TMI Blog2021 (10) TMI 1019X X X X Extracts X X X X X X X X Extracts X X X X ..... rguments for and on behalf of the assessee, it was submitted by Shri Modh, the ld. counsel for the assessee, that the only issue arising and raised in appeal is the disallowance of loss of Rs. 10,43,274 suffered by the assessee on account of 'Sauda Settlement'. The same stands disallowed for want of substantiation, for which he would take the Bench through the assessment and the first appellate order. The assessee, a wholesale trader in food grains, oilseeds, etc. makes several bargains in the course of his business, which are entered into on oral basis. An oral contract is equally valid in law. As the contract for supply of wheat was, due to adverse price movement, reversed, again orally, the resulting loss was charged by the buyer, M/s. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it was enquired by the Bench from Shri Modh about the (availability of the) relevant details of the transaction/s inasmuch as none stood furnished at any stage. That is, what was sold; at what rate; where and by whom was the delivery to be made; the obtaining market rate/s at the time of the contract as well as at the time the goods were to be delivered, etc., and if there was any material, viz. Sauda Book, contract notes, etc., to substantiate the same. This is as this only would give some clarity on, as well as the basis of, the transaction, which had not even been explained, i.e., as he seeks to do now before the Tribunal for the first time, albeit without any details whatsoever, even as the debit note, unnumbered, raised by SAOL, sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies, and perused the material on record. 3.1 My first observation in the matter is that the disallowance being in respect of a specific loss or expenditure, made on the basis of non-acceptance of the assessee's explanation qua the same, the fact of the assessee's accounts being audited, or its' book results having been, by inference, otherwise accepted by the Revenue, is of no consequence in-so-far as the said disallowance is concerned, which is to be adjudged on its merits. 3.2 My second observation in the matter is that, much less substantiated, even the nature of the transaction has not been explained at any stage and, despite abundant opportunity to do so. No doubt oral contracts are entered into in the business world, as over phone. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out obtaining a similar forward contract. How would a trader quote a price for, or even honor, his contract, i.e. without such a contract, which becomes a necessity? This also contradicts the payment of freight by SAOL, which only means, as also observed during hearing, that the supply stands made thereto. Why else, one may ask, would it bear the same? Further, if the supply is made, as stated, directly by the assessee, implying that the delivery was ex-works (godown), SAOL would yet be obliged to pay the cost to the assessee, who in turn would pay its' cost to its' supplier. Where the assessee acted as, as again stated, a broker, he would be entitled to a positive income in the form of commission/brokerage from SAOL, the buyer. Rather, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it. On what account, one may ask? To no answer, again, by Sh. Modh. Why would any person pay such huge sums to another, the assessee in the instant case, i.e. without business consideration, which is clearly missing, or at least not apparent, much less explained. In the context of the instant case, the relative quantum of this sum is that it finances almost the whole of the stock-intrade of the assessee, being at Rs. 268.74 lacs as on 31/3/2013 (PB pg. 20). 3.3 Further still, without prejudice, even if one were to ignore all this, and go by what stands stated by Sh. Modh earlier, i.e., of it being an open-ended transaction, which was not honored and, accordingly, obligation under the contract of supply discharged by bearing the loss - on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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