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TMI Blog2018 (2) TMI 1624X X X X Extracts X X X X X X X X Extracts X X X X ..... e unusual that the said broker had carried out commodity trading transactions for and on behalf of the assessee without collecting any margin money. We find that the Director of broker company M/s Marigold Vanijya Pvt Ltd had filed a sworn affidavit before the ld AO which had been rejected without assigning any reasons in the assessment order. We find that the ld AO had not verified the transactions by summoning the broker u/s 131 of the Act or obtaining information from them. Hence the order of the ld AO suffers from various deficiencies. However, in the interest of justice, we deem it fit and appropriate, to remand this issue to the file of the ld AO, to decide this issue afresh in accordance with law. - I.T.A No. 83/Kol/2016 - - - Dated:- 8-11-2017 - Shri M.Balaganesh, AM Shri S.S.Viswanethra Ravi, JM For the Appellant : Shri Avinash Mishra, CIT For the Respondent : Shri A.K. Tulsian, FCA ORDER Per M.Balaganesh, AM 1. This appeal by the Revenue arises out of the order of the Learned Commissioner of Income Tax(Appeals)-20, Kolkata [in short the ld CIT(A)] in Appeal No.699/CIT(A)- 20/CC-2(1)/14-15 dated 04.11.2015 against the order passed by the DC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld AO to compute the disallowance by taking into account only dividend bearing investments while computing disallowance under Rule 8D(2)(iii) of the Rules in the light of the decision of this tribunal in the case of REI Agro Ltd vs DCIT reported in 144 ITD 141 (Kolkata Trib). With regard to disallowance under Rule 8D(2)(i) of the Rules, the assessee gave the workings of disallowance at ₹ 1,57,976/-. The ld CITA observed that assessee has made investments in shares and securities and at the same time, it is involved in trading of shares and securities also. Therefore, proportionate disallowance of direct expense is to be made based on the turnover related to the business of the assessee. He directed the ld AO accordingly. Aggrieved, the revenue is in appeal before us on the following grounds:- 1. Whether on the facts and circumstances of the case, the Ld. CIT(A) erred in law in deleting the disallowance u/s 14A of the I.T. Act, 1961. 2. Whether on the facts and circumstances of the case, the Ld. CIT(A) erred in ignoring the clarification made by the CBDT through Circular No.-5/2014 and thereby deleted the disallowance u/s 14A of the I.T. Act, 1961. 2.3. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arigold Vanijya Pvt Ltd on 25.3.2014 in which he has claimed the transaction to be a genuine one. The ld AO did not accept the said affidavit. However, no reason was adduced by the ld AO for not accepting the same. Accordingly he treated the loss of ₹ 41,55,088/- as bogus loss and disallowed the same in the assessment. 3.2. It was argued that the only reason of treating the loss on commodity trading to be bogus was that the margin money was not charged by the broker on the transactions. The ld AO had not disputed the genuinity of any documents submitted before him. It was submitted that all the transactions with regard to commodity trading were entered through banking channels, valid contract notes were drawn in favour of the assessee and all the relevant details and documents were filed as requisitioned by the ld AO in the course of assessment proceedings. The ld AO also verified the documents submitted by the assessee. It was submitted that if the margin money is not charged by the broker, then the transactions canot be regarded as bogus. Further it was argued that client cannot be held responsible for any default by the broker. In this regard, the assessee plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sactions as well. It was submitted that their genuineness / legality has never been challenged by any authority. It was also submitted that a duly sworn affidavit was also furnished by the broker M/s Marigold Vanijya Pvt Ltd stating that such transactions were genuine and routed through proper channels. But the ld AO had outrightly rejected the affidavit without assigning any reasons for such rejection. It was further submitted that in case the ld AO had any doubts on the genuineness of the subject mentioned transaction, he could have made independent enquiries u/s 133(6) or u/s 131 of the Act seeking personal appearance of the Director of the Broker Company or he could have asked for relevant details /documents. Further , he could have also enquired or could have deputed Inspector of Income Tax to verify from the regulatory body. But the ld AO did not try to verify the genuineness of the transactions. Finally it was stated that the assessee had a cordial relation with the broker and hence full responsibility of managing portfolio was assigned to the broker M/s Marigold Vanijya Pvt Ltd. The assessee was not aware of such irregularity of the broker company as entire dealing was d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instant case. Admittedly, the assessee is not an interested party with either the Director or the broker company M/s Marigold Vanijya Pvt Ltd. In such a scenario, it is quite unusual that the said broker had carried out commodity trading transactions for and on behalf of the assessee without collecting any margin money. We find that the Director of broker company M/s Marigold Vanijya Pvt Ltd had filed a sworn affidavit before the ld AO which had been rejected without assigning any reasons in the assessment order. We find that the ld AO had not verified the transactions by summoning the broker u/s 131 of the Act or obtaining information from them. Hence the order of the ld AO suffers from various deficiencies. However, in the interest of justice, we deem it fit and appropriate, to remand this issue to the file of the ld AO, to decide this issue afresh in accordance with law. The assessee is also at liberty to file fresh evidences in support of its transactions before the ld AO. Accordingly, the Grounds 3 4 raised by the revenue are allowed for statistical purposes. 4. The Ground No. 5 raised by the revenue is general in nature and does not require any specific adjudication. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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