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2020 (4) TMI 656 - AT - Income TaxCondonation of delay - appeal of the assessee was dismissed by the ld.CIT(A) on the solidary ground that the same was not within limitations and assessee had no sufficient cause for filing the appeal in time - HELD THAT - Keeping in view of the decision in Hon'ble Supreme Court in the case of Land Acquison Collector Vs. MST Kitji 1987 1987 (2) TMI 61 - SUPREME COURT we find that the assessee had sufficient cause for not filing the appeal in time before the ld.CIT(A). Therefore, considering the reasons as cited in the said application and also keeping in view principles laid down by Hon'ble Supreme Court, we condone the delay in filing the appeal before the ld.CIT(A). Undisclosed income - set off of shares business loss against the undisclosed income - No claim shall be available for any allowances or expenditure of income referred to any section 68, section 69, section 69A, section 69B, section 69C and section 69D from A.Y. 2013-14 onwards. This amendment being prospective and not retrospective and since the claim raised by the assessee is for the A.Y. 2009-10, therefore, this amendment is not applicable and thus the claim for set off of shares business loss is available to the assessee as benefit provided u/s.71 of the Act may not simply be denied on the ground that the assessee was not able to substantiate his claim for classification under certain head of income. In our view, even if that claim is not substantiated, even then the income can be classified under any other head i.e. the income from other sources and benefit u/s.71 of the Act is also allowable. Therefore, keeping in view of the totality of the facts and circumstances as discussed above and also keeping in view of the decisions as mentioned above, we allow the claim of the assessee for set off of shares business loss against the undisclosed income for the year under consideration, accordingly solitary ground raised by the assessee are allowed.
Issues Involved:
1. Reopening of assessment and issuance of notice under Section 148 of the Income Tax Act, 1961. 2. Addition of ?11,11,080/- on account of disallowance of set-off of loss of shares F & O against undisclosed income. Detailed Analysis: Issue 1: Reopening of Assessment and Issuance of Notice under Section 148 The first ground raised by the assessee challenged the reopening of assessment and issuance of notice under Section 148 of the Income Tax Act, 1961. However, this ground was not pressed by the assessee during the proceedings. Consequently, this ground was dismissed as not pressed. Issue 2: Addition of ?11,11,080/- Due to Disallowance of Set-off of Loss of Shares F & O Against Undisclosed Income The second ground pertained to the addition of ?11,11,080/- due to the disallowance of set-off of loss of shares F & O against undisclosed income. The assessee filed its return of income, which included income from business profits and other sources, and claimed deductions under Chapter VI-A of the Act. The case was reopened, and the assessment was completed under Section 143(3) read with Section 147, disallowing the set-off of loss of shares F & O. The assessee appealed to the CIT(A), who dismissed the appeal on the grounds of it being filed beyond the statutory time limit without sufficient cause. The assessee argued that the delay was due to medical emergencies and lack of awareness about the provisions of the law, which was supported by an affidavit. Upon review, the Tribunal found that the assessee had sufficient cause for not filing the appeal in time, referencing the Supreme Court decision in the case of Land Acquisition Collector Vs. MST Kitji. The delay was condoned, and the appeal was admitted. On the merits, the Tribunal examined the addition made by the Revenue Authorities. The assessee had a total undisclosed income of ?60,28,325/-, which was invested in shares and options trading, resulting in a loss of ?59,64,585/-. The assessee argued that the loss from shares F & O should be considered a business loss under Section 43(5)(d) and set off against the undisclosed income. The Tribunal referenced several judgments, including: - CIT Vs. D.P. Sandu Bros. [2005]: Held that Section 14 and Section 56 constitute a complete code for determining the head under which income should be taxed. - Hon'ble Madras High Court: Emphasized that income tax is levied on total income classified under various heads, allowing for the set-off of losses under Section 71. - Hon'ble Gujarat High Court: Stated that the Act does not envisage taxing any income under a head not specified in Section 14, supporting the set-off of losses against income under any head. - Circular No.11/2019: Clarified that the amendment to Section 115BBE(2) was prospective from A.Y. 2013-14 onwards, allowing set-off of losses against undisclosed income for earlier years. The Tribunal concluded that the assessee was entitled to set off the business loss from shares F & O against the undisclosed income for the assessment year 2009-10. Thus, the solitary ground raised by the assessee was allowed, and the appeal was partly allowed. Appeals for A.Y. 2010-11 and 2011-12 The facts and circumstances for the assessment years 2010-11 and 2011-12 were identical to those of A.Y. 2009-10. Therefore, the Tribunal's findings and directions for A.Y. 2009-10 were applied mutatis mutandis to these appeals. Consequently, the grounds raised by the assessee in both appeals were partly allowed. Conclusion In summary, the three appeals filed by the assessee for the assessment years 2009-10 to 2011-12 were partly allowed. The order was pronounced in the open court on 14-02-2020.
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