Income Tax Appellate Tribunal - Panji
The Ito,, Guntur vs Smt, Kanna Maria Rani,, Guntur on 8 September, 2017
आयकरअपीलीयअधधकरण, धिशाखापटणमपीठ, धिशाखापटणम
IN THE INCOME TAX APPELLATE TRIBUNAL,
VISAKHAPATNAM BENCH, VISAKHAPATNAM
श्रीिी. दुगााराि,न्याधयकसदस्यएिं
श्रीधड.एस. सुन्दरससह, लेखासदस्यके समक्ष
BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER&
SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER
आयकरअपीलसं./I.T.A.No.129/Viz/2016
(धनधाारणिर्ा / Assessment Year:2011-12)
The Income Tax Officer Smt.Kanna Maria Rani
Ward-1(3), Guntur D.No.4-20-34/2
4th Lane, Navabharat Nagar
Guntur- 522 006
[PAN : AKAPK5022A]
(अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent)
अपीलाथीकीओरसे/ Appellant by : Shri M.K.Sethi, DR
प्रत्याथीकीओरसे / Respondent by : Shri I.Kama Sastry, AR
सुनिाईकीतारीख / Date of Hearing : 04.09.2017
घोषणाकीतारीख/Date of Pronouncement : 08.09.2017
आदेश /O R D E R
PER D.S. SUNDER SINGH, Accountant Member:
This appeal is filed by the revenue against the order of the Commissioner of Income Tax (Appeals) [CIT(A)]-1, Guntur vide ITA No.126/CIT(A)-1/GNT/2014-15 dated 30.12.2015. 2 ITA No.129/Viz/2016
Smt.Kanna Maria Rani, Guntur
2. All grounds of appeal are related to the deletion of addition made by the assessing officer on estimation basis on turnover. The assessee filed return of income declaring total income of Rs.2,72,340/- on 15.06.2012. The assessee is in the business of trading in online commodity exchange and also there were cash deposits in bank account. The case was selected for scrutiny under the CASS and the assessing officer issued notices calling for information, but the assessee did not respond to the notices issued. The total transactions of the assessee during the year was Rs.52,28,56,160/-. The assessing officer treated the entire transactional value as business turnover and estimated the income @ 5% on total turnover which worked out to Rs.2,61,42,808/- and the same was brought to tax. The assessing officer completed the assessment u/s 144 of I.T.Act on total income of Rs.2,64,15,150/-. Aggrieved by the order of the assessing officer, the assessee went on appeal before the Ld.CIT(A) and argued that the transactions were pertaining to online commodity exchange transactions and in commodity exchange transactions, the entire transactional value should not be treated as business turnover, only the net difference of each transaction would constitute the turnover. The assesse further 3 ITA No.129/Viz/2016 Smt.Kanna Maria Rani, Guntur argued before the Ld.CIT(A) that, she has done online commodities trading and incurred loss of Rs.12,21,171/- and lost the transaction tax, turnover charges etc. and the Ld. AR relied on the guidance note from the Institute of Chartered Accountants of India and filed the written submissions stating that "The assessee in the written submissions it is mentioned that she has done online commodities trading and incurred loss of Rs.12,21,171/- plus transaction tax, turnover charges etc. which she has not claimed in her return of income filed. The assesseehas invested a sum of Rs.12,61,200/- in the said business and lost the total investment in the said business. In proof of investment a copy of statement of account issued by M/s India Infoline Commodities Limited is enclosed herewith. The learned Assessing Officer has finalized the assessment under his best of judgement under section 144 of I.T.Act by estimating income at 5% on total turnover of commodity exchange transaction and raised a huge demand of tax of Rs.1,17,74,290/-.The transaction of buying and selling the commodities was a speculative transaction. No physical delivery of goods has taken place. The account has been settled only by crediting / debiting the difference and the assessee has carried out no other activity. The learned assessing officer ought to have considered only the difference in purchase and sale of commodities as the income / loss of the assessee."
2.2. The Ld.CIT(A) considering the written submissions made by the assessee, and the decisions of various tribunals and also referring the guidance note of the Institute of Chartered Accountants of India (ICAI) 4 ITA No.129/Viz/2016 Smt.Kanna Maria Rani, Guntur held that the business turnover should be difference of each transaction i.e. difference between purchase and sale value. The Ld.CIT(A) taken the help of guidance note of ICAI on speculative transaction which reads as under :
"Speculative transaction : A speculative transaction means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips. Thus, in a speculative transaction, the contact for sale or purchase, which is entered into is not completed by giving or receiving delivery so as to result in the sale as per value of contract note. The contract is settled otherwise and squared up by paying out the difference, which may be positive or negative. As such, in such transaction, the difference amount is „turnover‟. In the case of an assessee doing speculative transactions there can be both positive and negative differences arising by settlement of various such contracts during the year. Each transaction resulting into whether a positive or negative difference is an independent transaction. Further, amount paid because of negative difference paid is not related to the amount received on account of positive difference. In such transactions, though the contract notes are issued for full value of the purchased or sold asset the entries in the books of account are made only for the differences. Accordingly, the aggregate of both positive and negative difference is to be considered as the turnovers of such transactions for determining the liability to audit vide section 44AB."
2.3. The Ld.CIT(A) allowed the appeal of the assessee and deleted the addition made by the assessing officer without examining the books of 5 ITA No.129/Viz/2016 Smt.Kanna Maria Rani, Guntur accounts and the relevant material. Aggrieved by the order of CIT(A), the revenue is in appeal before us.
3. Appearing for the revenue, the Ld.DR argued that the assessing officer has given number of opportunities but there was no reply from the assessee, hence, assessment was completed u/s 144 estimating the income @5% on gross turnover. The assessee has neither produced the books of accounts nor furnished the details called for by the assessing officer, therefore, it cannot be decided whether the turnover was related to the commodities turnover or not? Nature of receipt required to be examined with the books of accounts. The Ld.CIT(A) entertained fresh evidence relating to the transactions, which was not produced before the assessing officer and the Ld.CIT(A) has not given any opportunity to the Assessing officer to examine the facts. Therefore, Ld.DR argued that addition made by the assessing officer be confirmed.
4. On the other hand, Ld.AR relied on the orders of the Ld.CIT(A) and argued that the assessee is in the line of buying and selling commodities, 6 ITA No.129/Viz/2016 Smt.Kanna Maria Rani, Guntur derivative transactions and no physical delivery of goods has taken place. The account has been settled only by crediting/debiting the differences and the assessee has not carried out any other activity. Therefore, Ld.AR argued that the net difference of each transaction is the business turnover and the Ld.CIT(A) has rightly deleted the addition.Ld.AR further argued that the notices were not being served on the assessee.
4.1. Per contra, responding to the argument of the Ld.AR, Ld.DR submitted that the notices were issued and served in the address given by the assessee at Piduguralla, Guntur as per the procedure for serving notices. The assessee has not furnished the change of address to the assessing officer hence the notices could not be sent to the new address. Therefore, Ld.DR submitted that the notices were served on the assessee as per the procedure. For a query from the Bench, Ld.AR conceded that the change of address has not been notified to the assessing officer.
5. We have heard the rival submissions and perused the material placed on record. In this case, before the assessing officer, the assessee 7 ITA No.129/Viz/2016 Smt.Kanna Maria Rani, Guntur has not submitted the details and there was no response from the assessee for the notices issued on various occasions. The assessing officer has issued number of notices and the case was fixed for hearing on several occasions. Since, there was no response from the assessee, the assessment was completed u/s 144 of I.T.Act as per the information available on record. During the appeal proceedings, the assessee has submitted the details and made written submissions before the Ld.CIT(A) stating that the assessee was dealing in the share, securities and derivatives and the turnover in this line of business would be aggregate of the difference in each transaction after settlement but not the total transaction value. The Ld.AR further argued that the transactions are periodically settled otherwise than by actual delivery or transfer of commodities or scrips and the each transaction results into positive or negative difference depending on the transaction and the aggregate of positive and negative transaction represents the turnover but not the entire transactional value. The assessee has filed evidences before the Ld.CIT(A) regarding the turnover and trading in online commodities business. However, Ld.CIT(A) has allowed the appeal of the assessee without referring the additional evidences to the assessing 8 ITA No.129/Viz/2016 Smt.Kanna Maria Rani, Guntur officer or calling for the remand report. The CIT(A) also did not verify the books of accounts and given finding on the determination of true and correct income. Though the CIT(A) permitted to conduct enquiries and decide appeal, when the assessment was completed ex parte, the Ld.CIT(A) cannot simply delete the addition in appeal but examine the books of accounts, call for the details and determine the true and correct income. If there is any discrepancy, opportunity should be given to the AO in the interest of justice. In the instant case, Ld.CIT(A) has not undertaken such exercises. Therefore, we are of the considered opinion that the assessment should be remitted back to the file of the assessing officer for denovo consideration. The assessing officer should examine the books of accounts and determine the true and correct income. Accordingly, we set aside the order of the Ld.CIT(A) and remit the assessment back to the file of the assessing officer for denovo consideration.
6. In the result, the appeal of the Revenue is allowed for statistical purpose.
9ITA No.129/Viz/2016
Smt.Kanna Maria Rani, Guntur The above order was pronounced in the open court on 8th Sep 2017.
Sd/- Sd/-
(िी.दुगााराि) (धड.एस. सुन्दरससह)
(V. DURGA RAO) (D.S. SUNDER SINGH)
न्याधयकसदस्य/JUDICIAL MEMBER लेखासदस्य/ACCOUNTANT MEMBER
धिशाखापटणम /Visakhapatnam
ददनांक /Dated : 08.09.2017
L. Rama, SPS
आदेश की प्रधतधलधप अग्रेधर्त / Copy of the order forwarded to:-
1. अपीलाथी / The Appellant -The Income Tax Officer, Ward-1(3), Guntur
2. प्रत्याथी / The Respondent-Smt.Kanna Maria Rani, D.No.4-20-34/2, 4th Lane, Navabharat Nagar, Guntur- 522 006
3. The Pr. Commissioner of Income-tax-1, Guntur
4. आयकरआयुक्त (अपील) / The CIT (A)-1, Guntur
5. धिभागीयप्रधतधनधध, आयकरअपीलीयअधधकरण, धिशाखापटणम /DR, ITAT, Visakhapatnam
6. गाडाफ़ाईल / Guard file आदेशानुसार / BY ORDER // True Copy // Sr. Private Secretary ITAT, VISAKHAPATNAM