The Tax Publishers2020 TaxPub(DT) 2326 (Chd-Trib)

INCOME TAX ACT, 1961

Section 28

Assessee had filed sufficient documentary evidences to substantiate its claim of purchase and sale of commodity stock in the form of documents giving details of all commodity stock transactions entered into, copy of account of the parties with whom transaction had been entered along with consignment purchase and consignment sale documents. AO, on the other hand, based his findings of transaction being bogus merely on the basis of suspicion and there was no concrete evidence, nor any investigation was carried out by AO on the findings submitted by assessee, to arrive at this conclusion. Accordingly, assessee was to be allowed loss on commodity transactions.

Business loss - Commodity stock trading loss - Treatment of loss as bogus on suspicion basis - Necessary evidences filed by assessee

Assessee claimed set-off of commodity stock trading loss against long-term capital gains earned during the year. AO denied the same noting that assessee had not indulged in such transactions either in preceding year or the succeeding year, scope of company did not include trading in commodity, change in object had not been intimated to any authority, no concrete document to support rate of purchase and sale of commodities had been filed by assessee and, therefore, assessee's explanation for selling the commodities at a loss on account of same being infected was not believable. Accordingly, AO held that assessee was not eligible to claim loss on account of commodity trading and thus disallowed the same. Held Assessee had filed sufficient documentary evidences to substantiate its claim of purchase and sale of commodity stock in the form of documents giving details of all commodity stock transactions entered into, copy of account of the parties with whom transaction had been entered alongwith consignment purchase and consignment sale documents. AO, on the other hand, based his findings of transaction being bogus merely on the basis of suspicion and there was no concrete evidence, nor any investigation carried out by AO on the findings submitted by assessee, to arrive at this conclusion. Accordingly, assessee was to be allowed loss on commodity transactions.

Applied:Anju Sharma v. Income Tax Officer ITA No. 451/Chd/2019 Order, dated 6-11-2019 : 2019 TaxPub(DT) 7809 (Chd-Trib).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2015-16



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