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TMI Blog2016 (4) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... roof. Since the assessee has not produced all relevant records to prove the genuineness of the local purchases made by the assessee, the Assessing Officer is justified in disallowing the claim towards the local purchases of old gold jewellery made by the assessee. - Decided against assessee Addition made u/s 68 towards sundry creditors - Held that:- CIT(A) simply observed that "I find that the Assessing Officer after due verification has not commented adversely on any of the explanation given by the appellant" and deleted the addition. The findings of the CIT(A) is very cryptic. There are no details on the basis of which he has given relief to the assessee. Hence, in our opinion, it is appropriate to remit the matter back to the file of the CIT(A) for reconsideration. The ld. CIT(A) shall pass a detailed order in accordance with law. - ITA Nos. 1491 & 1492/Mds/2012, ITA No.1450/Mds/2012, ITA No.1493/Mds/2012 - - - Dated:- 26-2-2016 - Chandra Poojari, AM And Duvvuru RL Reddy, JM For the Appellant : Dr B Nischal, JCIT For the Respondent : Ms Lakshmi Sriram, Adv ORDER Per Chandra Poojari, Accountant Member These appeals by the Revenue and the assessees are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed out wholly and exclusively for business purpose. According to Assessing Officer, the direct inference of the dealings done by the assessee indicates that it had speculated on the commodities market as a venture to earn profit from a separate line of business. He further stated that all the transactions were entered into by Shri Sujith Cherian, director in his individual capacity. The assessee, in reply, produced resolution of the Board of Directors of the company wherein it authorized Shri Sujith Cherian to deal in commodity market through MCX NCDEX commodity brokers. The Assessing Officer observed that the resolution did not have any reference to any hedging operation. The Assessing Officer stated that Assigning the reason that it is for the purpose of hedging the business operations appears to be an after thought connived to take advantage of the loss to be adjusted against business income. The transaction which was taken by Shri Sujith Cherian with Religare has been settled without physical transfer of any asset in the commodity market. Any loss suffered on accounts of futures and options is a speculative loss, that is to be disallowed u/s u/s 43(5). The Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s justified in remitting the matter back to the Assessing Officer to verify any forward contracts have been cancelled prematurely and verify the reasons for premature cancellation in the light of the order of the Tribunal in the case of London Star Diamond Company (I) P. Ltd vs DCIT, 37 CCH 217 (Mum) and also given a direction that the loss arising out of derivative transaction in excess of export turnover has to be considered as speculative loss because excess derivative transaction has no proximity with export turnover. Being so, the above order of the Tribunal is having no application to the facts of the present case. The reliance placed by the ld.A.R is totally misconceived. 4. In our opinion, the issue in dispute is squarely covered by the order of Mumbai Tribunal in the case of Varsha Corporation Ltd vs DCIT, 153 ITD 395 wherein held as follows: MCX, through which the Assessee had carried out the transactions, was not a recognized stock exchange as required under the provisions of Section 43(5)(d) of the Act. MCX, through which the Assessee had carried out the transactions, was notified as a recognized association for the purposes of clause (e) of proviso to clause 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treated inflated purchases of ₹ 2,36,57,817/- out of purchase of gold of ₹ 5,61,43,624/-. On appeal, the CIT(A) observed that the assessee has produced the copies of sales tax assessment order, stock reconciliation, sample sales invoices for purchase of gold and billlwise purchase of old gold. He also called for the remand report from the Assessing Officer. After going through it, the CIT(A) observed that it is common practice in jewellery business that consumers exchange/sell old jewellery to buy new ornaments and receive cash for the excess jewellery sold. He satisfied with the reconciliation statement showing purchase of old gold, conversion of the same into jewellery, payment of conversion charges and ultimate sale of new jewellery and deleted the addition in both the assessment years under consideration. Against this, the Revenue is in appeal before us. 8. The contention of the ld.D.R before us is that the assessee did not produce any details at the time of assessment, therefore, the CIT(A) is not justified in giving relief to the assessee on the basis of simple sales invoices produced by the assessee to evidence the purchase of old gold. 9. We have consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is very cryptic. There are no details on the basis of which he has given relief to the assessee. Hence, in our opinion, it is appropriate to remit the matter back to the file of the CIT(A) for reconsideration. The ld. CIT(A) shall pass a detailed order in accordance with law. 11. The next issue in I.T.A. No.1493/Mds/2012 in the case of Shri Sujith Cherian, for assessment year 2007-08, is that the CIT(A) erred in deleting the addition made towards cash deposits of ₹ 63.47 lakhs as unexplained credits u/s 68 of the Act. 12. The facts of the issue are that the Assessing Officer on perusal of the ledger of director's loan noticed that the assessee has received cash of ₹ 63,47,441/-. The Assessing Officer also perused the bank statements and found that the assessee has credited cash deposits into bank ac. Since the assessee could not produce the details of parties from whom the cash was received and was not able to offer explanation about its nature and source, the Assessing Officer treated the sum of ₹ 63,47,441/- as unexplained cash credit u/s 68 of the Act and added the same to the total income of the assessee by placing reliance on the judgment of the Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X
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