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TMI Blog2022 (6) TMI 742X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal are allowed. Set off of loss from derivative transactions against income declared by the assessee in the return of income - assessee has submitted that both the quantification and genuineness of the aforesaid loss from derivative transactions are not in dispute - assessee, due to oversight could not claim the above loss either before the AO or the Ld. CIT(Appeals) and has relied on various judicial precedents in support of his contention that additional claim can be raised at any stage before appellate authorities - HELD THAT:- We are in agreement with the contention of the assessee that a legally valid claim can be made by the assessee even before the appellate authorities. Therefore, in the interests of justice, we are restoring the matter to the file of the AO only in respect of the additional grounds of appeal in respect of claim of set off of loss incurred in derivative transactions against income declared in the return of income filed by the assessee, with a direction to verify the claim of the assessee in respect of this ground, since the revenue authorities did not have any opportunity to verify the aforesaid claim of the assessee at any prior stage. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has also taken their below additional grounds of appeal before us for the first time: The appellant, through oversight, could not raise in the original appeal memo, the following legal ground of appeal and therefore, appellant now craves leave to raise this additional ground of appeal before this Hon'ble ITAT. This, being a legal ground, can be raised before this Hon'ble the ITAT as per decision of Hon'ble Supreme Court in the case of National Thermal Power - 229 ITR 383 . 1. Alternatively and without prejudice, both the lower authorities have erred in not allowing set off of loss from derivative transactions of Rs.24,79,180/-against the income declared by the assessee. Appellant craves leave to add, amend, alter, change, delete and edit the above ground of appeal before or at the time of the hearing of the appeal. Grounds 1 to 3: additions under section 68 of the Act: 4. The brief facts of the case are that the assessee is an individual engaged in the business of carrying out job of work of power coating. For the year under consideration, the assessee filed return of income under section 44AD of the Income Tax Act, 1961 (Act) on p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposit. Accordingly, the Ld. CIT(Appeals) restricted the addition to ₹ 47,35,070/- (₹ 63,58,700 - ₹ 3,33,630 - ₹ 12,90,000/-). 6. Before us, the counsel for the assessee primarily reiterated the submissions made before the lower authorities. He submitted that the fact of business is being carried out by the assessee is not disputed. He submitted that the assessee has been declaring his return of income under presumptive basis under section 44 AD of the Act for the previous 2 years as well and during the year under consideration as is evident from page 3 of the assessment order that the total job work receipts amounted to ₹ 49,54,738/-. Out of the above receipts of ₹ 49,54,738/-, a sum of ₹ 9,13,848/- was received by way of cheque (which was duly accepted by the Department) and a sum of ₹ 40,40,890/- was received in cash (and the same is disputed by the Department). The counsel for the assessee submitted that following the principles of consistency, AO was not justified in in taking contrary stand for job work receipts in cash during the year under consideration. The counsel placed reliance on various decisions on the principles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the provisions of section 44AD of the Act without maintaining books of account. The ITAT made the following observations: As has been observed earlier that addition under section 68 can be made only if any sum is found credited in the books maintained by the assessee for any previous year and the assessee fails to offer valid explanation for credit of such sum in the books or explanation offered is rejected by the Assessing Officer. In other words maintenance of books by the assessee is sine-qua non for making addition u/s 68 of the Act. Since section 44AD does not obligates the assessee to maintain books, the provisions of section 68 cannot be invoked where the assessee has filed return of income under the provisions of section 44AD of the Act without maintaining books of account. 7.2 In the case of Smt. Madhu Raitani v. ACIT [2011] 10 taxmann.com 206 (Gauhati) (TM) , it was held that existence of books of account maintained by assessee is a condition precedent for making addition under section 68 The ITAT further held that where assessee had not maintained books of account, there was no legal scope to invoke provisions of section 68 and as such, addition made on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake addition in respect of undisclosed cash credits found in assessee's bank account. 7.6 The Chandigarh Tribunal in the case of Nand Lal Popli v DCIT [2016] 71 taxmann.com 246 (Chandigarh - Trib.) , held that where profit declared by assessee under presumptive taxation as provided under section 44AD was accepted, Assessing Officer could not make separate addition by invoking provisions of section 69C of the Act. The facts of this case were that assessee was a civil contractor. He had declared its profits under section 44AD at the rate of 8 per cent against the gross receipts. During assessment proceedings, the assessee explained that he had made payments from the bank account on various dates which were not reflected in the cash flow statement. Since no documentary evidence was filed to prove that those payments were towards contract work, the Assessing Officer made addition of said amount to assessee's income under section 69C of the Act. The Commissioner (Appeals) confirmed said addition. While deciding the issue in favour of the assessee, the Tribunal held as below: Since the scheme of presumptive taxation has been formed in order to avoid the long drawn process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch of the individual lenders were less than ₹ 20,000 coupled with the fact that the assessee has been able to establish their identity, we are of the view that source of cash deposits of ₹ 12,57,700/- also stands substantiated. Accordingly, ground number 1 to 3 of the assessee s appeal are allowed. 9. Grounds for 4 to 8 of the assessee s appeal are general / consequential in nature and do not require any specific adjudication. Additional grounds of appeal: 10. Additional ground of appeal filed by the assessee relates to set off of loss from derivative transactions of ₹ 24,79,180/- against income declared by the assessee in the return of income. The assessee has submitted that both the quantification and genuineness of the aforesaid loss from derivative transactions are not in dispute. However, the assessee, due to oversight could not claim the above loss either before the Ld. Assessing Officer or the Ld. CIT(Appeals) and has relied on various judicial precedents in support of his contention that additional claim can be raised at any stage before appellate authorities . We are in agreement with the contention of the assessee that a legally valid c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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