9911796707
TMI Blog2018 (4) TMI 874X X X X Extracts X X X X X X X X Extracts X X X X ..... 961 (in short "the Act) for the Assessment Year 2007-08. 2. The first issue to be decided in this appeal is as to whether the ld AO was justified in treating loss from derivative transactions amounting to Rs. 19,63,492/- as loss from speculation business and not allowing the setting off of this loss against regular business income and income from other sources, in the facts and circumstances of the case. 2.1. The brief facts of this issue are that the assessee is an individual running a petrol pump and had filed his return of income for the Asst Year 2007-08 on 31.10.2007 declaring Nil income. The assessee was directed to produce the books of accounts, copies of bank statements and other relevant papers and documents by the ld AO in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he matter. It is not clear from the records that whether the assessee had made any factual submissions before the ld AO that the loss of Rs. 19,63,492/- was incurred out of derivative transactions are not. We are not able to ascertain the same from the paper book filed by the assessee except placing reliance on Form 10DB filed by the ld AR. No doubt, if the said loss is incurred from derivative transactions, the same would not be speculation loss in terms of section 43(5)(d) of the Act. This requires factual verification by the ld AO. Hence we deem it fit and appropriate, in the interest of justice and fairplay, to remand this issue to the file of ld AO for denovo adjudication. The assessee is at liberty to furnish necessary documents and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of statement of accounts printed from the same place. In order to verify the genuineness of loan, summons u/s 131 of the Act were issued by the ld AO to 40 of them at random basis. In response to the said notices, the following persons appeared before the ld AO :- 3.2. The ld AO recorded statements from aforesaid persons and found that none of the so-called loan creditors were having sound financial ability to afford the loan to a Petrol Pump Owner (i.e the assessee herein) since they were found to be a daily wage earner having income during the financial year for Rs. 50/- to Rs. 60/- per day as a daily wage earner. The ld AO also observed that even some of those persons used to work under the assessee as a daily paid worker during the per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is obvious that the assessee does not want to present them before the department by taking a plea which cannot be accepted in view of the fact that the assessee knows it very well that his case is getting time barred by limitation by the end of the calendar year. Accordingly, the assessee was show caused as to why the sum of Rs. 11,37,227/- representing loans should not be treated as amounts received from bogus parties and taxed u/s 68 of the Act. In response the assessee submitted that as per list provided of 61 loan creditors, 21 persons were checked personally by the ld AO on 9.11.2009 who were personally present before the ld AO. It was further submitted by the assessee that: "In this connection it is humble submission that all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the creditworthiness of the parties could not be proved beyond doubt as well as the genuineness of the transactions. With regard to the persons who were not summoned or were absent, the ld AO observed that the same ratio would be applied keeping in view the judgment in the case of Durga Prasad More vs CIT reported in 82 ITR 540 (SC) and Sumati Dayal vs CIT reported in 214 ITR 801 (SC) where in it was stated that an evidence have to be judged by applying the test of human probabilities and an inference is to be drawn on the basis of circumstance available on record. Accordingly, the ld AO added the entire loan amount of Rs. 11,37,227/- as bogus as unexplained cash credit u/s 68 of the Act. 4. The assessee filed additional evidences befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments of the summoned and examined Unsecured Loan Creditors of the assessee. 7. We have heard the rival submissions. We find that the ld AR argued that the assessee is running his business in a village where no banking facilities are available. He argued that the parties in order to keep safe custody of their hard earned savings had come forward to offer loans to the assessee in cash totaling to Rs. 11,37,227/- comprising of 61 persons. He submitted that some of these persons had even appeared before the ld AO in response to the summons issued u/s 131 of the Act and had confirmed the fact of giving loan to the assessee herein. While this is so, there is no case of making any addition treating the loan creditors as bogus u/s 68 of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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