TMI Blog2016 (8) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... n the final order of assessment, Assessing Officer made no disallowance on this count by holding that deduction of tax was deficient. Sale of gold - Held that:- Coming to the last issue, it is undisputed that the same was never gone into by the Assessing Officer during the assessment proceedings since the Assessing Officer was not conscious that Shri Chudasma to whom the sale of gold was allegedly made was not alive on such date. He had no occasion to inquire into such a transaction. In context of notice for reassessment, however, the issue does not rest here. Prime question is, had income chargeable to tax escaped assessment on this count. Only if there is prima facie material to suggest that due to such sale stated by the Assessing Officer to be bogus, income chargeable to tax has escaped assessment, reassessment would be permissible. If we examine the transaction more closely it refers to a cash sale of gold made by the assessee for a sum of ₹ 42.68 lacs to Shri Chudasma Viajysinh Pratapsinh. It was later on found that on the date of sale Shri Chudasma had already expired. However, it is not even the case of the Revenue that the assessee did not offer the sale proceeds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee that the company settled the contract by paying the difference in price and not delivery. In this connection, it is stated. that as per the provision of section 43(5) of the Act, the sale of any commodity which is periodically and ultimately settled otherwise than by actual delivery or transfer of commodity is speculative in nature. Since in the case of assessee, the transaction has not been settled by actual delivery, the loss of ₹ 1,24,93,268/is a speculative loss. Moreover, the assessee has settled its MCX contracts otherwise than actual delivery of commodity viz. Gold Silver by paying margin money only. In view of the provision of section 43(5) of the I.T. Act, the loss of ₹ 1,24,93,268/on MCX transaction has to be treated as speculative loss which has escaped the assessment within meaning of section 14 7 of the I. T. Act. It is further observed that the assessee has paid Usance Charges on Silver loan and deducted tax @ 2% of Usance Charges. Assessee has paid Usance charges of ₹ 8,81,018/. Since the Usance charges are nothing but the interest payment, assessee ought to have deducted Tax at source @10% as per provision of section194A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssues were mentioned. Upon the petitioner making a detailed representation, the Commissioner dropped the revisional proceedings by an order dated 22.3.2016. It would thereafter, not be open for the Assessing Officer to reopen the assessment on these very issues. 5. On the other hand, learned counsel Mrs. Bhatt submitted that the Assessing Officer has recorded proper reasons before issuing notice for reopening particularly, with respect to sale of gold to Shri Chudasma. Said transaction was apparently bogus since on the date of sale, Shri Chudasma had already expired. 6. We may recall that the reasons recorded by the Assessing Officer refer to three separate grounds for reopening the assessment. First is with respect to the loss of ₹ 1.24 crores claimed by the assessee on account of MCX rate difference in sale of gold and silver. According to the Assessing Officer, such loss was speculative loss, therefore, not an allowable loss in terms of section 43(5) of the Act. The second ground was that, as per the Assessing Officer, upon payment of usance charges on silver loan, the assessee had to deduct tax at source at the rate of 10% as per section 194A of the Act since such u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ledger this loss has been transferred to MCX rate difference account. 10. Yet again under letter dated 27.12.2013, the assessee made a detailed representation why MCX should not be considered as speculative loss. Preamble to the said letter reads as under : During the last hearing on 23/12/2013 in case of the above named assessee, your honour had asked us to show cause as to why the MCX loss should not be considered as speculation loss. In this regards we would like to clarify in furtherance to our earlier submissions that it is a business loss and not a speculation loss for the reason that the assessee is trading/merchandising in Silver/gold and the loss so suffered, is on account of safe guarding the raw materials or merchandise traded by him. 11. It is not necessary to record the entire contents of this letter which are aimed only on the issue why such loss could not be treated as speculative. 12. In the final order of assessment that the Assessing Officer passed, he made no disallowance on this count. It can thus be seen that entire issue of nature of loss suffered by the assessee on sale of gold and silver was examined at length by the Assessing Officer during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... source as shown by the assessee was in order. Once again in the final order of assessment, Assessing Officer made no disallowance on this count by holding that deduction of tax was deficient. 17. Coming to the last issue, it is undisputed that the same was never gone into by the Assessing Officer during the assessment proceedings since the Assessing Officer was not conscious that Shri Chudasma to whom the sale of gold was allegedly made was not alive on such date. He had no occasion to inquire into such a transaction. In context of notice for reassessment, however, the issue does not rest here. Prime question is, had income chargeable to tax escaped assessment on this count. Only if there is prima facie material to suggest that due to such sale stated by the Assessing Officer to be bogus, income chargeable to tax has escaped assessment, reassessment would be permissible. If we examine the transaction more closely it refers to a cash sale of gold made by the assessee for a sum of ₹ 42.68 lacs to Shri Chudasma Viajysinh Pratapsinh. It was later on found that on the date of sale Shri Chudasma had already expired. However, it is not even the case of the Revenue that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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