Shrikant Mantri, Huf v. Income Tax Appellate Tribunal & Others

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.338 OF 2010 Shrikant Mantri, HUF............Petitioner.VersusIncome Tax Appellate Tribunal & Others ........Respondents. Mr.Pramod Kumar Parida with Mr.Anil N. Mishra i/by M/s.PKP Legal Solution for the petitioner. Mr.Suresh Kumar for the respondent. CORAM : Dr.D.Y. Chandrachud & J.P. Devadhar, JJ. DATE : 23[rd] February, 2010. P.C. : 1.The assessee has, in these proceedings, challenged an order passed by the Income Tax Appellate Tribunal on an application under Section 254(2) of the Income Tax Act, 1961. The assessee is aggrieved by the dismissal of its application. 2.The bone of contention relates to a transaction involving a loss of Rs.21,41,080/- on account of the purchase and sale of 13,600 shares of Saw Pipes Limited. The transaction was entered into by the assessee through a broker by the name of Mega Securities Private Limited. Both the assessee and the broker share the same address. The Assessing Officer noted that in order to verify the correctness of the claim of the assessee of a short-term capital loss, it was called upon to furnish a copy of its account with the broker and details of the shares purchased and sold. The account produced by the assessee showed that the assessee had not settled the purchase and sale bills as per the amounts mentioned in the bills. Summons was issued to the broker for production of records. Sufficient opportunities were also granted to the assessee. Despite this, the relevant records were not produced. The Assessing Officer, consequently, treated the loss as a speculation loss and allowed it to be carried forward towards future speculation profits. 3.Before the Commissioner of Income Tax (Appeals), when the matter was carried in appeal, a remand report was called for from the Assessing Officer. The Commissioner of Income Tax (Appeals) noted that the broker through whom the transactions were carried out had the same address as the assessee. Consequently, the claim of the assessee that he had no control over the broker was not correct. On a review of the material that was available on record, the Commissioner of Income Tax (Appeals) held that the transactions in question were speculative transactions within the meaning of Section 43(5). Section 43(5) provides that, a speculative transaction means a transaction in which a contract for the purchase and sale of any commodity, including stocks and shares, is settled otherwise than by the actual delivery or transfer of the commodity or scrips. A finding of fact was recorded by the Commissioner of Income Tax (Appeals) that the assessee had not produced material to establish that actual delivery of shares had taken place. The transactions were speculative, under Section 43(5). 4.In an appeal against the order of the Commissioner of Income Tax (Appeals), the Income Tax Appellate Tribunal also arrived at a finding of fact that the assessee had not produced evidence to support the delivery of the scrips which were sold by the assessee. Against the order of the Income Tax Appellate Tribunal, an appeal was filed before this Court, which was allowed to be withdrawn on 23[rd ]September 2008, with liberty reserved to the assessee to adopt the appropriate remedy. The assessee thereupon filed an application under Section 254(2), which has been dismissed by the impugned order of the Tribunal. The submission of the assessee before the Tribunal was that the aspect of payment alone was not conclusive for deciding the issue and the Tribunal was not right in deciding the issue on an appreciation of fact relating to the realization of the proceeds. According to the assessee, the distinctive numbers of the shares were placed on record and the bills for the same and the ledger account of the broker were filed and the same has not been considered. The Tribunal has observed that the issue was decided not merely on the basis of the aspect of payment, which the assessee failed to establish but also on the basis that the assessee had failed to adduce any evidence that the delivery of the relevant shares had taken place. The material which was placed before the Tribunal was also considered by the Commissioner of Income Tax (Appeals), who entered a finding a fact that the material was not sufficient to establish that the delivery of shares had taken place. 5.The Assessing Officer, the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal have entered concurrent findings of fact that the assessee failed to establish the actual delivery of shares. Consequently, by virtue of the provisions of Section 43(5), the transaction has to be regarded as a speculative transaction since no delivery has taken place. The finding has been reaffirmed in the order passed on the application under Section 254(2). The question as to whether there was actual physical delivery is a question of fact. This Court would not be inclined to interfere unless it is demonstrated that a material part of the evidence has been over-looked by the authorities below. That is not the case. 6.In the circumstances, we do not find any reason to exercise our jurisdiction under Article 226 of the Constitution of India. The petition shall accordingly stand dismissed. There shall be no order as to costs. (J.P. Devadhar, J.) (Dr.D.Y. Chandrachud, J.)