IN INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SH. R. K. PANDA, ACCOUNTANT MEMBER ITA No.6695/Del/2018 Assessment Year 2015-16 Sarvajit Bhatia Income Tax Officer A-362, Dabua Colony, Pali Vs Ward 11(3) Road, Faridabad Faridabad Pan no.AKMPB4292K (APPELLANT) (RESPONDENT) Appellant by Sh. Rakesh Jain, Advocate Respondent by Shri S. L. Anuragi, Sr. DR Date of hearing 02/07/2019 Date of Pronouncement 21/08/2019 ORDER PER R.K. PANDA, AM: This appeal filed by assessee is directed against order dated 29.08.2018 of CIT(A)-19, Faridabad relating to A. Y.2015-16. 2. Facts of case, in brief, are that assessee is individual and derives income from salary and sale and purchase of shares. He filed his return of income on 21.08.2015 declaring total income of Rs.4,25,400/- after claiming deduction under chapter VI-A. case of assessee was selected for scrutiny through CASS to examine issue of commodity transaction / derivative (futures) transaction. Statutory notices u/s. 143 (2) of Act was issued on 26.07.2016 which was duly served on assessee fixing case for hearing on 08.08.2016. assessee filed revised return of income on 15.10.2016 declaring total income of Rs.5,90,400/-. details of income declared in revised return are as under :- Income from salary : Rs.5,90,400/- Profits and gains from Business and Profession :(-) Rs.14,73,068/- Loss on speculation business : Rs.58,329/- 3. assessee also filed audited balancesheet and profit and loss account alongwith revised return of income and has shown sale of shares amounting to Rs.33,73,395/- and share purchase amounting to Rs.57,20,755/- and has shown loss of Rs.23,47,360/- and loss from Speculation business of share amounting to Rs.58,329/-. assessee has also disclosed income of Rs.13,60,000/- under head portfolio consultancy received during F.Y.2014-15 in his revised return of Income. On perusal of balance sheet filed by assessee, Assessing Officer noticed that Balance sheet has been signed by auditors on 30.09.2016 and Tax Audit Report was signed on 31.07.2015. He, therefore, asked assessee vide questionnaire dated 30.06.2017 to give reply on above. assessee in his reply dated 12.07.2017 submitted that Balance sheet and Tax Audit Report has been signed by auditor on 31.07.2015. This was clerical mistake while printing Page | 2 balance sheet. assessee was asked vide questionnaire dated 30.06.2017 and 19.09.2017 to furnish sources to meet out huge losses suffered by assessee. assessee in his reply submitted that loss to extent of Rs.13,60,000/- has been met by him from income earned by him from consultancy portfolio business receipt shown by him in his return of income and balance from loans from bank and his salary Income. From details of consultancy charges so received by assessee, Assessing officer noted that same has been received in cash from 101 persons and each amount is below Rs.20,000/-. Rejecting various explanation given by assessee Assessing Officer made addition of Rs.13,60,000/- being cash deposits made in bank account u/s. 68 of IT Act as unexplained cash deposit. 4. So far as revised return is concerned, Assessing Officer noted that assessee has maintained two bank accounts one with State Bank of Hyderabad where his salary was credited and other deposits were made. Besides that he has account with ICICI Bank and Dmat account with ICICI direct. Financial transaction towards dealing in shares has been made from this account. While examining both accounts Assessing Officer noticed that cash and cheques have been deposited on various dates. assessee was asked to furnish source of deposit since it is directly relatable to his shares transaction activity. Rejecting various explanation given by assessee and relying on decision of Page | 3 Hon ble Supreme Court in case of CIT Vs. S. Raman Chettiar reported in 55 ITR 630 and various other decisions Assessing Officer held that assessee cannot avail himself of advantage given u/s 139 (5) for filing revised return. He accordingly held that loss claimed on sale of shares is not allowable. He, therefore, rejected loss on sale of shares claimed by assessee in revised return and determined total income of assessee at Rs.17,85,400/-. 5. In appeal Ld. CIT(A) upheld action of Assessing Officer. 6. Aggrieved with such order of CIT(A), assessee is in appeal before Tribunal by raising following grounds of appeal :- 1. That under facts and circumstances of case and in law, as no reasonable opportunity has been allowed by both lower authorities, therefore, both lower authorities have passed order against principles of natural justice. 2. That under facts and circumstances of case and in law, both orders passed by Ld. AO as well as by Ld. CIT (A) are without application of mind by ignoring all documents and details filed before them, therefore, Assessment Order as well as CIT (A) appeal order is illegal and un - sustainable. (Ground No-1) 3. That under facts and circumstances of case and in law, Page | 4 both lower authorities have erred in law as well as on merits in disallowing loss of Rs.14,73,068/- earned during year, therefore, whole disallowance made is illegal, unsustainable and without application of mind. (Ground No-2) 4 That under facts and circumstances of case and in law, both lower authorities have erred in law as well as on merits in disallowing speculation loss of Rs. 58,239/- earned during year, therefore, whole disallowance made is illegal, unsustainable and without application of mind. Ground No-3) All above grounds are mutually exclusive and not linked with each other. appellant reserves right to add, alter, amend or withdraw any grounds of appeal either before or at time of hearing of this appeal. 7. assessee has also raised following additional ground :- "Because action is being challenged on facts & law for making addition of Rs. 13,60,000/- other than issues for which assessee's case has been selected for limited scrutiny i.e. examination of commodity transaction & Derivative (Future) transaction overlooking board instruction in respect of Limited scrutiny. Therefore assessment order passed in violation of Board's instruction, which are binding upon AO & hence assessment order passed is bad in law & void-ab- initio." Page | 5 8. After hearing both sides and considering fact that all material facts necessary for adjudication of additional ground are available on record, additional ground raised by assessee is allowed in light of decision of Hon ble Supreme Court in case of NTPC Limited. 9. Ld. Counsel for assessee submitted that case of assessee was selected for scrutiny i.e. examination of commodity transaction / derivatives (futures) transactions. However, Assessing Officer has gone beyond scope of limited scrutiny. Referring to CBDT Instruction No.5/2016 dated 14.07.2016 he submitted that it is mandatory on part of Assessing Officer to obtain approval of administrative PCIT/CIT/PDIT/DIT for converting limited scrutiny case into complete scrutiny case. Referring to decision of Pune Bench of Tribunal in case of Suresh Jugraj Mutha Vs. Addl. CIT in ITA No.5/PUN/2016 vide order dated 04.05.2018 for A.Y. 2011-12, he submitted that Tribunal in said decision has held that order of AO is void ab initio since limited scrutiny case was converted to full scrutiny case and no approval of administrative CIT was taken. Tribunal observed that reason for which case was selected for limited scrutiny was for examination of commodity transaction and derivatives / future (transaction). However, Assessing Officer has gone beyond scope of limited scrutiny and made some other addition. Referring to CBDT Instruction No.5/2016 dated 14.07.2016 he submitted that it is mandatory Page | 6 on part of Assessing officer to obtain approval of administrative PCIT/ CIT / PDIT / DIT for converting limited scrutiny case into complete scrutiny case. He submitted that Assessing Officer in instant case has not followed mandatory requirement of obtaining approval of administrative CIT. Therefore, various additions made by Assessing Officer are not sustainable. 10. So far as issue relating to filing of revised return of income is concerned he submitted that since return was revised u/s. 139 (5), therefore, original return filed u/s. 139 (1) would not survive and claim of loss not made in original return but claimed in revised return has to be allowed /carried forwarded. For above proposition he relied on decision of Hon ble Gujarat High Court in case of PCIT Vs. Babu Bhai Ramanbhai Patel reported in 249 taxman.com 470, decision of Mumbai Bench of Tribunal in case of Gilbarco Veeder Root India Pvt. Ltd. Vs. DCIT vide ITA No.2695/M/2017 order dated 07.09.2018 and various other decisions. So far as merit of case is concerned i.e. relating to deposit of cash and cheque in bank account, he submitted that assessee has filed necessary details before Assessing Officer and, therefore, revenue authorities are not justified in not considering same and making addition. 11. Ld. DR on other hand heavily relied on Page | 7 decision of Assessing Officer and CIT(A). 12. I have considered rival arguments made by both sides, perused orders of Assessing Officer and CIT(A) and paper book filed on behalf of assessee. I have also considered various decisions cited before me. I find case of assessee was selected for limited scrutiny to examine issue of commodity transaction/ derivatives (futures) transactions as mentioned by Assessing Officer in body of assessment order itself. However, Assessing Officer in instant case converted limited scrutiny case to full- fledged scrutiny case which is evident from assessment order. I find CBDT vide Instruction No.5/2016 dated 14.07.2016 and instruction No.225/402/2018 dated 28.11.2018 has issued certain guidelines for converting limited scrutiny case to complete scrutiny which is binding on department. Board has clearly mentioned that in limited scrutiny case Assessing Officer cannot travel beyond issues for which case was selected and in case Assessing Officer wants to expand its scope of enquiry/ investigation other than issues on which case was selected for scrutiny, then in that case mandatory approval from PCIT or CIT or PDIT or DIT has to be obtained. 13. perusal of Assessment Order shows that no such approval has been taken. I, therefore, deem it proper to restore issue to file of Assessing Officer with direction to Page | 8 verify as to whether such approval has been taken and in case no such approval has been taken then addition so made by Assessing Officer and upheld by CIT(A) stands deleted. additional ground raised by assessee is accordingly allowed. 14. So far as issue relating to revised return is concerned, I find Assessing Officer did not consider same on ground that although tax audit report was signed on 30.07/2015 and original return was filed on 21.08.2015 i.e. after 21 days from date of tax audit report, however, assessee has not disclosed loss on sale of shares in original return. Relying on decision of Hon ble Supreme Court in case of CIT Vs. Raman Chettiar which has been quoted by Hon ble Allahabad High Court in case of Amjad Ali Nazir Ali Vs. CIT reported in 110 ITR 0419, Assessing Officer held that although said decision is under provisions of old Act, however, same shall be applicable even to new Act since provisions are parimateria and assessee cannot take advantage of provisions of section 139(5) by deliberately making omission or wrong statement. I find Ld. CIT(A) upheld action of Assessing Officer. While doing so he relied on decision of Hon ble Himachal Pradesh High Court in case of Veer Bhadra Singh (HUF) Vs. PCIT vide order dated 05.10.2017 and decisions of Hon ble Madya Pradesh High Court in case of Sulemanji Ganibhai Vs. CIT reported in 121 ITR 373 and in Page | 9 case of CIT Vs. Dr. Kumari M. Dubey reported in 171 ITR 144. It is submission of Ld. Counsel for assessee that non disclosure of loss claimed on shares was not willful or deliberate but inadvertent mistake and, therefore, in view of decision of Hon ble Gujarat High Court in case of PCIT Vs. Babu Bhai Ramanbhai Patel(supra) and decision of Mumbai Bench of Tribunal in case of Gilbarco Veeder Root India Pvt. Ltd. Vs. DCIT (supra). revised return has to be accepted. 15. I find Hon ble Gujarat High Court in case of Babu Bhai Ramanbhai Patel (supra) while deciding identical issue has observed as under :- 3. So far as question no. [B] is concerned, brief facts are that for assessment year 2005- 06, assessee filed return of income on 30.If .2005 under Section 139(1) of Act declaring total income of Rs.53,24,330/-. In such return, assessee did not claim speculation loss of Rs. 69,93,450/-. Such return was, however, revised under Section 139(5) on 29.11.2006. Assessing Officer disallowed carry forward of speculation loss on ground that same was not claimed in original return but in revised return. CIT(A) as well as Tribunal ruled in favour of assessee. In particular, Tribunal was of view that once return was revised under Section 139(5) of Act, original return filed under Section 139(1) would not survive. It was found that revised return was filed within time prescribed. Tribunal did not accept Assessing Officer's view that revised return should be treated as non-est. 4. Before us learned counsel for revenue pieced heavy reliance on provisions contained in sub-section (3) of Section 139 to contend that assessee who wishes to carry forward any loss must file return under sub- section (3) within time permitted and only upon which same would be treated as return under Section 139(1) of Act. Counsel for revenue submitted that when no return in terms of sub-section (3) of Section 139 claiming carry forward or set off loss was filed, such claim cannot be subject matter of Page | 10 revised return. Had assessee filed such return, possibility of revising such return on finding any error would arise. 5. We may notice that under sub-section (1) of Section 139, every person whose income for previous year exceeds maximum amount net chargeable to tax, is required to file * return before due date. Sub-section (3) of Section 139 provides that any person who has sustained loss and claims that loss should be carried forward would file return of loss within time prescribed under sub-section (1) and thereupon ail provisions of Act shall apply as if it was return under sub-section (1) of Section 139 of Act. Under subsection 4 of Section 139, person who has not furnished return within time allowed under sub-section (1) may still furnish return at : ny time before end of relevant assessment year or before completion of assessment whichever is earlier. Subsection (5) of Section 139 provides that any person having furnished return under subsection (1) or sub-section (4) discovers any omission or wrong statement therein, he may furnish revised return any time before expiry of one year from end of relevant assessment year or before completion of assessment whichever is earlier. 6. Sub-section (5) of Section 139, therefore, gives right to assessee who has furnished return under sub-section (1) or sub-section (4) to revise such return on discovery of any omission or wrong statement. Such revised return, however, can be filed before expiry of one year from end of relevant assessment year or before completion of assessment, whichever is earlier. This is precisely what assessee did while exercising right to revise return. Sub-section (5) of Section 139 does not envisage Situation whereupon revising return if case for loss arises which assessee wishes to carry forward, same would be impermissible. In terms, sub-section (5) of Section 139 allows assessee to revise return filed under subsection (1) or sub-section (4) as long as time frame provided therein is adhered to and requirement of revised return has arisen on discovery of any omission or wrong statement in return originally filed. Accepting contention of revenue would amount to limiting scope of revising return already filed by assessee flowing from sub-section (5). No such language or intention flows from such provision. 7. Allahabad High Court in case of Dhampur Sugar Mills Ltd. vs. Commissioner of Income Tax, Delhi Central reported in [1973] 90 ITR 236, in context of Income Tax Act, 1922 held that assessee is given right to file correct and complete return if he discovers error or omission in return filed earlier. assessment can be completed only on basis of correct and complete return. earlier return, after revised return has been filed, cannot form basis of assessment although it may be used to indicate conduct of assessee. There is clear Page | 11 distinction between revised return and correction of return. Once revised return is filed, original return must be taken to have been withdrawn and substituted by fresh return for purpose of assessment. 8. Madras High Court in case of Commissioner of Income Tax vs. Periyar District Cooperative Milk Producers Union Ltd. reported in [2094] 266 ITR 705 held that once assessee had filed return claiming carry forward loss under sub-section (3) of Section 139, revised return could be filed in respect of such return. We are conscious that we are not directly concerned with such situation. 9. In view of above discussion, we do not find any error in view of Appellate Tribunal. Tax appeal is, therefore, dismissed. 16. I find Mumbai Bench of Tribunal in case of Gilbarco Veeder Root India (P) Ltd. following decision of Hon ble Gujarat High Court cited (supra) has allowed depreciation claimed in revised return amounting to Rs.23,93,31,090/- which was not claimed in original return. 17. So far as decisions relied on by Ld. CIT(A) are concerned I am of considered opinion that those decisions are not applicable to facts of present case. In all those decisions there were deliberate concealment in original return for which it was held that revised return would not supplant original return. However, in instant case, I am of considered opinion that it is not deliberate omission but inadvertent error. Further, there is no decision of Hon ble Jurisdictional High Court on this issue. It is settled proposition of law that when two views are possible on issue, view which is favourable to assessee has to be followed. In this view of matter I hold that Ld. CIT(A) should not have upheld action of Assessing Officer in not considering revised return filed. I, therefore, set aside Page | 12 order of CIT(A) and direct Assessing Officer to consider revised return as in accordance with law. ground raised by assessee is accordingly allowed. 18. In result, appeal filed by assessee is allowed for statistical purpose. Order pronounced in open court on 21.08.2019. Sd/- (R.K PANDA) ACCOUNTANT MEMBER *Neha* Date:- 21.08.2019 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Date of dictation Date on which typed draft is placed before dictating Member Date on which approved draft comes to Sr.PS/PS Date on which fair order is placed before Dictating Member for Pronouncement Date on which fair order comes back to Sr. PS/ PS Date on which final order is uploaded on website of 21.08.2019 ITAT Date on which file goes to Bench Clerk Date on which file goes to Head Clerk. date on which file goes to Assistant Registrar for signature on order Date of dispatch of Order Sarvajit Bhatia v. Income-tax Officer, Ward11(3), Faridabad