M/s. CLASSIC SHARES BROKING SERVICES LTD, MUMBAI v. THE ACIT CEN CIR-40, MUMBAI

ITA 7279/MUM/2007 | 2001-2002
Pronouncement Date: 17-02-2010 | Result: Partly Allowed

Appeal Details

RSA Number 727919914 RSA 2007
Assessee PAN AABCS4255R
Bench Mumbai
Appeal Number ITA 7279/MUM/2007
Duration Of Justice 2 year(s) 2 month(s) 11 day(s)
Appellant M/s. CLASSIC SHARES BROKING SERVICES LTD, MUMBAI
Respondent THE ACIT CEN CIR-40, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 17-02-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted K
Tribunal Order Date 17-02-2010
Date Of Final Hearing 21-12-2009
Next Hearing Date 21-12-2009
Assessment Year 2001-2002
Appeal Filed On 06-12-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'K' BENCH MUMBAI BEFORE SMT. P. MADHAVI DEVI JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO. 7279/MUM/2007 (ASSESSMENT YEAR: 2001-02) M/S. CLASSIC SHARES & STOCK BROKING ACIT CENTRAL C IRCLE 40 SERVICES LTD. RADHA BHAVAN AAYAKAR BHAVAN M.K. RO AD 1ST FLOOR 121 NAGINDAS MASTER ROAD VS. MUMBAI 400020 MUMBAI 400023 PAN - AABCS 4255 R APPELLANT RESPONDENT APPELLANT BY: SHRI RAJIV KHANDELWAL RESPONDENT BY: DR. P. DANIEL O R D E R PER B. RAMAKOTAIAH A.M. THIS APPEAL BY THE BY THE ASSESSEE IS AGAINST THE O RDER OF THE CIT(A)- CENTRAL VII MUMBAI DATED 08.11.2007. 2. ASSESSEE HAS RAISED THE FOLLOWING TWO GROUNDS: - 1. THE COMMISSIONER OF INCOME-TAX (APPEALS) CENTR AL VII MUMBAI (HEREINAFTER REFERRED TO AS THE CIT(A)) ERRED IN UP HOLDING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING LOSS OF RS. 2 67 62 566 ON TRANSACTION BACKED BY DELIVERY AND RS.10 95 62 134 ON TRANSACTIONS NOT BACKED BY DELIVERY ON THE BASIS TH AT THE TRANSACTIONS ARE NOT GENUINE IN NATURE. THE APPELLANT CONTENDED THAT ON THE FACTS AND IN T HE CIRCU8MTANCES OF THE CASE AND IN LAW THE CIT(A) OUGHT TO HAVE CO NFIRMED THE DISALLOWANCE OF LOSSES ARISEN ON TRANSACTIONS CARRI ED OUT IN THE PURSUIT OF BUSINESS. THE REASONS GIVEN BY THE CIT(A ) ARE ERRONEOUS BASELESS UNRELATED AND UNCONNECTED TO THE FACTS OF THE CASE. 2. THE CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF A SUM OF RS.4 741 UNDER SECTION 36(1)(VA) AND RS.9 122 UNDER SECTION 43B BEING PAYMENTS TO PROVIDENT FUND ON THE BASIS THAT THERE HAS BEEN DELAY IN DEPOSITING THE SAID SUMS WITHIN THE SPECIF IED DUE DATES. THE APPELLANTS CONTENDED THAT THE FACTS AND CIRCUM STANCES AND IN LAW THE CIT(A) OUGHT NOT TO HAVE UPHELD THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING THE SAID STATUTORY PAYMENTS AND THE SAID DISALLOWANCE REQUIRES TO BE DELETED. ITA NO. 7279/MUM/2007 M/S. CLASSIC SHARS & STOCK BROKING SERVICES LTD. 2 3. THE ASSESSEE CLAIMED LOSS IN ITS RETURN OF INCOME F OR A.Y. 2001-02 OF RS.2 67 62 566/- ON ACCOUNT OF LOSS INCURRED ON SHA RE TRANSACTIONS ON DELIVERY BASIS AND RS.1095 LAKHS BEING LOSS ON SPEC ULATIVE TRADING WHICH WAS DISALLOWED BY THE A.O. FOLLOWING THE REPORT OF THE SEBI AND JPC IN THE KETAN PAREKH CASES. THE CIT(A) BASED ON THE ORDER IN THE CASE OF ANOTHER GROUP OF SAI MANGAL INVESTRADE LTD. UPHELD THE DISA LLOWANCE OF THE LOSS. 4. THE LEARNED COUNSEL FILED ELABORATE PAPER BOOK GIVI NG COMPLETE DETAILS OF TRANSACTIONS INVOLVING DELIVERY AND PAYMENT DETA ILS AND MARKET TO MARKET LOSSES ETC. AND SUBMITTED THAT THE A.O. HAS NOT EX AMINED THE ENTIRE EVIDENCES AVAILABLE WITH HIM AT THE TIME OF PASSING THE ORDER AND SINCE THE ASSESSEE WAS NOT GIVEN MUCH OPPORTUNITY AT THAT POI NT OF TIME THE A.O. PASSED SIMILAR ORDERS IN ALL THE GROUP CASES. IT WA S HIS SUBMISSION THAT THE ASSESSEE WAS IN A POSITION TO SUPPORT THE CLAIM OF LOSS AND FURTHER HE COUNTERED THE OBSERVATIONS OF THE A.O. BY STATING T HAT THE OBSERVATIONS WITH REFERENCE TO PARA 23 IN PAGE 14-16 OF THE ORDER WIT H REFERENCE TO NON- FURNISHING OF INFORMATION WAS NOT CORRECT IN AS MUC H AS THERE WAS NO DISPUTE ON THE ISSUE OF GENUINENESS OR OTHERWISE OF THE LOSS ON ACCOUNT OF TRADING ACTIVITY OF THE ASSESSEE IN THE BLOCK ASSES SMENT AND ON THE CONTRARY THE TRADING ACTIVITY HAS BEEN ACCEPTED IN THE AFORE SAID ASSESSMENT AND ALSO IN THE PAST. FURTHER IT WAS ALSO SUBMITTED THAT MAJ ORITY OF THE SPECULATIVE TRANSACTIONS ARE NOT WITH THE SISTER CONCERNS. HE R EFERRED TO THE STATEMENT SHOWING ANALYSIS OF TRADES EXECUTED ON EXCHANGES AN D PRINCIPLE TO PRINCIPLE TRADE DURING THE RELEVANT PERIOD AND SUBMITTED THAT 99.28% OF THE TRADE TRANSACTIONS HAVE BEEN EXECUTED ON EXCHANGE AND ON THE TRANSACTIONS WITH ASSOCIATE CONCERNS THERE WAS NO LOSS BUT PROFIT. HE COUNTERED ALL THE ARGUMENTS OF THE A.O. AND SUBMITTED THAT THE ASSESS EE HAS PRODUCED BANK STATEMENTS IN ORIGINAL DURING THE COURSE OF ASSESSM ENT PROCEEDINGS AND THEY HAVE SUBMITTED ALL PRIMARY DOCUMENTS BEFORE THE ISS UE OF VARIOUS SHOW CAUSE NOTICES BUT THEY HAVE NOT BEEN CONSIDERED AT ALL. THE LEARNED COUNSEL HAS FILED DETAILED WRITTEN SUBMISSIONS RUNNING TO 1 8 PAGES ON WHICH ALL THE ISSUES RAISED BY THE A.O. IN THE ASSESSMENT ORDER W ERE EXPLAINED. ITA NO. 7279/MUM/2007 M/S. CLASSIC SHARS & STOCK BROKING SERVICES LTD. 3 5. THE SPECIAL COUNSEL FOR THE REVENUE HAS SUBMITTED T HAT THE ASSESSEE IS PART OF KETAN PAREKH GROUP AND MOST OF THE TRANS ACTIONS ARE DONE WITH GROUP CONCERNS. AFTER PRELIMINARY ARGUMENTS WHEN IT WAS POINTED OUT THAT THE ASSESSING OFFICERS ORDER DOES NOT SPEAK OF THE FACTS AS EXPLAINED BY THE COUNSEL AND THE FACTS ON RECORD ARE ENTIRELY DIFFER ENT FROM THE OBSERVATIONS OF THE A.O. IT WAS SUBMITTED THAT MANY OF THE OBSER VATIONS ARE COMMON FOR THE GROUP CONCERNS AND SPECIFIC ENQUIRY ABOUT ASSES SEES TRANSACTIONS WAS NOT MADE. 6. CONSIDERING THE VOLUMINOUS DETAILS FILED BEFORE US SUPPORTING THE ASSESSEES CLAIM AND ON PERUSAL OF THE ORDERS OF TH E A.O. AND THE CIT(A) WE ARE OF THE OPINION THAT THE A.O. HAS DISALLOWED THE CLAMS ON CERTAIN GENERAL PRINCIPLES ABOUT THE KETAN PAREKH GROUP CASES AND O BSERVATIONS OF THE JPC AND SEBI WITHOUT EXAMINING THE INDIVIDUAL DETAILS O F THE ASSESSEE COMPANY FOR THE IMPUGNED YEAR. IN VIEW OF THIS WE ARE OF T HE OPINION THAT THE MATTER REQUIRES RE-EXAMINATION BY THE A.O. IT IS ALSO NOTI CED THAT IN THE CASE OF SAI MANGAL INVESTRADE LTD. RELIED UPON BY THE CIT(A) IN THE ORDER THE COORDINATE BENCH VIDE ORDER DATED 25.11.2009 HAS AC CEPTED THAT THE TRANSACTIONS ARE GENUINE AND THE LOSS CLAIMED PERTA INS TO VALUATION OF STOCK AT COST OR NET REALISABLE VALUE AND ACCORDINGLY THE GROUNDS OF THE ASSESSEE WERE ALLOWED. IN VIEW OF THIS FINDING OF FACT IN AN OTHER GROUP CONCERN WE ARE OF THE OPINION THAT THE A.O. SHOULD EXAMINE THE NAT URE OF THE TRANSACTION UNDERTAKEN BY THE ASSESSEE WITHOUT GETTING AFFECTED /PERSUADED BY THE OBSERVATIONS OF THE SEBI AND JPC UNLESS THEY ARE A PPLICABLE TO THE FACTS IN ASSESSEE CASE. IT IS ALSO BROUGHT TO OUR NOTICE THA T THERE WAS SPECIAL AUDIT CONDUCTED OF ASSESSEES TRANSACTIONS AND THE REPORT WAS NOT PLACED ON RECORD. THE A.O. IS DIRECTED TO CONSIDER THE ISSUES AFRESH IN THE LIGHT OF THE FACTS ON RECORD AND NEEDLESS TO SAY THAT THE ASSESS EE SHOULD BE GIVEN OPPORTUNITY BEFORE DECIDING THE ISSUES. FOR THIS PU RPOSE THE ORDERS OF THE A.O. AND CIT(A) ON THIS ISSUE ARE SET ASIDE AND THE ASSESSMENT IS RESTORED BACK TO THE A.O. TO CONSIDER IT AFRESH AFTER EXAMIN ING THE FACTS AND ACCORDING TO THE LAW. ITA NO. 7279/MUM/2007 M/S. CLASSIC SHARS & STOCK BROKING SERVICES LTD. 4 7. GROUND NO. 2 PERTAINS TO THE DISALLOWANCE OF A SUM OF RS.4 471/- UNDER SECTION 36(1)(VA) AND RS.9 122/- UNDER SECTIO N 43B BEING PAYMENTS OF PROVIDENT FUND. THE AMOUNTS ARE COVERED BY SECTION 43B AND THE SAME WERE DISALLOWED HAVING NOT BEEN PAID WITHIN THE DUE DATE . IT WAS SUBMITTED THAT THE AMOUNT UNDER SECTION 35(1)(VA) CANNOT BE ALLOWE D WHEREAS THERE IS AN AMENDMENT TO SECTION 43B WITH REFERENCE TO ALLOWING AMOUNT PAID BEFORE FILING THE RETURN. RETROSPECTIVE APPLICATION OF THE AMENDMENT WAS UPHELD BY THE HON'BLE SUPREME COURT IN THE CASE CIT VS. ALOM EXTRUSIONS LTD.319 ITR 306(SC). ACCORDINGLY THE AMOUNT OF RS.9 122/- IS A LLOWABLE. 8. WE HAVE CONSIDERED THE ISSUE. SINCE THE HON'BLE SUP REME COURT HAS UPHELD RETROSPECTIVE APPLICATION OF THE AMENDMENT B ROUGHT TO SECTION 43B THE A.O. IS DIRECTED TO ALLOW THE AMOUNT OF RS.9 12 2/- COVERED BY SECTION 43B. THE GROUND IS PARTLY ALLOWED. 9. IN THE RESULT THE APPEAL IS TREATED AS PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH FEBRUARY 2010. SD/- SD/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED: 17 TH FEBRUARY 2010 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CENTRAL VII MUMBAI 4. THE CIT CENTRAL IV MUMBAI CITY 5. THE DR K BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.