Principal Commissioner Of Income Tax-4, Kolkata v. Aachman Vanijya Pvt. Ltd. ………

Form No. IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE PRESENT:THE HON’BLE JUSTICE T.S. SIVAGNANAMAndTHE HON’BLE JUSTICE HIRANMAY BHATTACHARYYA ITAT/192/2018IA NO:GA/2/2018[OLD NO:GA/1453/2018] PRINCIPAL COMMISSIONER OF INCOME TAX-4, KOLKATAVS. AACHMAN VANIJYA PVT. LTD.……… For the appellant: Mr. Tilak Mitra, Adv.,For the respondent: None appears. Heard on : January 24, 2022. Judgement on : January 24, 2022. T.S. SIVAGNANAM, J. : This appeal by the revenue filed underSection 260A of the Income Tax Act, 1961, (the Act, in brevity) isdirected against the order dated 4.8.2017 passed by the Income TaxAppellate Tribunal, “B” Bench, Kolkata (Tribunal) inITA/1248/Kol/2016 for the assessment year 2011-12. The revenuehas raised the following substantial questions of law for ourconsideration. a. Whether on the facts and the circumstances of the case,the Learned Tribunal has erred in law or in fact inquashing the order under Section 263 of the Income TaxAct, 1961 passed by the Commissioner of Income Tax-4,Kolkata in the facts and circumstances of the case whilepassing the order dated 23[rd] January, 2014 under Section143(3) of the Income Tax Act, 1961, there was clear nonapplication of mind in the said order passed by theassessing officer? b. Whether on the facts and in the circumstances of thecase, the Learned Tribunal has erred in law or in fact inquashing the order of the Commissioner of Income Tax-4,Kolkata in spite of the assessing officer having not passeda speaking order? We have heard Mr. Tilak Mitra, learned senior standing counselfor the appellant and carefully perused the materials placed on record.The short question involved in this appeal is whether the assumptionof jurisdiction by the Commissioner of Income Tax under Section 263of the Act was justified or not. We have perused the order ofassessment dated 23.1.2014 under section 143|(3) of the Act. Fromthe said order we find that the assessee was put on notice by theassessing officer under Sections 143(2) and 143(1) along withquestioners. The assessing officer has recorded that the case wasdiscussed with the authorised representative of the assessee and theassessee has produced the necessary documents as called for, namely, ledger, cash book, brokers contract notes, purchase and salesregister, loan confirmations, bank statement, etc. Thereafter theassessing officer has checked those evidences and also considered thereply received to the notice issued under Section 133(6) of the Act andthen proceeded to complete the assessment. The Commissioner whileissuing notice under Section 263 of the Act has culled out somematerials from the records and was of the opinion that the loss inshare credit account was contingent in nature and not allowable. Withregard to loss on account of derivative segment, the Commissionerwas of the opinion that it is a speculation loss and cannot be set offagainst other source of income. The assessee submitted a reply to theshow cause notice on 29.3.2016. The said reply has not been annexedto the case papers but we find from the order passed by theCommissioner dated 31.3.2016 one paragraph of the reply/writtensubmission has been extracted. On a perusal of the stand taken bythe assessee it is seen that in the case of closing stock of shares of thecompany the valuation was done on the basis of accounting standardand this has been the consistent method applied by the assesseecompany year after year. The assessee further contended that any lossarising on account of such valuation method followed consistentlyyear after year is allowable business loss as per the provisions of theAct. Further, it is not a contingent or notional loss since this will againbecome opening stock for the next year thereafter nullifying theimpact as the debit or expenditure side will be of reduced amount inthe next year. The assessee placed reliance on CBDT instruction no.03/2010 dated 23.3.2010 stating that the same applies to foreignexchange derivative transaction and not to delivery based tradingbusiness assets like closing stock of tangible items. The Commissionerin his order dated 31.3.2016 has not extracted the remaining portionof the written submission of the assessee. However, we find that theCommissioner has not given any reasons as to why the submissionmade by the assessee is not accepted. The Commissioner merelydirected the assessing officer to verify and examine the issues, whichwas pointed out by him in the show cause notice. Aggrieved by suchorder the assessee filed appeal before the Tribunal and reiterated thefactual position, more particularly that the practice followed by theassessee has been a consistent practice accepted by the department.Further reliance was also placed on CBDT instruction no.03/2010.That apart, the assessee contended that all materials were availablewith the assessing officer and documents were placed before him andthere is absolutely no justification to invoke the powers under Section263 of the Act. The Tribunal examined the notice took note of thecontentions advanced by the assessee on the merits and were fullysatisfied that the assessing officer has considered all the books anddocuments placed before him and thereafter completed theassessment. That apart, the Tribunal also noted that the same hasbeen the consistent practice of the assessee. With this finding of factthe Tribunal held that there was absolutely no justification forinvoking the power under Section 263 of the Act and the twin testsrequired to be attracted for invoking the power under Section 263 was also conspicuously absent. Thus, we are of the clear view that theTribunal was right in granting relief to the assessee and the orderdoes not call for any interference. In the result, the appeal filed by therevenue is dismissed and the substantial questions of law areanswered against the revenue. The stay petition, IANO:GA/2/2018[OLD NO:GA/1453/2018] also stands dismissed. (T.S. SIVAGNANAM, J.) I agree. (HIRANMAY BHATTACHARYYA, J.)