INCOME TAX ACT, 1961

Section 28

Business loss - Derivative loss - Notice sent to broker under section 133(6) returned unserved - Assessee having furnished contract notes and bank statements--NCDEX denying the broker to have traded during period 1-4-2010 to 31-3-2011

Assessee carried out F&O/derivative transaction in shares in which it earned derivative profit of Rs. 2,20,000 and also incurred loss of Rs. 52 lakhs. Accordingly, net of derivative loss of Rs. 50 lakhs was claimed. In order to verify genuineness of assessee's claim AO sent notice under section 133(6) to concerned broker at address mentioend in bill, however, said notice returned back unserved. Thereafter, AO sent notice under section 133(6) to NCDEX in response to which NCDEX stated the broker not to have traded during period 1-4-2010 to 31-3-2011. Accordingly, AO held that the loss claimed was not genuine.Held: Since assessee had furnished all the documents along with bank transaction details, therefore, it could not be said that primary onus cast upon assessee had not been discharged. However, at the same time, broker who had carried out concerned transaction could not corroborate or confirm transaction as notice sent to broker came back unserved. Thus, explanation and evidences submitted by assessee could not be substantiated. Under these facts and circumstances, issue was remanded back to AO to re-examine the claim of loss afresh. Assessee was directed to substantiate its case and to provide not only the confirmation from broker but also correct address of broker and AO would be at liberty to carry out any necessary inquiry to verify genuineness of the transaction.

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2011-12

INCOME TAX ACT, 1961

Section 68

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