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TMI Blog2021 (12) TMI 1032X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 2,92,861/- is treated as speculation loss instead of business loss, taxable income will remain the same of ₹ 59,70,000/-. This fact has not been denied by the ld. Pr. CIT or ld. CIT DR. Thus, if there is no loss of revenue in this year or in subsequent year nor will it impact the taxable income, then the assessment order cannot be held to be prejudicial to the interest of revenue and accordingly, in view of the principle laid down by Hon'ble Apex Court in the case of Malabar Industrial Co. Ltd.[ 2000 (2) TMI 10 - SUPREME COURT ] the assessment order cannot be set aside. Otherwise also, it is purely a case of change of opinion for the reason that similar nature of transaction of day trading of shares and F O has been held to be business income/business loss in all the earlier years wherein assessment has been completed u/s. 143(3) of the Act. Thus, if rule of consistency is applicable on the same facts and circumstances in these years, then merely changing the head of income from business to speculation, then it cannot be held that the assessment order is erroneous and prejudicial to the interest of revenue. More so, here in this case, section 263 has been done o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law or where two views are possible and he has taken one view with which the Pro Commissioner does not agree, it cannot be treated that the assessment order is erroneous so as to be prejudicial to the interest of revenue unless the view taken by AO is unsustainable in law . iii) Order is set aside hurriedly without providing proper opportunity of being heard in violation of provisions of natural justice. 4. That on the facts and circumstances of the case and in law, notice/order of ld. Pr. CIT is completely against the provisions of section 263 of Act in as much as if for argument sake even if loss ₹ 93,23,384/- is held as speculation loss than also taxable income, tax payable etc. will be same and hence there is no loss to revenue, hence order set aside is not erroneous being not prejudicial to interest of revenue. 5. That, without prejudice to above, as admittedly it is not a case of no enquiry, hence even if it was a case of inadequate enquiries for argument sake despite detailed enquiries made by AO, than ld. Pr. CIT erred In cancelling the order to conduct enquiries instead of arriving at definite conclusion after conducting inquiries, beside S. 263 can&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f trades undertaken were of the nature of speculative transaction through day jobbing in which sale and purchase of scrips on same day are matched without taking the delivery of the scrips. Ld. Pr. CIT further observed in his impugned order u/s. 263 that one of the reasons for selecting the case for scrutiny was large value sale of share which were settled otherwise than by actual delivery or transfer of STT. Thus, according to him, the mandate for scrutiny was to investigate, whether assessee is indulged in speculative transactions or not. However, as noted above, the limited scrutiny was for security transactions and not whether it is a business gain/loss or speculative gain/loss. 7. In response, the assessee submitted that total loss in F O segment during the relevant assessment year was ₹ 18,31,158/- and the total loss in day jobbing is ₹ 93,23,384/-. It was further submitted that the assessee is undertaking the business of purchase and sale of shares and day jobbing as his regular business and also produced account of the broker and month-wise detail of profit loss account of the date-wise transaction. Thus, it was submitted that it was a business loss. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21.01.2011 (ITAT), Delhi 5. It is evident from facts of the present cases, as mentioned in the foregoing paragraphs that the AO accepted the version of the assessee without making any proper independent enquiry or verification whereas it is very well settled law that mere failure to make enquiries makes an order erroneous and prejudicial to the interest of the Revenue. Further it is not necessary for the Commissioner to make further enquiries before cancelling the assessment order of the AO. The Commissioner can regard the order as erroneous on the ground that in the circumstances of the case, the AO should have made further enquiries before accepting the statements made by the assessee in the return of income. The reasons are obvious. Unlike the Civil Court which is neutral to give decision on the basis of evidence produced before it, an AO is not only an adjudicator but is also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further inquiry. It is his duty to ascertain the truth of the facts stated in the return, when the circumstances of the cases are such as to provoke inquiry. The meaning to be given to the wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case was under scrutiny and ld. Pr. CIT has enlarged the scope in respect of security transaction to change the head of income. He further submitted that on all the issues raised otherwise, AO has raised specific queries and the assessee has submitted all the replies giving entire details of shares transactions including under F O and day trading. Thus, the AO has passed the order after duly applying his mind and it cannot be a case of not carrying out under enquiry. Ld. Pr. CIT cannot extend the scope of scrutiny by changing the head of income of some share dealing to apply set off rules to recompute income. 12. Lastly, he submitted that even otherwise also, if loss of ₹ 93,23,384/- is ultimately held to be speculation loss then also the declared gross as well as taxable income will remain same, i.e. ₹ 60,00,000/- and ₹ 59,80,000/- for the ASSESSMENT YEAR 2015-16 AND 2016-17 respectively. Thus, there is no loss to revenue and hence it is not prejudicial to the interest of revenue within the scope of S. 263. The reason being, assessee has huge b/f losses from earlier years and if amount under question is not allowed to set off than it will be adjusted agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011-12 -622,726,906 689,595 39,524,006 75,272,162 29,912,933 Accepted u/s 143(3) 2012-13 -5,944,124 5,179,665 702,259 19,026,805 17,806,210 Accepted u/s 143(3) 2013-14 -9,532,168 1,624,814 -1,413,614 18,013,164 17,386,912 Accepted as per return 2014-15 14,237,415 1,055,947 -35,163 18,553,242 20,495,640 Accepted u/s 143(3) 2015-16 -9,323,384 -1,831,158 90,757 -11,981,580 43,070,999 5,980,000 Accepted u/s 143(3) originally 2016-17 -292,861 -78,786,053 -200,430 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e adjusted against the brought forward losses which has been demonstrated before us by filing original and alternative computation of income with statement of profit/losses and their set off and carry forward losses. The said computation has been placed on pages 64 to 79 for the A.Y. 2015-16 and similarly for A.Y. 2016-17 at pages 80 to 86 of the paper book. From the perusal of the said document, it is seen that as per the actual computation, the business loss of ₹ 1,91,81,580/- was set off against the income of; a) house property of ₹ 20,52,542/-, b) against income from other sources of ₹ 5,40,403/-; and c) against short term capital gain of ₹ 93,88,635/-. Thus, balance short term capital loss was ₹ 2,91,58,924/- was set off against carry forward loss under the same head 'short term capital gain' against available carried forward short term capital gain of ₹ 4,41,05,508/-. If the amount of ₹ 93,23,384/- is treated as speculation loss then business loss of ₹ 26,58,196/- will get set off against the income from house property of ₹ 20,52,542/-, against income from other sources of ₹ 5,40,403/- and against short term ..... X X X X Extracts X X X X X X X X Extracts X X X X
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