B.k. Jain v. Commissioner Of Income Tax, Ludhiana

ITA No. 418 of 2014 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 418 of 2014 (O&M) Date of Decision: 2.2.2016 B.K. Jain ....Appellant. Versus Commissioner of Income Tax, Ludhiana ...Respondent. CORAM:-HON'BLE MR. JUSTICE AJAY KUMAR MITTAL.HON'BLE MRS. JUSTICE RAJ RAHUL GARG. PRESENT: Mr. Sachin Bhardwaj, Advocate for the appellant. Mr. Rajesh Katoch, Advocate for the respondent. AJAY KUMAR MITTAL, J. 1.Delay of 203 days in filing the appeal is condoned. 2.This appeal has been preferred by the assessee underSection 260A of the Income Tax Act, 1961 (in short “the Act”) against theorder dated 18.10.2013 (Annexure A-7) passed by the Income TaxAppellate Tribunal, Chandigarh Bench “A”, Chandigarh (hereinafterreferred to as “the Tribunal”) in ITA No. 34/CHANDI/2013, for theassessment year 2004-05, claiming the following substantial questionsof law:- (i)Whether under the facts and circumstances ofthe case, the exparte order in the revisionaljurisdiction u/s 263 is sustainable, whileconcealing the pendency of departmentalappeal in the High Court u/s 260A andthe case, the exparte order in the revisionaljurisdiction u/s 263 is sustainable, whileconcealing the pendency of departmentalappeal in the High Court u/s 260A and assessee's absence could be the reason whichhas been attributed for declining the benefit bythe Tribunal? (ii) Whether under the facts and circumstances ofthe case, the Tribunal order is unwarranted/unreasonable while upholding the additions,whereas the another co-ordinate bench of theTribunal order remands the case to AO, hencedivergent orders qua the same case? (iii)Whether under the facts and circumstances ofthe case, the Tribunal order is unwarranted/unreasonable while upholding the additions,whereas the Hon'ble High Court has upheld theorder of the another co-ordinate bench of theTribunal in the appeal of the department? 3.Briefly stated, the facts necessary for adjudication of theinstant appeal as narrated therein may be noticed. The assessee is aChartered Accountant by profession and is engaged in the job of givingaccommodation/book entries to various persons making investments inlong/short term capital gain/gifts/loans on commission basis. He filed hisreturn for the assessment year 2004-05 on 30.3.2005 declaring theincome of ` 15,00,000/-. The said return was processed under Section143(1) of the Act on 12.4.2005. The proceedings were initiated forscrutiny by issuance of a notice under Section 143(2)/142(1) of the Actalong with a questionnaire dated 5.10.2006 on 6.10.2006. A surveyunder Section 133A of the Act was conducted on 15.6.2004 at the officeof the assessee and consequently at various other persons on 29.6.2004 ITA No. 418 of 2014-3- ITA No. 418 of 2014-3- (Shri Manoj Kumar), 25.6.2004 (Shri Sagun Garg) and 2.8.2004(Pardeep Khanna) whose statements were recorded under Section 131of the Act and thereafter information under Section 133(6) of the Act wascalled from various Banks, LSE Securities Ltd. The Assessing Officervide order dated 29.12.2006 (Annexure A-1) framed the assessment atan amount of ` 1,01,25,140/-. Feeling aggrieved, the assessee filed anappeal before the Commissioner of Income Tax (Appeals) [for brevity“the CIT(A)”]. The CIT(A) vide order dated 29.9.2008 (Annexure A-2)partly allowed the appeal. Against the order, Annexure A-2, the assesseeand the revenue filed appeals before the Tribunal. The Tribunal videorder dated 29.4.2010 (Annexure A-4) partly allowed the appeal of theassessee and remanded the matter to the Assessing Officer for re-adjudication on certain points alone and dismissed the appeal of therevenue. Both, the revenue as well as the assessee assailed the orderof the Tribunal before this Court vide ITA Nos. 38 of 2011 and 363 of2011. During the pendency of the said appeals before this Court, theAssessing Officer passed the assessment under Section 143(3) readwith Section 254 of the Act vide order dated 29.12.2011 (Annexure A-5).Accordingly, the Commissioner of Income Tax (in short “the CIT”), inpursuance to the order of the Assessing Officer, Annexure A-5, issued ashow cause notice dated 24.5.2012 under Section 263 of the Act. TheCIT vide order dated 7.11.2012 (Annexure A-6) enhanced theassessment framed by the Assessing Officer by ` 29,25,782/-[` 14,43,658/- qua wrong allowance of trading loss from shares and` 14,82,124/- qua non-inclusion of income assessed by the AssessingOfficer despite being assessed by the CIT(A)]. The assessee assailedthe order, Annexure A-6, before the Tribunal who vide order dated ITA No. 418 of 2014 18.10.2013 (Annexure A-7) dismissed the appeal. Hence, the presentappeal. 4.We have heard learned counsel for the parties. 5.The CIT upon examining the assessment order passedunder Section 143(3) read with Section 254 of the Act found that thesame was erroneous and prejudicial to the interest of the revenue. Theincome was enhanced by ` 29,25,782/- by the CIT on two counts:- (i)` 14,43,658/- qua wrong allowance of tradingloss from shares;loss from shares; (ii)` 14,82,124/- qua non-inclusion of incomeassessed by the Assessing Officer despitebeing assessed by the CIT(A).assessed by the Assessing Officer despitebeing assessed by the CIT(A). 6.Taking up the first issue of wrong allowance of trading lossfrom shares amounting to ` 14,43,658/-, the Tribunal while upholding therevisional order of the CIT had noticed as under:- “The reading of above paras of the assessment orderclearly shows that the Assessing Officer has wronglyunderstood the order of the Tribunal and has givenwrong effect to the same. The assessee was requiredto prove the source of investment for which someadditions were made in the earlier years. However,the assessee ultimately dealt with the issue on resultsof share transactions and the Assessing Officeraccepted the same and allowed loss of ` 14,43,688/-which was neither the direction of the Tribunal nor afinding of the ld. CIT(A) in the appeal proceedingsbefore the first appellate authority. In fact when the profits itself has been estimated there is no questionof computing the loss in respect of share trading.Moreover before us the ld. counsel of the assesseehas very clearly admitted on 17.9.2013 that this wasclearly an error committed by the Assessing Officer.Therefore, we hold that the assessment order to theextent of allowing loss from trading in shares iserroneous and prejudicial to the interest of theRevenue.” 7.Adverting to the non-inclusion of income assessed by theAssessing Officer despite being assessed by the CIT(A), the relevantfindings of the Tribunal may be noticed with advantage which are asunder:- profits itself has been estimated there is no questionof computing the loss in respect of share trading.Moreover before us the ld. counsel of the assesseehas very clearly admitted on 17.9.2013 that this wasclearly an error committed by the Assessing Officer.Therefore, we hold that the assessment order to theextent of allowing loss from trading in shares iserroneous and prejudicial to the interest of theRevenue.” 7.Adverting to the non-inclusion of income assessed by theAssessing Officer despite being assessed by the CIT(A), the relevantfindings of the Tribunal may be noticed with advantage which are asunder:- “15.As far as second issue is concerned, we areunable to agree with the contention of the assesseethat the issue is not originating from assessmentorder. There is no force in the contention madethrough written submissions that this issue pertains toassessment order dated 29.12.2006. In fact theassessment order dated 29.12.2006 was challengedbefore the ld. CIT(A) and then before the Tribunal andthe present assessment order dated 29.12.2011 is incontinuation of same proceedings because this orderis passed to give appeal effect to the order of theTribunal passed u/s 254. When an addition wasalready made for the first time the same cannot beignored while giving appeal effect to the order of the Tribunal in the last order and, therefore, it is clear thaterror has been committed in the latest order whilegiving appeal effect. The same is regardingcomputation of estimated profit earned on account ofshare dealing done by the assessee with Shri R.K.Kohli and Co. and others. Thus from above it is clear that the ld. CIT(A) duringappeal proceedings before him has confirmed thisaddition particularly after noticing that the AssessingOfficer has himself made additions of ` 14,82,124/- byinvoking the provisions of Section 154 by orderpassed u/s 154. XXXXXXXXXXXXXXXX17.Now this addition should have been made partof the order of assessment while giving effect to theorder of the Tribunal but the Assessing Officer hasconveniently forgot ten to make addition to the incomeand therefore, his order has become erroneous andprejudicial to the interest of the Revenue and the Ld.Commissioner has correctly held accordingly anddirected the Assessing Officer to make addition onthese two items i.e. in respect of wrong loss allowedto ` 14,43,688/- and ` 14,82,124/- on account ofestimated loss. Therefore, in our opinion, revisionary order passed u/s 263 in respect of these two issuesdoes not require any interference and we confirm thesame. 19.Before parting we would like to observe that thiscase seems to be a total negligence on the part of theAssessing Officer. In fact the way the order has beenpassed it is giving a feeling that same has been donewith ulterior motive and in such cases revenue shouldalways conduct enquiries.” 8.No error or perversity could be demonstrated in the order ofthe CIT and the Tribunal. The Tribunal had legally and validly affirmedthe revisional order of the CIT passed under Section 263 of the Act whiledismissing the appeal of the assessee. 9.In view of the above, there is no error in the approach of theTribunal as the Assessing Officer had gone beyond the remand orderpassed by the Tribunal on 29.4.2010. Accordingly, no substantialquestion of law arises in this appeal. Consequently, there is no merit inthe appeal and the same is hereby dismissed. (AJAY KUMAR MITTAL) JUDGE February 2, 2016 gbs (RAJ RAHUL GARG) JUDGE