Income Tax Appellate Tribunal - Mumbai
R.R. Hosiery P. Ltd, Mumbai vs Assessee on 21 June, 2011
आयकर अपील य अ धकरण "डी" यायपीठ मुंबई म।
IN THE INCOME TAX APPELLATE TRIBUNAL "D" BENCH, MUMBAI ी संजय अरोड़ा, लेखा सद य एवं ी वजय पाल राव, या यक सद य के सम ।
BEFORE SHRI SANJAY ARORA, AM AND SHRI VIJAY PAL RAO, JM आयकर अपील सं./I.T.A. No. 6945/Mum/2011 ( नधारण वष / Assessment Year: 2005-06) R. R. Hosiery Pvt. Ltd. Dy. CIT, Central Circle-47, Market City Resources Pvt. Ltd., Mumbai Shree Laxmi Woolen Mills Compound, बनाम/ Dr. E Moses Road, Mahalaxmi, Vs. Mumbai-400 011 थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. AAACR 2450 G (अपीलाथ /Appellant) : ( यथ / Respondent) अपीलाथ क ओर से / Appellant by : Shri Vijay Mehta यथ क ओर से/Respondent by : Shri Surinderjit Singh सनु वाई क तार ख / : 06.02.2014 Date of Hearing घोषणा क तार ख / : 21.02.2014 Date of Pronouncement आदे श / O R D E R Per Sanjay Arora, A. M.:
This is an Appeal by the Assessee directed against the Order by the Commissioner of Income Tax (Appeals)-38, Mumbai ('CIT(A)' for short) dated 21.06.2011, dismissing the assessee's appeal contesting its assessment u/s.143(3) of the Income Tax Act, 1961 ('the Act' hereinafter) for the assessment year (A.Y.) 2005-06 vide order dated 29.12.2010.
2. The only issue arising in the instant appeal by the assessee, per its two grounds, is the treatment of the loss sustained by it on account of derivative trading as a speculative 2 ITA No.6945/Mum/2011 (A.Y. 2005-06) R. R. Hosiery Pvt. Ltd. vs. Dy. CIT loss. Though the assessee has raised two grounds on merits, it was fairly conceded at the time of hearing by the ld. Authorized Representative (AR), the assessee's counsel, that the matter stands decided against it by the decision by the Tribunal in its own case for this year, i.e., in pursuance of section 143(3) proceedings (in ITA No.3237/Mum/2009 dated 30.09.2010/PB pgs.35-40), following the decision by its special bench in Shree Capital Services (P.) Ltd. vs. Asst. CIT [2009] 121 ITD 498 (Kol)(SB). And that the same stands further confirmed by the jurisdictional High Court (in ITA(L) No. 2473 of 2010 dated 18.04.2011/PB pg.41) following its decision of even date in CIT vs. Shri Bharat R. Ruia (HUF) (in ITA No.1539 of 2010). Further, the assessee has preferred an appeal before the apex court, adverting our attention to the admission of its SLP by it (PB pgs.42-43). On this, it was observed by the Bench that the fact that the assessee's SLP against the dismissal of its appeal by the hon'ble jurisdictional high court has been admitted by the apex court, would not in any manner detract from the precedence value of the decision by the hon'ble high court, which is binding on us. Upon this position being clarified thereto, the ld. AR sought time to file an additional ground/s, which was granted, i.e., when the appeal was first taken up for hearing (on 04.02.2014). The assessee has now raised two additional grounds, which read as under, pressing for their admission on the ground that they are legal grounds, with the relevant facts being on record and undisputed:
"1. On the facts and in the circumstances of the case and in law, the learned CIT(A) ought to have held that the action of AO, in treating loss of Rs.70,49,962 as speculative loss in the assessment order passed u/s.153A of the Act., is without jurisdiction and bad in law.
2. On the facts and in the circumstances of the case and in law, the learned CIT(A) ought to have appreciated that the issue of derivative loss was subject matter of appeal in the original proceedings on the date of initiation of search and hence the learned AO ought not to have made the disallowance in assessment order passed u/s.153A as a fresh addition/ disallowance."
3. We have heard the parties, and perused the material on record.
3 ITA No.6945/Mum/2011 (A.Y. 2005-06)R. R. Hosiery Pvt. Ltd. vs. Dy. CIT 3.1 The assessee firstly assails the jurisdiction of the Assessing Officer (A.O.) to treat the impugned trading loss as a speculation loss inasmuch as the same has been the subject matter of consideration by him in the regular proceedings u/s. 143(3), which stood concluded on the framing of the assessment on 27.12.2007 (copy of the assessment order on record/PB pgs.1-20). The assessment for the current year being pending before the ld. CIT(A) as on the date of search (20.02.2008); the assessee's appeal before him having been instituted on 31.01.2008, the assessment already framed would not abate as per section 153A. Further, vide its second additional ground, the assessee objects to the A.O. having reflected the said adjustment, inasmuch as the same stood not accepted as a business loss but only as a speculative loss, to be carried forward separately, as a separate and distinct item, as if it was a subject matter with regard thereto. No material qua the same having been admittedly found in search, and no change to the assessment as framed u/s. 143(3) having been made by him in the fresh assessment in its respect, the A.O. ought to have made the computation from the income as already assessed u/s.143(3). The objection, the ld. AR, on a query by the Bench as to its import inasmuch as the income - and at the same sum and nature/configuration - stands assessed, would submit, is not technical inasmuch as the same can have bearing in the collateral proceedings, viz. the penalty proceedings.
3.2 We admit the assessee's additional grounds inasmuch as they raise legal issue/s, with the relevant facts being on record. Even as clarified during the course of hearing itself, on an objection thereto being raised by the ld. Departmental Representative (DR), we find no merit in the assessee's additional ground no.1. The jurisdiction of the A.O. in the assessment proceedings pursuant to a search is to assess the total income for each of the assessment years falling within the period of six years immediately preceding the assessment year relevant to the previous year in which the search is conducted or the requisition is made. Reference in this context may be made to the decision by the hon'ble delhi high court in the case of CIT vs. Anil Kumar Bhatia [2013] 352 ITR 493 (Del), so that there are no fetters on the power of the AO to assess any income that in his view 4 ITA No.6945/Mum/2011 (A.Y. 2005-06) R. R. Hosiery Pvt. Ltd. vs. Dy. CIT forms part of the total income of the assessee for the relevant year/s, and would thus include the impugned income as well, including as to its nature/character.
3.3 With regard to the assessee's second objection, i.e., per its additional ground no.2, we find the same as not without force. This though is not for the reason that no material in relation to the impugned income stood found in search, on which aspect we observe conflict of judicial opinion, but for the reason that the A.O. has admittedly not altered either the nature or the quantum of addition as made in the regular assessment, since sustained in appeals. Inasmuch as therefore the said assessment does not in law abate, and the A.O. has merely adopted the same in the section 153A assessment, the same ought to be reflected therein as such. Stating the same to be an 'addition' in the section 153A assessment is thus inconsistent with the law in the facts of the case. To clarify further, even if, therefore, he had made an addition on that score, he would begin with the income already assessed u/s.143 (3), i.e., in regular assessment, specifying the nature of the modification being now carried out. We, accordingly, for the reasons stated, accepting the assessee's contention in this regard, direct the A.O. to modify his order by bringing out the fact of having adopted the income as already assessed by him, in the impugned assessment. We decide accordingly.
3.4 The assessee's principal ground, challenging the assessment of income as speculative, i.e., on the merits of the addition, fails in view of the decision by the hon'ble court in its own case, even as clarified at para 2 above. The other (second) ground No. 2 relates to proceedings in the succeeding year/s and is, thus, not maintainable in the present appeal. We decide accordingly.
4. In the result, the assessee's appeal is partly allowed on the afore-said terms.
Order pronounced in the open court on February 21, 2014 Sd/- Sd/-
(Vijay Pal Rao) (Sanjay Arora)
या यक सद य / Judicial Member लेखा सद य / Accountant Member
मुंबई Mumbai; दनांक Dated : 21.02.2014
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ITA No.6945/Mum/2011 (A.Y. 2005-06)
R. R. Hosiery Pvt. Ltd. vs. Dy. CIT
व. न.स./Roshani, Sr. PS
आदे श क त ल प अ े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आयु त(अपील) / The CIT(A)
4. आयकर आयु त / CIT - concerned
5. वभागीय त न ध, आयकर अपील य अ धकरण, मंब
ु ई / DR, ITAT, Mumbai
6. गाड फाईल / Guard File
आदे शानस
ु ार/ BY ORDER,
उप/सहायक पंजीकार (Dy./Asstt. Registrar)
आयकर अपील य अ धकरण, मुंबई / ITAT, Mumbai