I need expert guidance. Post a scrutiny assessment a demand order has been issued by AO for FY 2017-2018 . Need guidance on appeal.
1. Assessee is salaried employee but for FY2017-2018 , also had STCG, Interest on savings accounts , Gain on sale of company shares on which STT is not paid but taxed as perquisite.
2. The Assesses also had Losses on business Income ( Non-speculative ) in derivatives trading, Losses on business income from ( speculative) Intra day trading. This is 1st year of business commencement and losses thereof.
3. 3 heads of income quoted in bullet 1 incidence of which happened as below
Q1 - less than 5000, Q2 - less than 2000, Q3 - less than 50,000 and Q 4 - 33,00,000
4. Losses from Non-speculative business were Q3 - 12,50,000 and Q4 - 63,00,000
5. Losses from speculative business were Q2 & Q 4 - 8,50,000
The assessee did not pay advance tax as his primary source is from Salary. For Q1 and Q2 his net tax liability did not exceed 10,000 post TDS and tax relief . And for Q3 and Q4 - this income has been set-off against Non-speculative Business losses under provisions of Sec 71.
For FY2017-2018 the last date for filing return along with a tax audit for those in scope was extended to 31st Oct 2018. Original return filed on 03/10/2018 and revised in 3 days and refiled 06/10/2018.
Post the proceedings the AO has concluded the following.
1. He has taxed STCG at 15% and ignored Sec 71 provisions
2. Charged penalty for delay in paying Advance tax.
3. A penalty for delayed return filing.
4. Also while taxing STCG at 15% he has also allowed set-off against Business losses and resultant balance loss has been carried forward.
Are these correct and also the following appeal by Assessee - kindly guide.
1. STCG should not be charged at 15% because gains have been set-off against business losses which happened in Q3 & Q4 and Sec 71 applies.
2. Advance tax eligibility - given that across all 4 quarters at no point tax liability post TDS and tax relief exceeded 10,000.
3. Assessed Income in ITR and post the proceedings has not changed. Is the demand notice valid?
4. Also given the complexity of filing ITR3 , the STCG, LTCG ( exempt income for FY17-18) and business losses were not accurately reported. STCG, LTCG revised upwards. Business losses carried forward non-speculative ( 8 years) and speculative ( 4 years) were under reported as the ITR number should have been higher.
5 . further AO has issued a notice for penalty proceedings under 270A.
Kindly guide and do let me know if you would need any additional information please.
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