9911796707
TMI Blog1988 (9) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... dings given by the Appellate Assistant Commissioner were assailed by counsel for the assessee. The Tribunal, after hearing the parties, set aside the findings of the Appellate Assistant Commissioner and held that the claim of speculation loss of Rs. 1,25,515 should have been allowed. At the hearing before us, no one appeared for the assessee. Mr. A. C. Moitra, the learned advocate appearing for the Commissioner, has assailed the order of the Tribunal on the ground that the findings of the Tribunal are perverse inasmuch as the findings were arrived at by ignoring relevant material. The facts of the case would demonstrate that the Tribunal did not consider the relevant materials and had also ignored several relevant materials in arriving at the findings : "The assessee has claimed loss of Rs. 1,25,515 in share speculation through Z. Dhyawala and Co. of 65, Cotton Street, Calcutta. From the details filed, it was noticed that, in all the transactions, the assessee has claimed to have suffered loss. It was noticed that the payments were alleged to have been made, all by cash as follows : Rs. 31-1-1971 15,000 25-2-1971 25,000 29-3-1971 10,000 31-3-1971 25,000 29-6-1971 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l the transactions, in this case, were made through one broker, viz., B. L. Dhyawala, sole proprietor of Dhyawala and Co. The Income-tax Officer, in his assessment order, had noted the different dates on which the transactions took place. One of the transactions allegedly took place on March 31, 1971. But March 31, 1971, as it appears from the calendar is "Sunday" and accordingly no transaction could have been made on that particular day. Since the transactions were made through one broker, the Income-tax Officer, in order to find out the genuineness of such transactions, tried to serve a summons on Dhyawala and Co. but the notice server could not find out the concerned Dhyawala at the address given by the assessee. The Income-tax Officer again tried to serve the summons and he requested an employee of the assessee, viz., Shri R. K. Bararia, to help in this regard. But again the said Dhyawala could not be found out at his address. The Income-tax Officer again requested the said Shri R. K. Bararia on February 25, 1975, to produce the said Dhyawala before him on February 27, 1975. But, on February 27, 1975, the said Shri Bararia appeared and said that it was not possible for him to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Central Bank of India, one at United Bank and one with Bank of Tokyo. All the banks are situated very near the business premises of the assessee and there would have been no difficulty in depositing cash in the bank and drawing cheques, if necessary. Shri Ramesh Kumar Miranka, appearing on behalf of Shri Dhyawala, stated in his sworn statement dated November 21, 1975, that Dhyawala and Co. sometimes received payment by cheques and made payments by cheques. Even Shri Miranka could not satisfactorily explain why all payments were made by cash only by the assessee. (ii) A curious feature is that Shri B. L. Dhyawala, the alleged sole proprietor of Dhyawala and Co. has never made his appearance before the Income-tax Officer or before me. It is not known why he could never be traced at No. 65, Cotton Street, Calcutta, where he is supposed to carry on his business of stock broking. Before the Appellate Assistant Commissioner, Shri Dhyawala did not appear but some, relation of his, namely, Shri. R. K. Miranka, appeared bringing the summons form which the Appellate Assistant Commissioner sent and bringing the account books of Dhyawala and Co. and Shri Miranka stated in his sworn state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts were not reliable is fortified by the following facts According to the ledger of the assessee, the assessee paid cash of Rs. 15,000 to Dhyawala and Co. on January 31, 1971. The assessee also produced an unstamped receipt issued by one Shri Kailash Prasad said to be the son of Shri Dhyawala. However, in the account books of Dhyawala and Co. the receipt of money from the assessee was entered on March 31, 1971. Shri Miranka stated in his sworn statement that in fact the assessee paid the money only on March 31, 1971, and, in fact, March 31, 1971, was Sunday and the assessee could not have paid money on a Sunday. (v) The 'contract notes' prepared and signed by Dhyawala and Co. to its clients, do not bear printed serial numbers. The numbers are written in pencil by the broker. The contract forms were all signed either by Shri Ramesh K. Miranka or Shri Kailash Prasad. They are not signed by Shri B. L. Dhyawala. In his sworn statement, Shri Miranka, at first, stated as follows 'No signatures were obtained on contract forms from B. D. Jalan in token of their confirmation. They signed on different slips. The confirmation slip is a perforated slip and is part of the main cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailash Prasad Dhyawala'. He is only known as 'Kailash Prasad' and moreover, he always signs as 'Kailash Prasad'. (viii) In fact, the above discussion will show that the signatures of the key parties, the partners of the assessee-firm and Shri B. L. Dhyawala never showed up in any of the documents produced before the Department. All the transactions were carried out by Shri R. K. Bararia on behalf of the firm and Shri Kailash Prasad and Shri Miranka on behalf of Shri Dhyawala. It is not clear why only proxies acted throughout. (ix) Each single transaction in this case resulted only in a net loss to the assessee and the assessee could not reap net profit on any transaction with this broker. This shows that the assessee tried very hard to incur a net loss by artificial means." When the matter came before the Appellate Assistant Commissioner, he also came to the conclusion that the claim of speculation was spurious. To summarise, the Appellate Assistant Commissioner gave the following reasons : "(i) All the payments were made in cash and not by crossed cheque or crossed draft ; (ii) B. L Dhyawala, the sole proprietor of Dhyawala and Co., never appeared before the Income-tax O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rising out of commercial transactions and mode of payments determined the nature of transactions. The assessee might not have entered the details of the transactions in its books of account as and when those were entered with the broker. Such a lapse would not make the transactions illegal or spurious. At best, the assessee's books of account were not complete so far as the recording of such transactions was concerned ; that would not however determine the nature of transaction. The Appellate Assistant Commissioner had been, in our opinion, wrong in disputing the method adopted by the broker in respect of the transaction and the procedure in acknowledging payment. The broker's contract forms with perforated slips attached thereto were genuine documents and it was not the case of the Department that the transactions entered into by the broker with the assessee-firm only were recorded in such contract forms. It was also not the case of the Department that the transactions were made at prices not prevailing on the dates of transactions. The Appellate Assistant Commissioner had gone that far to support his conclusion with reference to Shri Kailash Prasad's way of writing his name. It ..... X X X X Extracts X X X X X X X X Extracts X X X X
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