Income Tax Appellate Tribunal - Pune
Jhamtani Jairam Ramchand,, Pune vs Income Tax Officer,, Pune on 1 November, 2018
आयकर अपील
य अ धकरण] पण
ु े यायपीठ "एक सद य" पण
ु े म
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "SMC", PUNE
BEFORE
SHRI ANIL CHATURVEDI, AM
आयकर अपील सं
. / ITA No.416/PUN/2017
नधा रण वष / Assessment Year : 2011-12
Jhamtani Jairam Ramchand, .......... अपीलाथ /
Jhamtani Iron Trading,
Appellant
S.No.11/2/7, Opp. Royal World
School, Behind Jhamatani Impressions,
Pimpiri, Pune - 411 017.
PAN : AAYPJ27-8E.
बनाम v/s
The Income Tax Officer, .......... यथ /
Ward 8(3), Pune.
Respondent
Assessee by : Shri Dinesh R. Gulbari.
Revenue by : Shri Rajesh Gawli.
सन
ु वाई क तार ख / घोषणा क तार ख /
Date of Hearing : 10.09.2018 Date of Pronouncement: 01.11.2018
आदे श / ORDER
PER ANIL CHATURVEDI, AM :
1. This appeal filed by the assessee is emanating out of the order of Commissioner of Income Tax (A) - 6, Pune, dt.30.08.2016 for the assessment year 2011-12.
2. The relevant facts as culled out from the material on record are as under :-
Assessee is an individual and stated to be engaged in the business of trading in iron and steel and trading in shares. Assessee filed his return of income for A.Y. 2011-12 on 21.02.2014 declaring 2 ITA No.416/PUN/2017 total income of Rs.20,99,423/- and carry forward loss of Rs.15,14,993/- in respect of trading in shares. The case was selected for scrutiny and thereafter assessment was framed u/s 143(3) of the Act vide order dt.21.02.2014 and the total income was determined at Rs.24,45,860/-. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who vide order dt.30.08.2016 (in appeal No. PN/CIT(A)-V/ITO Wd.8(3)/23/2014-15) dismissed the appeal of the assessee. Aggrieved by the order of Ld.CIT(A), assessee is now in appeal and has raised the following grounds :
"1. On the facts and circumstances prevailing in the case and as per provisions of law, the learned Assessing Officer has acted arbitrarily in making additions at higher side by not allowing addition of income to the extent as per provisions of law u/s 44AE i.e. 4,500/- per month from one Light transport vehicle and instead added total receipts of Rs. 3,46,282/- to ROI. The Appellant. actually received amounts on accounts of transport business and the evidences of commercial transport vehicle purchased and financed by Sundaram Finance Ltd. used for business was given to the Assessing Officer towards deposits into Seva Vikas Bank a/c no. 7260 undisclosed in the books of accounts. The Appellant be granted just & proper relief in this regards.
2. On the facts and circumstances prevailing in the case and as per provisions of law, the learned Assessing Officer has acted arbitrarily & added total receipts of Rs3,46,282/- to ROI of the assessed which is actually received on accounts of transport business & deposited into Seva Vikas Bank a/c no. 7260 undisclosed in the books of accounts, The Appellant prays without prejudice to ground no. 1 above, provisions of law u/s 44E should be applied and if not the appellant should be allowed to claim the reasonable expenses like oil, diesel. repairs & maintenance, Salary of Driver, depreciation. etc for running transport business. The Appellant be granted just & proper relief in this regards as per expenses statement submitted on records of CIT (Appeals) 6. Vide submission Dt. 24/08/2016.
3. On the facts & circumstances prevailing in the case & as per provisions of law, the learned assessing office is not justified in disallowing the appellant claim towards Interest paid to Sundaram Finance. oil, diesel, repairs & maintenance, Salary of Driver, depreciation, on Transport Vehicle as an expenses and also not justified otherwise in not accepting the appellants pray to assess the transport receipts of Rs. 3,46,282/- as per provisions of law u/s 44AE while assessing the income of appellant.
4. On the facts & circumstances prevailing in the case & as per provisions of law, the learned assessing office is not justified in not allowing the appellant to set off the loss of share trading activity with Motilal Oswal Securities Ltd amounting to Rs. 804883/- & 6112/- as undisclosed business loss which is an fully explained loss from share trading activity as per statements issued by Motilal Oswal Securities Ltd pertaining to FY 2009 -2010 & FY 2010 - 2011."3 ITA No.416/PUN/2017
3. Before us, Ld.A.R. submitted that ground Nos.1 to 3 are inter- connected and therefore considering his submissions, these grounds are considered together.
3.1. During the course of assessment proceedings, AO noticed that assessee had two bank accounts i.e., A/c. Nos.7260 and 8638 maintained with Seva Vikas Bank, Pimpri Branch, Pune. He noticed that assessee has not disclosed these two bank accounts and also not offered the transactions therein for tax. The assessee was therefore asked to explain the source of the credit entries in those two bank accounts. Assessee made the submissions which were not accepted by the AO. AO further noted that similar issue was involved in assessee's own case for A.Y. 2009-10 and the AO has made the addition of the amount of deposits in those two bank accounts. AO noted that for the year under consideration the total credits in A/c No.7260, were to the extent of Rs.9,61,582/-. After considering the submissions of the assessee, that the credit of Rs.6,15,300/- was received from 'Motilal Oswal' on account of redemption of investments in shares and in view of the submission that it was already taxed in earlier year, AO granted credit of Rs.6,15,300/- and made addition of Rs.3,46,282/-. With respect to the deposits in saving bank A/c No.8638, AO noted that an amount of Rs.156/- was credited and the same was also added to the income. He thus made aggrigate addition of Rs.3,46,438/- (Rs.3,46,282/- Rs.156/-). Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who dismissed the appeal of the assessee by observing as under :
"4.1 The appellant had two bank accounts with Seva Vikas Bank, Pimpiri Branch, Pune (account No.7260 & 8638) which were not 4 ITA No.416/PUN/2017 disclosed to the department and the transactions therein are not accounted in the books of accounts maintained by him. There were total of Rs.9,61,582/- credits in the account no.7260 and Rs.156/- in the account no.8638. The AO considering that an amount of Rs.6,15,300/- received in the form of cheque from Motilal Oswal to be amount of redemption of shares which were taxed separately as undisclosed investment in the earlier year had not considered the amount to be undisclosed income. The balance amount of Rs.3,46,282/- is considered as a undisclosed income of the appellant. 4.1.2. The appellant in this appeal has sought to bifurcated the inflows and outflows into the bank account under three different heads namely, transport and other receipts, transactions with Motilal Oswal Securities Ltd and cash transaction head. The total inflows and outflows were matching leaving a small closing balance. The appellant claimed that it had incurred loss in derivative transactions and regular share transaction carried through Motilal Oswal Securities Ltd, broker and claimed the share in loss to be at Rs.8,12,380/- and the derivative loss at Rs.6,122/- and submitted transaction statement in support of the same. It further claimed that in respect of the other transport receipts, the expenses on diesel and salaries, interest on vehicle loan and depreciation of the vehicle should be provided and the addition should have been restricted to Rs.41,298/-. 4.1.2. The appellant submission have been considered and it is found that these transaction have never been reflected in the books maintained by him. So the losses so claimed on the share transactions cannot be allowed to be carried forward as they have never been part of the regular return filed by him. The appellant had already claimed certain losses in share trading in respect of the regular return itself. The appellant did not file any supporting evidence as to whether the transactions statement now filed includes any of the transactions already reflected in the regular books. If the share trading loss itself is Rs.8,12,382/- and it is outside the books, the appellant would have to pay this amount to the broker. There is no evidence of such payments have been made to the broker. In the absence of the complete details, it is difficult to accept the appellant's claims. The methodology adopted by the AO appears to be most appropriate in the given circumstances. Therefore the addition made by the AO is sustained." Aggrieved by the order of Ld.CIT(A), assessee is now in appeal.
4. Before me, Ld.A.R. reiterated the submissions made before AO and Ld.CIT(A) and further submitted that assessee had one light transport vehicle which was used for transportation business. He submitted that assessee had not maintained the books of accounts of transport business. He submitted that the credit in bank account No.7260 represented receipts from transport business. He submitted that AO should have granted reasonable expenses like diesel, oil, 5 ITA No.416/PUN/2017 repairs and maintenance etc., against the receipts and only the balance amount should have been added to income. In the alternative, income should have been determined as per provisions of 44AE of the Act. He therefore submitted that the addition be deleted or in the alternate, the matter be remitted to AO. He further submitted that on identical issue in assessee's case in A.Y. 2009-10, similar ground was decided against the assessee by the Hon'ble ITAT but assessee has filed an Miscellaneous Application. Ld.D.R. on the other hand, supported the order of lower authorities and submitted that in earlier year on identical facts, the ground was dismissed by ITAT.
5. I have heard rival submissions and perused the material on record. The issue in the present ground is with respect to addition made on account of unexplained deposits in the bank account which was not disclosed by assessee. Before me, it is Ld.A.R.'s contention that the receipts in the aforesaid bank account represents credits of transportation business and the AO should have granted credit for expenses relating to transportation business or in the alternative, income should have been determined as per provisions of Section 44AE of the Act. I find that identical issue arose in assessee's own case in A.Y. 2009-10. The ground was decided against the assessee by the Tribunal vide order dt.31.10.2017 in ITA No.1346/PUN/2014 by observing as under :
"12. The issue in ground of appeal No.3 raised by the assessee is in not applying the provisions of section 44AE of the Act to assess the transport receipts in the hands of assessee and thereafter, not allowing the interest paid to Sundaram Finance & depreciation on transport vehicles. The assessee had failed to furnish the details of vehicles owned. The assessee had failed to furnish any proof of ownership or 6 ITA No.416/PUN/2017 use of vehicles as well as earning of income with documentary evidence in respect of transport business. Hence, the claim of depreciation as well as bank interest on vehicles loan was not accepted by the Assessing Officer and the CIT(A). Even before us, the assessee has failed to furnish any evidence in this regard and in the absence of the same, we find no merit in the ground of appeal No.3 raised by the assessee."
Before me, Ld.A.R. has not furnished any details of the vehicle owned by him and the plea of granting credit for expenses is also without any documentary evidence. Further the Ld.A.R. has not controverted the findings of ITAT in assessee's own case for A.Y. 2009-10. Further, mere filing of Miscellaneous Application against the earlier year's order cannot be a ground for taking a different view. In view of the aforesaid facts, I find no reason to interfere with the order of Ld.CIT(A) and thus, the ground of assessee is dismissed.
6. Ground No.4 is with respect to not allowing the set off of loss of share trading activity.
6.1. It is assessee's contention that he was trading in shares through Motilal Oswal Securities and the transactions were done through bank A/c No.7260 maintained with Seva Vikas, which was not disclosed by assessee. As per assessee, he had incurred share trading loss of Rs.8,12,380/- and derivative trading loss of Rs.6,122/-. AO while considering the undisclosed income from the aforesaid bank account did not grant credit for the aforesaid business loss. When the matter came before Ld.CIT(A), Ld.CIT(A) upheld the order of AO.
Aggrieved by the order of Ld.CIT(A), assessee is now in appeal. 7 ITA No.416/PUN/2017
7. Before me, Ld.A.R. reiterated the submissions made before AO and Ld.CIT(A) and further submitted that the share trading and derivative business was done through the undisclosed bank account and therefore the loss incurred in share trading activity should have been allowed to be set off u/s 70 and 71 of the Act. Ld.D.R. on the other hand, supported the order of lower authorities and further submitted that on identical facts in assessee's own case for A.Y. 2009- 10, the matter was remitted back to AO by ITAT.
8. I have heard the rival submissions and perused the material on record. I find that identical claim of loss from trading activity of shares and derivatives was made by assessee in A.Y. 2009-10 before ITAT. The Co-ordinate Bench of the Tribunal restored the matter back to AO with the necessary directions. The observations of ITAT in A.Y. 2009-10 are as under :
"15. On perusal of record, we find that income has been assessed in the hands of assessee on the basis of entries in undisclosed bank accounts, wherein the deposits were both in cheque and cash. The Assessing Officer and the CIT(A) also noted that the assessee had made application of funds to the extent of Rs.31,31,246/- in shares and there was payment to Sundaram Finance of Rs.1,44,000/-. The Assessing Officer thus, added sum of Rs.32,75,246/- on the basis of investments made. However, before the CIT(A), the assessee pointed out that the Assessing Officer has not applied consistent approach. He filed reconciliation before the CIT(A), which was accepted by him and the addition was restricted to Rs.18,69,439/-. The assessee is not in appeal against the aforesaid addition. However, the assessee claims that out of the said account, it had made investments and has incurred losses on account of share trading and derivatives. In the totality of the above said facts and circumstances, we deem it fit to restore this issue back to the file of Assessing Officer, who shall consider the claim of assessee and decide the issue in accordance with law. The Assessing Officer shall afford reasonable opportunity of being heard to the assessee. The ground of appeal No.4 raised by the assessee is thus, allowed as indicated above. The grounds of appeal and additional grounds of appeal are thus, partly allowed as indicated above."8 ITA No.416/PUN/2017
I find the issue raised in the present ground is identical to that of A.Y. 2009-10. I therefore for similar reasons and with similar directions, restore the issue to AO to decide the issue. Needless to state that AO shall grant adequate opportunity of hearing to the assessee. Assessee is also directed to co-operate with AO by promptly furnishing all the required documents as called for by AO. Thus, the ground of assessee is allowed for statistical purposes.
9. In the result, the appeal of the assessee is partly allowed.
Order pronounced on 1st day of November, 2018.
Sd/-
(ANIL CHATURVEDI) लेखा सद य / ACCOUNTANT MEMBER पुणे Pune; दनांक Dated : 1st November, 2018.
Yamini आदे श क# $ त&ल'प अ(े'षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. The CIT(A)-6, Pune.
4. The Pr.CIT(5), Pune.
5 "वभागीय %त%न&ध, आयकर अपील य अ&धकरण, "एक सद+य" / DR, ITAT, "SMC" Pune;
6. गाड. फाईल / Guard file.
आदे शानस ु ार/ BY ORDER // True Copy // व0र1ठ %नजी स&चव / Sr. Private Secretary आयकर अपील य अ&धकरण ,पुणे / ITAT, Pune.