Commissioner of Income Tax vs Ashok Kumar Kakkar, HUF

The revenue is aggrieved by an order dated 9-6-2006 passed by the Income Tax Appellate Tribunal (''the Tribunal'') in ITA No. 409/Delhi/2003 relevant for the assessment year 1998-99.

In its return for the assessment year in question, the assessee had declared a short-term capital gain of Rs. 14,10,871 on sale of agricultural land and which had been adjusted against a short-term capital loss of Rs. 13,25,261 on account of sale of shares. According to the assessee, it had dealt with those shares through a broker named M/s. CMS Securities Ltd., a member of the National Stock Exchange (''NSE'').

The assessing officer made enquiries with the NSE and was informed by the latter that the said broker had not traded on the NSE between 7 & 13-1-1998 and between 4th and 10-2-1998. The assessee disclosed before the assessing officer the permanent account number, ward number and other details of the broker but it appears that the assessing officer did not take any steps to make enquiries or summons the broker on the basis of the information disclosed by the assessee. The assessing officer did not accept the transaction on the ground that the Assessee had not been able to produce the broker to verify either his identity or the genuineness of the transaction. Accordingly, the claim of the assessee was rejected.

The assessee preferred an appeal before Commissioner (Appeals) (''Commissioner (Appeals)''). Before the Commissioner (Appeals), the assessee produced documents to show the genuineness of the transaction. The Commissioner (Appeals) permitted the assessee to adduce the said additional evidence and ultimately allowed the appeal. The revenue''s appeal to the Tribunal was dismissed.

According to learned Counsel for the revenue, the Commissioner (Appeals) erred in permitting the additional evidence to be adduced by the assessee particularly since the assessee had chosen not to produce these documents before the assessing officer. We are unable to agree. When the revenue went in appeal before the Tribunal, the documents filed by the assessee before the Commissioner (Appeals) were available with it. The revenue could have through its resources, verified the details in those documents including confirming the where about of the broker particularly since the broker had filed his returns.

Learned Counsel for the assessee says that latest and correct address of the broker had been supplied to the assessing officer but be did not go into this aspect of the matter. In any case, all the particulars of the broker were with the assessing officer, he could have summoned the broker to verify the genuineness of the transaction. However, he did not do so.

The response elicited by the assessing officer from the NSE to the effect that no transactions involving the broker on the floor had taken place can at best be an error by the broker for which the assessee cannot be penalised. In fact, for this reason also, it was incumbent on the assessing officer to trace out the broker to verify the genuineness of the transaction, but he failed to do so.

We do not find any infirmity in the opinion expressed by the Commissioner (Appeals) as well as the Tribunal that the assessing officer had erred in rejecting the claim of the assessee regarding short-term capital loss.

No substantial question of law arises for consideration.

Dismissed.