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TMI Blog2021 (10) TMI 1019X X X X Extracts X X X X X X X X Extracts X X X X ..... to be regarded as a separate and distinct business. There is, thus, no question of it being set off against the assessee s other, regular business of trading in food grains and oilseeds or, as stated before me, of commission agent/broker. This, further, would also result in non-explanation of the recovery of railway freight by the assessee therefrom. This also explains of this being stated as in the alternative, even as, as afore-stated, it is also without any details or material in support. Again, much less several, as claimed, no similar bargain stands shown as executed during the year, or even in the past, even as the same does not detract from the fact that the bargain under reference is wholly unproved, so that the factum of other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Sanwaria Agro Oils Ltd., Itarsi (SAOL) with whom the assessee has a regular account (PB pg. 4), which agrees with the assessee s account in its books (PB pg. 5), thereto. There is therefore nothing to mistrust the assessee when it says so. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, states of details accompanying the same, while none have been brought on record. He would reply in the negative. And, further, take the Bench through the ledger account of transport expenses (PB pg. 32), in the assessee s accounts, reflecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation 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. However, these are duly recorded immediately thereafter, if not almost simultaneously, and, further, confirmed through exchange of notes, as over fax, e-mails, etc. This is the regular trade practice, adopted un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, the same only means that the transaction has been, contrary to what stands stated, completed. The explanation further contradicts its earlier explanation of the loss as on account of reversal due to adverse mark ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, 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 ₹ 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 the basis of current market rate, the same, apart from being sans any details and evidence, would be a speculative transaction u/s. 43(5). The assessee shall not be, because of the tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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