2015 (8) TMI 1095 - AT - Income Tax

Deciding the case ex parte U/s 144 - Held that - The assessee s attitude was totally non-cooperative with the department as evident from the number of dates for hearing given by the Assessing Officer. The assessee had never produced the books of account before the Assessing Officer as claimed by him which has been confirmed by the ld CIT(A). Both the authorities cannot be held irresponsible when assessee s conduct shows that he had not produced books of account in given time before the Assessing Officer. The assessee s claimed that he had submitted books of account on 27/12/2010 does not serve any purpose as the case was going to barred by limitation on 30/12/2010 - Decided against assessee. Trading addition - estimation of G. P. - CIT(A) decided the assessee s appeal by enhancing the addition at 1, 92, 538/- by observing that on verification of books of account it was noticed by him that the turnover of assessee included sale of shares and stock option (derivatives) - Held that - As per Section 43(5) 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.Prima facie it is clear that Section 43(5)(d) is for trading in derivatives not trading of shares. The assessee claimed that the assessee has traded these shares through broker and through electronics mode which comes U/s 43(5)(d) of the Act and shall not be deemed to be an speculative transaction has wrongly interpreted Section 43(5) of the Act. The assessee has not produced any evidence regarding delivery of shares and transactions note detail of scrap traded during the year under consideration. Therefore we do not find any reason to intervene in the order of the ld CIT(A).- Decided against assessee. Addition to sundry creditors - CIT(A) deleted addition - Held that - As mentioned above the assessee was non-cooperative with the department even there is no copy of replies filed to show that full name address and PAN of trade creditors were filed before Assessing Officer. The ld CIT(A) was also wrong to accept the assessee s claim and held that show cause notice was given by the Assessing Officer itself for trade creditors on 27/12/2010 is against the fact of the case as submitted by the ld DR with reference to paper book submitted by the assessee. We have also perused the above documents the argument of the ld DR was found correct and the assessee had not submitted complete details of creditors with full address with PAN before the Assessing Officer. Any expenses claimed in the P 21, 93, 700/- which includes excess cash of 20, 49, 000/- and sundry creditors of 21, 44, 700/- which has been credited in the P 21, 94, 196/- for the year under consideration. Therefore order of the ld CIT(A) deserved to be confirmed on this issue. - Decided against revenue. Addition to fixed assets - CIT(A) deleted addition - Held that - The assessee never had furnished any evidence for purchase of assets before the lower authorities. Books of account were also not produced before the Assessing Officer. The ld CIT(A) also decided the issue on the basis of books of account without referring to the purchase bills. Further the assets transferred from proprietorship concern of Shri Lucky Bathla has not been verified from the balance sheet of Shri Lucky Bathla. The ld CIT(A) has accepted the assessee s argument without allowing the opportunity to the Assessing Officer therefore in the interest of justice this issue is required to be set aside to the Assessing Officer. - Decided in favour of revenue for statistical purposes.

Issues Involved:
1. Ex parte assessment under Section 144.
2. Trading addition and enhancement by CIT(A).
3. Disallowance of share trading loss under Section 73.
4. Addition towards sundry creditors.
5. Addition in relation to unsecured loans.
6. Addition of miscellaneous expenditure.
7. Initiation of penalty proceedings under Section 271(1)(c).
8. Deletion of salary expenses disallowance.
9. Deletion of addition to fixed assets.

Issue-wise Detailed Analysis:

1. Ex parte assessment under Section 144:
The assessee argued that the assessment under Section 144 was erroneous as all necessary documents were submitted. The Assessing Officer (A.O.) issued multiple notices, but the assessee failed to comply timely. The Tribunal upheld the ex parte assessment, noting the assessee's non-cooperative attitude and failure to produce books of account.

2. Trading addition and enhancement by CIT(A):
The A.O. made a trading addition of Rs. 9,48,532, estimating sales and gross profit. The CIT(A) enhanced this by Rs. 1,92,538, disallowing part of the share trading loss under Section 73. The Tribunal upheld the addition, finding the assessee's records insufficient and non-compliant.

3. Disallowance of share trading loss under Section 73:
The CIT(A) disallowed Rs. 11,41,070 as speculation loss under Section 73, which the assessee contested, arguing these were legitimate business transactions. The Tribunal upheld the disallowance, stating that the transactions were speculative as they were settled without actual delivery.

4. Addition towards sundry creditors:
The A.O. added Rs. 18,12,459 for unexplained sundry creditors. The CIT(A) partly allowed the appeal, confirming Rs. 3,19,611 and deleting Rs. 14,92,848. The Tribunal set aside the issue to the A.O., directing the assessee to provide complete details and confirmations.

5. Addition in relation to unsecured loans:
The A.O. added Rs. 3,00,000 for an unsecured loan from Gera Medicals due to lack of confirmation. The CIT(A) confirmed this addition. The Tribunal set aside the issue to the A.O., directing the assessee to provide necessary confirmations and details.

6. Addition of miscellaneous expenditure:
The A.O. disallowed Rs. 15,12,001 as the assessee failed to produce books of account and supporting documents. The CIT(A) confirmed the addition. The Tribunal set aside the issue to the A.O., directing the assessee to provide the required details.

7. Initiation of penalty proceedings under Section 271(1)(c):
The Tribunal found the initiation of penalty proceedings premature and dismissed the ground without adjudication.

8. Deletion of salary expenses disallowance:
The A.O. disallowed Rs. 3,44,763 out of salary expenses, citing discrepancies in statements and records. The CIT(A) deleted the disallowance, giving the benefit of telescoping with the surrendered cash. The Tribunal upheld the CIT(A)'s order.

9. Deletion of addition to fixed assets:
The A.O. added Rs. 14,83,182 for unexplained additions to fixed assets. The CIT(A) deleted the addition, stating it would result in double addition. The Tribunal set aside the issue to the A.O., directing verification of purchase bills, books of account, and the balance sheet of the proprietorship concern.

Conclusion:
The Tribunal partly allowed the appeals of both the assessee and the revenue, setting aside several issues to the A.O. for fresh consideration and directing the assessee to cooperate and provide necessary details. The Tribunal upheld some additions and deletions made by the CIT(A), emphasizing the need for proper documentation and compliance by the assessee.

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