M/S. VISION MILLENIUM EXPORTS P. LTD, MUMBAI V. DCIT, CENTRAL CIRCLE- 7(2), MUMBAI

ITA 1645/MUM/2020

AI Insights

The case involves M/s Vision Mellenium Exports Pvt. Ltd., which appealed against the order of the Commissioner of Income-tax (Appeals)-49, Mumbai, for the assessment year 2015-16. The primary contention was regarding the disallowance of a business loss of Rs.26,88,98,500/- incurred during contract settlements, which the Assessing Officer (AO) and the CIT(A) deemed not genuine and speculative. The Tribunal noted that the assessee did not appear for the hearings despite multiple adjournments and did not provide substantial evidence to counter the findings of the lower authorities. The Tribunal found that the transactions were not conducted through any recognized stock exchange, lacked third-party involvement, and were not legally enforceable, leading to the conclusion that they were not genuine business transactions.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123493 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 21-08-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 29-06-2020
• Other Referred Cases: Juggilal Kamlapat v. CIT, PB Finance Ltd. v. Shri Shital Prasad Jain, McDowell & Co. Ltd. v. CIT, Vodafone International holding BV v. Union of India, Azadi Bachao Andolan v. Union of India, Shri Charan Singh vs. Chandra Bhan Singh, CIT vs. Durga Prasad More, Sumati Dayal vs. CIT, Som Nath Maini v. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Transactions in derivatives; Speculation loss; Onus to prove; Sham transactions; Bogus
• Section: 73(1); 73; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER) ITA No. 1645/MUM/2020 Assessment Year: 2015-16 M/s Vision Millenium Exports P. Ltd., Jn-1, 65 b-5, sec-9, Vashi, Navi Mumbai-400703. Vs. DCIT, Central Circle-7(2), Room No. 655, Aayakar Bahvan, M.K. Road, Mumbai-400020. PAN No. AAACV 6970 B Appellant Respondent Assessee by : None Revenue by : Mr. Ankush Kapoor, CIT-DR Date of Hearing : 22/08/2023 Date of pronouncement : 22/08/2023 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 12.03.2020 passed by the Ld. Commissioner of Income-tax (Appeals)-49, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2015-16, raising following grounds: 1. On the facts and in the circumstances of the case and in law the id. CIT(A) erred in confirming the AO's action of disallowing the business loss of Rs.26,88,98,500/- gin contract settlement by holding the same as not genuine. 2. On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in confirming the AO's action of holding the business loss of Rs. 26,88,98,500/- as speculative loss and thereby, not allowing the se against the non 2. Briefly stated, the assessee e 29.09.2015 declaring total loss of Rs.25,50,57,463/ income filed by the assessee was selected for scrutiny and statutory notices u/s under Income served upon the assessee. The assessment was completed on 21.12.2017 after disallowing the loss of Rs.26,88,98,500/ ground same being not genuine and also being speculative loss ,therefore the assessee speculation business income. On further appeal upheld the disallowance of loss 3. At the outset, we may like to mention that despite notifying neither anyone attend for adjournment was filed. On perusal of the record, we find that the case has been adjourned from 21.06.2022 request of the Ld. Counsel of the assessee on many occasions Lastly on 15.06.2023, the hearing of the case h 22.08.2023 on the request of the Ld. Counsel of the assessee. In the circumstances, we are of the opinion that the assessee is not interested in prosecuting ex-parte qua the assessee after hear Departmental Representative (DR). M/s Vision Mellenium Exports Pvt. Ltd. speculative loss and thereby, not allowing the se against the non-speculative business income. Briefly stated, the assessee e-filed return of income on 29.09.2015 declaring total loss of Rs.25,50,57,463/ income filed by the assessee was selected for scrutiny and statutory under Income-tax Act,1961( in short ‘the Act’) served upon the assessee. The assessment was completed on 21.12.2017 after disallowing the loss of Rs.26,88,98,500/ ground same being not genuine and also being speculative loss assessee not eligible for set off speculation business income. On further appeal, the Ld. CIT(A) also disallowance of loss. At the outset, we may like to mention that despite notifying attended on behalf of the assessee nor for adjournment was filed. On perusal of the record, we find that the case has been adjourned from 21.06.2022 request of the Ld. Counsel of the assessee on many occasions astly on 15.06.2023, the hearing of the case has been adjourned to 22.08.2023 on the request of the Ld. Counsel of the assessee. In the circumstances, we are of the opinion that the assessee is not interested in prosecuting the appeal and therefore appeal was heard parte qua the assessee after hearing arguments of the Ld. Departmental Representative (DR). ITA No. 1645/M/2020 2 M/s Vision Mellenium Exports Pvt. Ltd. speculative loss and thereby, not allowing the set-off filed return of income on 29.09.2015 declaring total loss of Rs.25,50,57,463/-. The return of income filed by the assessee was selected for scrutiny and statutory tax Act,1961( in short ‘the Act’) were served upon the assessee. The assessment was completed on 21.12.2017 after disallowing the loss of Rs.26,88,98,500/- on the ground same being not genuine and also being speculative loss off against non- the Ld. CIT(A) also At the outset, we may like to mention that despite notifying sessee nor any request for adjournment was filed. On perusal of the record, we find that the case has been adjourned from 21.06.2022 onward on the request of the Ld. Counsel of the assessee on many occasions. as been adjourned to 22.08.2023 on the request of the Ld. Counsel of the assessee. In the circumstances, we are of the opinion that the assessee is not and therefore appeal was heard ing arguments of the Ld. 4. We find that the Ld. CIT(A) has rejected the contention of the assessee on the issue of loss of Rs.26,88,98,500/ under: “6.3. I have carefully considered the facts of the case, the findings of the Id. AO and the submissions of the assessee. 6.3.1 During the year under reference, the assessee entered into 6 different Forward Purchase Contracts with M/s. Betul Oil Limited (BOL) and M/s. Arabesque Mercantile (AMPL) for sale of submitted that BOL entered into 4 forward purchase contracts with the assessee for purchase of the said commodity. The details of the forward purchase contracts entered between BOL and the assessee are as under : Similarly, M/s. Arabesque Mercantile Pvt. Ltd (AMPL) entered into 2 forward purchase contracts with the assessee for purchase of same commodity namely Badami Whole Dhaniya (Coriander). The details of the forward purchase contracts entered between AMPL M/s Vision Mellenium Exports Pvt. Ltd. We find that the Ld. CIT(A) has rejected the contention of the assessee on the issue of loss of Rs.26,88,98,500/ 6.3. I have carefully considered the facts of the case, the findings of the Id. AO and the submissions of the assessee. 6.3.1 During the year under reference, the assessee entered into 6 different Forward Purchase Contracts with M/s. Betul Oil Limited (BOL) and M/s. Arabesque Mercantile Pv (AMPL) for sale of coriander (Badami Whole Dhaniya). It was submitted that BOL entered into 4 forward purchase contracts with the assessee for purchase of the said commodity. The details of the forward purchase contracts entered between BOL and the assessee are as under : Similarly, M/s. Arabesque Mercantile Pvt. Ltd (AMPL) entered into 2 forward purchase contracts with the assessee for purchase of same commodity namely Badami Whole Dhaniya (Coriander). The details of the forward purchase contracts entered between AMPL and the assessee are as under: ITA No. 1645/M/2020 3 M/s Vision Mellenium Exports Pvt. Ltd. We find that the Ld. CIT(A) has rejected the contention of the assessee on the issue of loss of Rs.26,88,98,500/- observing as 6.3. I have carefully considered the facts of the case, the findings of the Id. AO and the submissions of the assessee. 6.3.1 During the year under reference, the assessee entered into 6 different Forward Purchase Contracts with M/s. Betul Pvt. Ltd coriander (Badami Whole Dhaniya). It was submitted that BOL entered into 4 forward purchase contracts with the assessee for purchase of the said commodity. The details of the forward purchase contracts entered between BOL and the assessee are as under :- Similarly, M/s. Arabesque Mercantile Pvt. Ltd (AMPL) entered into 2 forward purchase contracts with the assessee for purchase of same commodity namely Badami Whole Dhaniya (Coriander). The details of the forward purchase contracts and the assessee are as under:- The total contract value for all the six transactions was Rs. 110 crores. The claim of the assessee was that the prices of coriander sharply increased over the contractual period of 60 days and therefore, the assessee coul commodity to the buyers on the expiry day of the contractual period. The assessee was, therefore, forced to buy back the commodity from the buyers at the prevailing market rate on the expiry date of the contractual period and in the proce incurred the impugned loss. 6.3.2 I find that the AO has discussed the issue in detail as to why the transactions as above could not be held as genuine transactions. The AO has noted that the numbers given to the contracts were illogical and not in sequ assessee failed to explain and produce earlier contracts bearing numbers before the numbers given to the aforesaid contracts. There were no brokers involved in the said transactions. It was apparent from the contract that it involved only the par involved in any manner from which any verification could have been made as to the genuineness of these transactions. BOL is a sister concern of the assessee, since, shareholders of the assessee and BOL are from same famil noted that all the above contracts were invariably settled at loss. The debit notes were printed on the letterhead of AMPL and BOL without any ratification numbers on them. On perusal of the said debit notes and contract notes, it was evident that even the reference contract numbers mentioned in debit notes were different. 6.3.3 The AO has made a very important observation that there was absolutely no monetary transaction during the whole process as no advance was given neither any payment was The transactions of contract settlement was adjusted against the sale of coriander during the same financial year and only the journal entries were passed on the last day of the financial year. The A observed transaction was bogus and manipulated to take the fictitious loss on account of contract settlement which was ultimately adjusted against the huge profit on sale of shares. The assessee had profit on sale of shares amounting to about 25.57 crores which was adjusted against the impugned loss in commodity trading. The amount payable on account of loss as a result of settlement of the contracts were adjusted against the sale bills of coriander sold to AMPL and BOL. M/s Vision Mellenium Exports Pvt. Ltd. The total contract value for all the six transactions was Rs. 110 crores. The claim of the assessee was that the prices of coriander sharply increased over the contractual period of 60 days and therefore, the assessee could not deliver the commodity to the buyers on the expiry day of the contractual period. The assessee was, therefore, forced to buy back the commodity from the buyers at the prevailing market rate on the expiry date of the contractual period and in the proce incurred the impugned loss. 6.3.2 I find that the AO has discussed the issue in detail as to why the transactions as above could not be held as genuine transactions. The AO has noted that the numbers given to the contracts were illogical and not in sequence. The assessee failed to explain and produce earlier contracts bearing numbers before the numbers given to the aforesaid contracts. There were no brokers involved in the said transactions. It was apparent from the contract that it involved only the parties concerned and no 3" party was involved in any manner from which any verification could have been made as to the genuineness of these transactions. BOL is a sister concern of the assessee, since, shareholders of the assessee and BOL are from same family. The AO has noted that all the above contracts were invariably settled at loss. The debit notes were printed on the letterhead of AMPL and BOL without any ratification numbers on them. On perusal of the said debit notes and contract notes, it was that even the reference contract numbers mentioned in debit notes were different. 6.3.3 The AO has made a very important observation that there was absolutely no monetary transaction during the whole process as no advance was given neither any payment was made for the settlement of the contract value. The transactions of contract settlement was adjusted against the sale of coriander during the same financial year and only the journal entries were passed on the last day of the financial year. The A observed that the whole of the transaction was bogus and manipulated to take the fictitious loss on account of contract settlement which was ultimately adjusted against the huge profit on sale of shares. The assessee had profit on sale of shares amounting to about 25.57 crores which was adjusted against the impugned loss in commodity trading. The amount payable on account of loss as a result of settlement of the contracts were adjusted against the sale bills of coriander sold to AMPL and BOL. ITA No. 1645/M/2020 4 M/s Vision Mellenium Exports Pvt. Ltd. The total contract value for all the six transactions was Rs. 110 crores. The claim of the assessee was that the prices of coriander sharply increased over the contractual period of 60 d not deliver the commodity to the buyers on the expiry day of the contractual period. The assessee was, therefore, forced to buy back the commodity from the buyers at the prevailing market rate on the expiry date of the contractual period and in the process 6.3.2 I find that the AO has discussed the issue in detail as to why the transactions as above could not be held as genuine transactions. The AO has noted that the numbers ence. The assessee failed to explain and produce earlier contracts bearing numbers before the numbers given to the aforesaid contracts. There were no brokers involved in the said transactions. It was apparent from the contract that it ties concerned and no 3" party was involved in any manner from which any verification could have been made as to the genuineness of these transactions. BOL is a sister concern of the assessee, since, shareholders y. The AO has noted that all the above contracts were invariably settled at loss. The debit notes were printed on the letterhead of AMPL and BOL without any ratification numbers on them. On perusal of the said debit notes and contract notes, it was that even the reference contract numbers mentioned 6.3.3 The AO has made a very important observation that there was absolutely no monetary transaction during the whole process as no advance was given neither any made for the settlement of the contract value. The transactions of contract settlement was adjusted against the sale of coriander during the same financial year and only the journal entries were passed on the last day of the that the whole of the transaction was bogus and manipulated to take the fictitious loss on account of contract settlement which was ultimately adjusted against the huge profit on sale of shares. The assessee had profit on sale of shares amounting to about Rs. 25.57 crores which was adjusted against the impugned loss in commodity trading. The amount payable on account of loss as a result of settlement of the contracts were adjusted against the sale bills of coriander sold to AMPL and BOL. 6.3.4 The A furthe transaction was neither carried out at any of the recognized Commodity Stock Exchange neither any broker was involved in the said transactions. The documents purporting to be agreements were not stamped neither were reg any Government agency and, hence, the rights and obligations arising out of the said contracts were not enforceable in any Court of law, which was highly improbable in view of the fact that the transaction value was substantially high. He furt were between parties which were known to each other and had existing business relations which further supports the probability of manipulation and adjustment in making a transaction in a manner which could be beneficial to e the parties in the matters of tax evasion. 6.3.5 Per contra the assessee made a detailed submission claiming that the transaction were genuine and it has resulted in a loss because of the fact that the assessee failed to deliver the commodity as p Contract between the parties concerned. The reason for such failure in delivering the goods as per the contract was claimed to be sharp increase in the prices of coriander over the contractual period of 60 days. The assessee claimed the other parties involved in the contract that is AMPL and BOL had paid tax on the income arising out of the said transactions and therefore there has not been any loss of revenue as a result of these transactions and denying the loss to the assesse assessee further submitted that there was no requirement in law that such transactions should only happen at a recognized stock exchange and with involvement of brokers. As regard the observation of the AO that no adv given, the assessee submitted that since the parties were well acquainted with each other, no advance was given at the beginning of the contract.The assessee submitted that the contract could be a written one or an oral one, it may be on plain paper and may not be registered. That per se does not render such contract as void. It only renders such agreements unenforceable in a court of law in case of breach of terms of the agreement. The terms and conditions in the contract were very specific clearl the quality specifications, the quantity to be supplied, the manner of packing, the delivery and its location, the contracted price, payment terms as well as other terms and conditions. As per the purchase contract, physical del M/s Vision Mellenium Exports Pvt. Ltd. 6.3.4 The A further noted that the contract settlement transaction was neither carried out at any of the recognized Commodity Stock Exchange neither any broker was involved in the said transactions. The documents purporting to be agreements were not stamped neither were registered with any Government agency and, hence, the rights and obligations arising out of the said contracts were not enforceable in any Court of law, which was highly improbable in view of the fact that the transaction value was substantially high. He further noted that the transactions were between parties which were known to each other and had existing business relations which further supports the probability of manipulation and adjustment in making a transaction in a manner which could be beneficial to e the parties in the matters of tax evasion. 6.3.5 Per contra the assessee made a detailed submission claiming that the transaction were genuine and it has resulted in a loss because of the fact that the assessee failed to deliver the commodity as per the Forward Purchase Contract between the parties concerned. The reason for such failure in delivering the goods as per the contract was claimed to be sharp increase in the prices of coriander over the contractual period of 60 days. The assessee claimed the other parties involved in the contract that is AMPL and BOL had paid tax on the income arising out of the said transactions and therefore there has not been any loss of revenue as a result of these transactions and denying the loss to the assessee would amount to double taxation. The assessee further submitted that there was no requirement in law that such transactions should only happen at a recognized stock exchange and with involvement of brokers. As regard the observation of the AO that no advance was given, the assessee submitted that since the parties were well acquainted with each other, no advance was given at the beginning of the contract.The assessee submitted that the contract could be a written one or an oral one, it may be on er and may not be registered. That per se does not render such contract as void. It only renders such agreements unenforceable in a court of law in case of breach of terms of the agreement. The terms and conditions in the contract were very specific clearly mentioning the commodity, the quality specifications, the quantity to be supplied, the manner of packing, the delivery and its location, the contracted price, payment terms as well as other terms and conditions. As per the purchase contract, physical del ITA No. 1645/M/2020 5 M/s Vision Mellenium Exports Pvt. Ltd. r noted that the contract settlement transaction was neither carried out at any of the recognized Commodity Stock Exchange neither any broker was involved in the said transactions. The documents purporting to be istered with any Government agency and, hence, the rights and obligations arising out of the said contracts were not enforceable in any Court of law, which was highly improbable in view of the fact that the transaction value was her noted that the transactions were between parties which were known to each other and had existing business relations which further supports the probability of manipulation and adjustment in making a transaction in a manner which could be beneficial to either of 6.3.5 Per contra the assessee made a detailed submission claiming that the transaction were genuine and it has resulted in a loss because of the fact that the assessee failed er the Forward Purchase Contract between the parties concerned. The reason for such failure in delivering the goods as per the contract was claimed to be sharp increase in the prices of coriander over the contractual period of 60 days. The assessee claimed that the other parties involved in the contract that is AMPL and BOL had paid tax on the income arising out of the said transactions and therefore there has not been any loss of revenue as a result of these transactions and denying the e would amount to double taxation. The assessee further submitted that there was no requirement in law that such transactions should only happen at a recognized stock exchange and with involvement of brokers. ance was given, the assessee submitted that since the parties were well acquainted with each other, no advance was given at the beginning of the contract.The assessee submitted that the contract could be a written one or an oral one, it may be on er and may not be registered. That per se does not render such contract as void. It only renders such agreements unenforceable in a court of law in case of breach of terms of the agreement. The terms and conditions in the y mentioning the commodity, the quality specifications, the quantity to be supplied, the manner of packing, the delivery and its location, the contracted price, payment terms as well as other terms and conditions. As per the purchase contract, physical delivery and payment was to be completed within 60 days from date of contract, however, the delivery could not be made as the assessee failed to honour the contract because of sharp increase in price of coriander, the commodity involved in the contract. It wa opinion and belief without proper appreciation of the submissions of the assessee. It was further claimed that the transactions were genuine and it resulted into a genuine loss to the assessee which was allowa business income of the assessee. 6.3.6 The assessee is in the business of purchasing and selling of shares. During the year it had substantial profit in the business of purchase and sell of shares. Dealing in coriander is not the the year the assessee has claimed to have entered into Forward Purchase Contracts for sale of coriander to BOL and AMPL. The assessee claimed that it failed to honour the contract because of sharp increase in price the contract period of 60 days and it was left with no option but to purchase the commodity from the buyers itself. Apparently, no payments were made neither any goods were supplied to any of the parties in respect of the said transactions. 6.3.7 In its detailed submissions, the assessee has hugely emphasized on form of the contracts to substantiate it's claim that the contracts were genuine business transactions. assessee explained that the terms of contract were specific, it had all the necessary details of the transactions such as quantity of the goods, terms of delivery etc. Such details are, however, not in dispute. Even if someone enters into a contract with a motive which is other than what has been stated in the contract, the n taken care of in order to give the contract shape of a valid contract. The crux of the matter is that in the given facts and circumstances of the case, can these transactions be held as genuine business transactions entered i parties with only motive of having income from such business transactions. I find that there are multiple reasons to believe that the submissions of the assessee failed to explain the substance of the transaction as a pure business tr while over-emphasizing on the form of the contracts as the assessee had difficulties in answering the questions which raised serious doubts about the substance as brought out in the impugned assessment order. M/s Vision Mellenium Exports Pvt. Ltd. and payment was to be completed within 60 days from date of contract, however, the delivery could not be made as the assessee failed to honour the contract because of sharp increase in price of coriander, the commodity involved in the contract. It was further submitted that the AO has formed his opinion and belief without proper appreciation of the submissions of the assessee. It was further claimed that the transactions were genuine and it resulted into a genuine loss to the assessee which was allowable as adjustment with the business income of the assessee. 6.3.6 The assessee is in the business of purchasing and selling of shares. During the year it had substantial profit in the business of purchase and sell of shares. Dealing in coriander is not the regular business of the assessee. During the year the assessee has claimed to have entered into Forward Purchase Contracts for sale of coriander to BOL and AMPL. The assessee claimed that it failed to honour the contract because of sharp increase in price of coriander over the contract period of 60 days and it was left with no option but to purchase the commodity from the buyers itself. Apparently, no payments were made neither any goods were supplied to any of the parties in respect of the said 6.3.7 In its detailed submissions, the assessee has hugely emphasized on form of the contracts to substantiate it's claim that the contracts were genuine business transactions. assessee explained that the terms of contract were specific, it the necessary details of the transactions such as quantity of the goods, terms of delivery etc. Such details are, however, not in dispute. Even if someone enters into a contract with a motive which is other than what has been stated in the contract, the necessary details would be well taken care of in order to give the contract shape of a valid contract. The crux of the matter is that in the given facts and circumstances of the case, can these transactions be held as genuine business transactions entered into by the respective parties with only motive of having income from such business transactions. I find that there are multiple reasons to believe that the submissions of the assessee failed to explain the substance of the transaction as a pure business transaction emphasizing on the form of the contracts as the assessee had difficulties in answering the questions which raised serious doubts about the substance as brought out in the impugned assessment order. ITA No. 1645/M/2020 6 M/s Vision Mellenium Exports Pvt. Ltd. and payment was to be completed within 60 days from date of contract, however, the delivery could not be made as the assessee failed to honour the contract because of sharp increase in price of coriander, the commodity involved in the s further submitted that the AO has formed his opinion and belief without proper appreciation of the submissions of the assessee. It was further claimed that the transactions were genuine and it resulted into a genuine loss ble as adjustment with the 6.3.6 The assessee is in the business of purchasing and selling of shares. During the year it had substantial profit in the business of purchase and sell of shares. Dealing in regular business of the assessee. During the year the assessee has claimed to have entered into Forward Purchase Contracts for sale of coriander to BOL and AMPL. The assessee claimed that it failed to honour the of coriander over the contract period of 60 days and it was left with no option but to purchase the commodity from the buyers itself. Apparently, no payments were made neither any goods were supplied to any of the parties in respect of the said 6.3.7 In its detailed submissions, the assessee has hugely emphasized on form of the contracts to substantiate it's claim that the contracts were genuine business transactions. The assessee explained that the terms of contract were specific, it the necessary details of the transactions such as quantity of the goods, terms of delivery etc. Such details are, however, not in dispute. Even if someone enters into a contract with a motive which is other than what has been ecessary details would be well taken care of in order to give the contract shape of a valid contract. The crux of the matter is that in the given facts and circumstances of the case, can these transactions be held as nto by the respective parties with only motive of having income from such business transactions. I find that there are multiple reasons to believe that the submissions of the assessee failed to explain the ansaction emphasizing on the form of the contracts as the assessee had difficulties in answering the questions which raised serious doubts about the substance as brought out in 6.3.8 It is most important to note th transactions having value of more than Rs. 100 crores and the same resulting in a loss of Rs. 26.88 crores to the assessee, there was absolutely no monetary transactions involved. Not a single paisa was given as advance at the beginning of the contract, neither any payments were made even to party settle the contracts. The transactions were settled through journal entries only. Hence, there could have been no possibilities of any verification as to the payments involved, as there was absol 6.3.9 There was no delivery of goods. The assessee had not even partly delivered the goods as per the terms of the contracts and, hence, there was no third such as transporters etc. The transactions had admittedly not been carried out through any Commodity Stock exchange and it did not even involve any broker between the parties concerned. 6.3.10 The assessee is in the business of purchase and sell of shares. Trading in Coriander is not its regular business. The assessee failed to adduce any evidence to establish that it had previously also entered into such Forward Contracts. The assessee apparently had no or little experience in dealing in coriander. The assessee failed to explain that in such circumstances, why it e forward contract having huge monetary considerations which it failed to honour by even partially supplying the said commodity. The sole explanation provided by the assessee for cancelling the contract and buying back the commo from the said parties (although only on paper) was that the assessee failed to deliver the commodity for the reason that the price of the same had raised sharply over the period of contract. The assessee could not, however, explain why the assessee failed to deliver the goods even partially when the prices were increasing and why the complete transactions had happened by way of buying the commodities from the same parties to meet the terms of contract. 6.3.11 It is an admitted fact that the transaction happened on any Recognized Stock Exchange neither it involved any 3 party as broker. It was also not a legal contract which could be enforceable in any Court of law. The claim of the assessee is that there is no bar in having contract note on pla agree with the view of the assessee that there is no bar in M/s Vision Mellenium Exports Pvt. Ltd. 6.3.8 It is most important to note that despite of the transactions having value of more than Rs. 100 crores and the same resulting in a loss of Rs. 26.88 crores to the assessee, there was absolutely no monetary transactions involved. Not a single paisa was given as advance at the f the contract, neither any payments were made even to party settle the contracts. The transactions were settled through journal entries only. Hence, there could have been no possibilities of any verification as to the payments involved, as there was absolutely no money trail. 6.3.9 There was no delivery of goods. The assessee had not even partly delivered the goods as per the terms of the contracts and, hence, there was no third-party involvement such as transporters etc. The transactions had admittedly t been carried out through any Commodity Stock exchange and it did not even involve any broker between the parties 6.3.10 The assessee is in the business of purchase and sell of shares. Trading in Coriander is not its regular business. see failed to adduce any evidence to establish that it had previously also entered into such Forward Contracts. The assessee apparently had no or little experience in dealing in coriander. The assessee failed to explain that in such circumstances, why it entered into such an uncertain forward contract having huge monetary considerations which it failed to honour by even partially supplying the said commodity. The sole explanation provided by the assessee for cancelling the contract and buying back the commo from the said parties (although only on paper) was that the assessee failed to deliver the commodity for the reason that the price of the same had raised sharply over the period of contract. The assessee could not, however, explain why the iled to deliver the goods even partially when the prices were increasing and why the complete transactions had happened by way of buying the commodities from the same parties to meet the terms of contract. 6.3.11 It is an admitted fact that the transactions had not happened on any Recognized Stock Exchange neither it involved any 3 party as broker. It was also not a legal contract which could be enforceable in any Court of law. The claim of the assessee is that there is no bar in having contract note on plain paper or in having an oral contract. I agree with the view of the assessee that there is no bar in ITA No. 1645/M/2020 7 M/s Vision Mellenium Exports Pvt. Ltd. at despite of the transactions having value of more than Rs. 100 crores and the same resulting in a loss of Rs. 26.88 crores to the assessee, there was absolutely no monetary transactions involved. Not a single paisa was given as advance at the f the contract, neither any payments were made even to party settle the contracts. The transactions were settled through journal entries only. Hence, there could have been no possibilities of any verification as to the payments 6.3.9 There was no delivery of goods. The assessee had not even partly delivered the goods as per the terms of the party involvement such as transporters etc. The transactions had admittedly t been carried out through any Commodity Stock exchange and it did not even involve any broker between the parties 6.3.10 The assessee is in the business of purchase and sell of shares. Trading in Coriander is not its regular business. see failed to adduce any evidence to establish that it had previously also entered into such Forward Contracts. The assessee apparently had no or little experience in dealing in coriander. The assessee failed to explain that in ntered into such an uncertain forward contract having huge monetary considerations which it failed to honour by even partially supplying the said commodity. The sole explanation provided by the assessee for cancelling the contract and buying back the commodity from the said parties (although only on paper) was that the assessee failed to deliver the commodity for the reason that the price of the same had raised sharply over the period of contract. The assessee could not, however, explain why the iled to deliver the goods even partially when the prices were increasing and why the complete transactions had happened by way of buying the commodities from the s had not happened on any Recognized Stock Exchange neither it involved any 3 party as broker. It was also not a legal contract which could be enforceable in any Court of law. The claim of the assessee is that there is no bar in having in paper or in having an oral contract. I agree with the view of the assessee that there is no bar in having a contract in this manner, but there could be no denying to the facts that in such circumstances, the onus on the assessee to establish the genuine greater as compared to the circumstances where the contract is more formal and entered into in a legally enforceable manner. However, as the assessee itself has accepted that these contracts are not enforceable in any court of law, t was a need to explain that why the assessee or the other parties decided to enter into contracts of such a high monetary value, breach of which could not have been challenged in any court of law. To say merely that the parties were known to each other motive behind having such non monetary value. 6.3.12 I have also considered the submission of the assessee that the transactions have not resulted in any loss of revenue to the exchequer. Howeve assessee is incorrect in the given facts of the case. It is evident that the assessee had substantial income in sale of shares which had been adjusted with this loss claimed to have happened in the commodity transactio evident from the submission of the assessee itself that BOL had offered only Rs. 1.83 crore as profit and had the contract settlement of Rs. 18 crore not available to the said concern it would had a business loss of Rs. 16.16 crores. Hence, evident that the substantial component of the contract settlement amount was adjusted with loss the said company had in other transactions and therefore, BOL has hardly paid any lax on the benefit arising from the impugned transactions. Similarly, AM Rs. 1 0,11, 3471 also adjusted the amount claimed to have been received out of settlement of contract with loss arising out of other business transactions. 6.3.13 In fact, this apparen manipulation where affairs were arranged in the manner that the assessee, who had substantial profit on account of sale of shares had adjusted the loss arising out of the impugned transactions avoiding the responsibility to pay legitimate tax on income arising from sale of shares, whereas, the other parties involved with the assessee naming BOL and AMPL could adjust their business losses with the income from the impugned transactions and as a result of which even they did not requi M/s Vision Mellenium Exports Pvt. Ltd. having a contract in this manner, but there could be no denying to the facts that in such circumstances, the onus on the assessee to establish the genuineness of transaction is greater as compared to the circumstances where the contract is more formal and entered into in a legally enforceable manner. However, as the assessee itself has accepted that these contracts are not enforceable in any court of law, t was a need to explain that why the assessee or the other parties decided to enter into contracts of such a high monetary value, breach of which could not have been challenged in any court of law. To say merely that the parties were known to each other does not justify or explain the motive behind having such non-formal contracts having huge monetary value. 6.3.12 I have also considered the submission of the assessee that the transactions have not resulted in any loss of revenue to the exchequer. However, it is found that this claim of the assessee is incorrect in the given facts of the case. It is evident that the assessee had substantial income in sale of shares which had been adjusted with this loss claimed to have happened in the commodity transactions. It is also evident from the submission of the assessee itself that BOL had offered only Rs. 1.83 crore as profit and had the contract settlement of Rs. 18 crore not available to the said concern it would had a business loss of Rs. 16.16 crores. Hence, evident that the substantial component of the contract settlement amount was adjusted with loss the said company had in other transactions and therefore, BOL has hardly paid any lax on the benefit arising from the impugned transactions. Similarly, AMPL had offered business income of Rs. 1 0,11, 3471- only and apparently this company had also adjusted the amount claimed to have been received out of settlement of contract with loss arising out of other business transactions. 6.3.13 In fact, this apparently was a classic case of manipulation where affairs were arranged in the manner that the assessee, who had substantial profit on account of sale of shares had adjusted the loss arising out of the impugned transactions avoiding the responsibility to pay gitimate tax on income arising from sale of shares, whereas, the other parties involved with the assessee naming BOL and AMPL could adjust their business losses with the income from the impugned transactions and as a result of which even they did not require to pay the due ITA No. 1645/M/2020 8 M/s Vision Mellenium Exports Pvt. Ltd. having a contract in this manner, but there could be no denying to the facts that in such circumstances, the onus on ness of transaction is greater as compared to the circumstances where the contract is more formal and entered into in a legally enforceable manner. However, as the assessee itself has accepted that these contracts are not enforceable in any court of law, there was a need to explain that why the assessee or the other parties decided to enter into contracts of such a high monetary value, breach of which could not have been challenged in any court of law. To say merely that the parties does not justify or explain the formal contracts having huge 6.3.12 I have also considered the submission of the assessee that the transactions have not resulted in any loss of revenue r, it is found that this claim of the assessee is incorrect in the given facts of the case. It is evident that the assessee had substantial income in sale of shares which had been adjusted with this loss claimed to ns. It is also evident from the submission of the assessee itself that BOL had offered only Rs. 1.83 crore as profit and had the contract settlement of Rs. 18 crore not available to the said concern it would had a business loss of Rs. 16.16 crores. Hence, it is evident that the substantial component of the contract settlement amount was adjusted with loss the said company had in other transactions and therefore, BOL has hardly paid any lax on the benefit arising from the impugned PL had offered business income of only and apparently this company had also adjusted the amount claimed to have been received out of settlement of contract with loss arising out of other tly was a classic case of manipulation where affairs were arranged in the manner that the assessee, who had substantial profit on account of sale of shares had adjusted the loss arising out of the impugned transactions avoiding the responsibility to pay gitimate tax on income arising from sale of shares, whereas, the other parties involved with the assessee naming BOL and AMPL could adjust their business losses with the income from the impugned transactions and as a re to pay the due amount of tax on the income arising out of the said transactions. 6.3.14 I have also taken note of the fact that an another group concern naming M (SCCPL) has als mercantile Pt Ltd(AMPL), one of the parties with whom the assessee had entered into contract with. On perusal of the details of the contract it is found that SCCPL had entered into four contracts with AMPL during the same financial year ie FY 2014-15 for (Badami Whole Dhaniya) amounting to Rs. 111.68 crore. The said SCCPL had also failed to supply the goods to AMPL within the contract period of 30 days and had purchased the goods on paper from AMPL to honour the cont process incurred loss of Rs. 15.30 crore. In this regard, besides the fact that the transactions in this case also happened in similar manner resulting in loss to SCCPL, what is most important to note that the assessee had entered into contract with AMPL and BOL in the month of May 2014 for supply of Badami whole Dhaniya, whereas SCCPL had entered into contract with AMPL in February 2015 for supply of same commodity, in both these cases reasons provided by the respective assessees for not su same which were that prices of coriander sharply increased over the contractual period of 60 days and 30 days respectively and, therefore, the commodity could not be delivered to the respective buyers. Needless to say, that there are too many of coincidences between the two set of transactions to pass the test of preponderance of 6.3.15 The Hon'ble Supreme Court in the case of Juggilal Kamlapat v. CIT (1969) tax authorities are entilled entity and look at the reality of the transaction and that in exceptional cases the Court can lift the veil of corporate entity and to pay regard to the economic realities behind the legal façade. Similarly, the Assessing O disregard the corporate entity if it is used for tax evasion or to perpetuate fraud. 6.3.16 The Hon'ble Delhi High Court in PB Finance Ltd. v. Shri Shital Prasad Jain that the doctrine of piercing the co necessary might be invoked by the Curt in the interest of justice to prevent the corporate entity from being used as an M/s Vision Mellenium Exports Pvt. Ltd. amount of tax on the income arising out of the said 6.3.14 I have also taken note of the fact that an another group concern naming M/S Shreyans Credit and Capital Ltd (SCCPL) has also entered into contracts with M/S Arabesqu mercantile Pt Ltd(AMPL), one of the parties with whom the assessee had entered into contract with. On perusal of the details of the contract it is found that SCCPL had entered into four contracts with AMPL during the same financial year ie 15 for sale of same commodity being coriander (Badami Whole Dhaniya) amounting to Rs. 111.68 crore. The said SCCPL had also failed to supply the goods to AMPL within the contract period of 30 days and had purchased the goods on paper from AMPL to honour the contract and in the process incurred loss of Rs. 15.30 crore. In this regard, besides the fact that the transactions in this case also happened in similar manner resulting in loss to SCCPL, what is most important to note that the assessee had entered into ract with AMPL and BOL in the month of May 2014 for supply of Badami whole Dhaniya, whereas SCCPL had entered into contract with AMPL in February 2015 for supply of same commodity, in both these cases reasons provided by the respective assessees for not supplying the goods were same which were that prices of coriander sharply increased over the contractual period of 60 days and 30 days respectively and, therefore, the commodity could not be delivered to the respective buyers. Needless to say, that there too many of coincidences between the two set of transactions to pass the test of preponderance of probability. 6.3.15 The Hon'ble Supreme Court in the case of Juggilal Kamlapat v. CIT (1969) 73 ITR 702 has held that the income tax authorities are entilled to pierce the veil of corporate entity and look at the reality of the transaction and that in exceptional cases the Court can lift the veil of corporate entity and to pay regard to the economic realities behind the legal façade. Similarly, the Assessing Officer has power to disregard the corporate entity if it is used for tax evasion or to perpetuate fraud. 6.3.16 The Hon'ble Delhi High Court in PB Finance Ltd. v. Shri Shital Prasad Jain [1983] 54 Comp. Cas. 66 has held that the doctrine of piercing the corporate veil wherever necessary might be invoked by the Curt in the interest of justice to prevent the corporate entity from being used as an ITA No. 1645/M/2020 9 M/s Vision Mellenium Exports Pvt. Ltd. amount of tax on the income arising out of the said 6.3.14 I have also taken note of the fact that an another Shreyans Credit and Capital Ltd Arabesque mercantile Pt Ltd(AMPL), one of the parties with whom the assessee had entered into contract with. On perusal of the details of the contract it is found that SCCPL had entered into four contracts with AMPL during the same financial year ie sale of same commodity being coriander (Badami Whole Dhaniya) amounting to Rs. 111.68 crore. The said SCCPL had also failed to supply the goods to AMPL within the contract period of 30 days and had purchased the ract and in the process incurred loss of Rs. 15.30 crore. In this regard, besides the fact that the transactions in this case also happened in similar manner resulting in loss to SCCPL, what is most important to note that the assessee had entered into ract with AMPL and BOL in the month of May 2014 for supply of Badami whole Dhaniya, whereas SCCPL had entered into contract with AMPL in February 2015 for supply of same commodity, in both these cases reasons provided by pplying the goods were same which were that prices of coriander sharply increased over the contractual period of 60 days and 30 days respectively and, therefore, the commodity could not be delivered to the respective buyers. Needless to say, that there too many of coincidences between the two set of probability. 6.3.15 The Hon'ble Supreme Court in the case of Juggilal 73 ITR 702 has held that the income- to pierce the veil of corporate entity and look at the reality of the transaction and that in exceptional cases the Court can lift the veil of corporate entity and to pay regard to the economic realities behind the legal fficer has power to disregard the corporate entity if it is used for tax evasion or 6.3.16 The Hon'ble Delhi High Court in PB Finance Ltd. v. [1983] 54 Comp. Cas. 66 has held rporate veil wherever necessary might be invoked by the Curt in the interest of justice to prevent the corporate entity from being used as an instrument of fraud and the fundamental principle of corporate personality itself might be disregarded having regard to the exigencies of the situation and for the ends of justice. If the economic realities of a transaction between the appellant and others are arranged and the exigency of the circumstances surrounding it reveal that the transaction has been entered on it, the authorities should look behind the real purpose of the transaction and deal with the consequence of the transaction in a manner with which it should have been dealt with otherwise. 6.3.17 Hence, after materials available on record in the case of the assessee and on further examination of the nature and circumstances of the contract, it could only be concluded that the modus operandi adopted by the assessee was f through a non commodity transactions. 6.3.18 The claim of the assessee that the rise of price of coriander could be verified from the market reports is of no consequence as it is evident that the placed on paper post facto the period it actually refers to for the sole motive to take undue benefit of the rise in price of the said commodity in creating a bogus loss on paper. 6.3.19 The transactions showing loss in commodity transaction, which had been set off with profit in purchasing and selling of shares, were sham transactions. It is a case of bogus loss obtained through colourable device for avoidance of tax. I find that the Id.AO, who after detailed examination and discussion and going beyond the said documents has established that the contracts were a mere mask to hide the real nature of transactions. As discussed in the preceding paragraphs, I find that the findings of the Assessing Officer are also based on strong surro preponderance of probability and human conduct in the light of detailed analysis of the facts including the manner in which the contracts were entered into and finally executed. 6.3.20 The insistence of the assessee that the transacti leading to loss in commodity trading are supported by documents such as contracts, sale and purchase invoices, journal entries etc. cannot be accepted in view of the fact and circumstances of the case brought on record after proper M/s Vision Mellenium Exports Pvt. Ltd. instrument of fraud and the fundamental principle of corporate personality itself might be disregarded having rd to the exigencies of the situation and for the ends of justice. If the economic realities of a transaction between the appellant and others are arranged and the exigency of the circumstances surrounding it reveal that the transaction has been entered only to defraud the revenue causing injustice to it, the authorities should look behind the real purpose of the transaction and deal with the consequence of the transaction in a manner with which it should have been dealt with 6.3.17 Hence, after a detailed analysis of the facts with the materials available on record in the case of the assessee and on further examination of the nature and circumstances of the contract, it could only be concluded that the modus operandi adopted by the assessee was for evasion of tax through a non-genuine transaction in the form of loss in commodity transactions. 6.3.18 The claim of the assessee that the rise of price of coriander could be verified from the market reports is of no consequence as it is evident that the said contracts had been placed on paper post facto the period it actually refers to for the sole motive to take undue benefit of the rise in price of the said commodity in creating a bogus loss on paper. 6.3.19 The transactions showing loss in commodity ransaction, which had been set off with profit in purchasing and selling of shares, were sham transactions. It is a case of bogus loss obtained through colourable device for avoidance of tax. I find that the Id.AO, who after detailed examination sion and going beyond the said documents has established that the contracts were a mere mask to hide the real nature of transactions. As discussed in the preceding paragraphs, I find that the findings of the Assessing Officer are also based on strong surrounding circumstances, preponderance of probability and human conduct in the light of detailed analysis of the facts including the manner in which the contracts were entered into and finally executed. 6.3.20 The insistence of the assessee that the transacti leading to loss in commodity trading are supported by documents such as contracts, sale and purchase invoices, journal entries etc. cannot be accepted in view of the fact and circumstances of the case brought on record after proper ITA No. 1645/M/2020 10 M/s Vision Mellenium Exports Pvt. Ltd. instrument of fraud and the fundamental principle of corporate personality itself might be disregarded having rd to the exigencies of the situation and for the ends of justice. If the economic realities of a transaction between the appellant and others are arranged and the exigency of the circumstances surrounding it reveal that the transaction has ly to defraud the revenue causing injustice to it, the authorities should look behind the real purpose of the transaction and deal with the consequence of the transaction in a manner with which it should have been dealt with a detailed analysis of the facts with the materials available on record in the case of the assessee and on further examination of the nature and circumstances of the contract, it could only be concluded that the modus or evasion of tax genuine transaction in the form of loss in 6.3.18 The claim of the assessee that the rise of price of coriander could be verified from the market reports is of no said contracts had been placed on paper post facto the period it actually refers to for the sole motive to take undue benefit of the rise in price of the 6.3.19 The transactions showing loss in commodity ransaction, which had been set off with profit in purchasing and selling of shares, were sham transactions. It is a case of bogus loss obtained through colourable device for avoidance of tax. I find that the Id.AO, who after detailed examination sion and going beyond the said documents has established that the contracts were a mere mask to hide the real nature of transactions. As discussed in the preceding paragraphs, I find that the findings of the Assessing Officer unding circumstances, preponderance of probability and human conduct in the light of detailed analysis of the facts including the manner in which the contracts were entered into and finally executed. 6.3.20 The insistence of the assessee that the transactions leading to loss in commodity trading are supported by documents such as contracts, sale and purchase invoices, journal entries etc. cannot be accepted in view of the fact and circumstances of the case brought on record after proper examination of the m account the substance behind the vail of form of the impugned transactions. A genuine transaction must be proved to be genuine in all respect. The onus was on the assessee to prove that the transaction leading to claim o in commodity trade was distinctly genuine transaction and not bogus, premeditated transaction arranged with a view to evade taxes. The onus was on the assessee to establish the substance of the transactions which had absolutely no payments involved find that the whole paraphernalia of the claimed genuine transactions is only on paper. The onus was on the assessee to prove that it has had genuine loss in the impugned transactions as it was the assessee who has m that it was engaged in genuine contract to supply coriander a commodity in which it does not deal in its normal course of business. The assessee had failed to discharge this onus to establish that the loss happened in normal course of business and it was not a manufactured transaction with a motive to incur loss on paper to set off its profit from dealing in shares. 6.3.21 In the case of Shri Charan Singh vs. Chandra Bhan Singh (AIR 1988 SC 6370), the Hon'ble Supreme Court have clarified that th substantially asserts the affirmative of the issue and not upon the party who denies it. It has been further held that the party cannot, on failure to establish a prima facie case, take advantage of the weakness of h party must succeed by the strength of his own right and the clearness of his own proof. He cannot be heard to say that it was too difficult or virtually impossible to prove the matter in question. In the case under consideration, s assessee who had made the claim that it had a genuine loss in transactions which had no involvement of any third parties, all the facts were especially within it's knowledge. Section 102 of Indian Evidence Act makes it clear that initial onus is on person who substantially asserts a claim. In the present case, it is seen that the assessee has failed to discharge its burden of proof and the Assessing Officer, on the other hand, has brought in sufficient evidences to prove that the claim of the 6.3.22 On the issue of circumstantial evidence and in the matters related to the discharge of 'onus of proof and the relevance of surrounding circumstances of the case, the M/s Vision Mellenium Exports Pvt. Ltd. examination of the material facts and after taking into account the substance behind the vail of form of the impugned transactions. A genuine transaction must be proved to be genuine in all respect. The onus was on the assessee to prove that the transaction leading to claim o in commodity trade was distinctly genuine transaction and not bogus, premeditated transaction arranged with a view to evade taxes. The onus was on the assessee to establish the substance of the transactions which had absolutely no payments involved and had no transfer of goods as well. I find that the whole paraphernalia of the claimed genuine transactions is only on paper. The onus was on the assessee to prove that it has had genuine loss in the impugned transactions as it was the assessee who has made a claim that it was engaged in genuine contract to supply coriander a commodity in which it does not deal in its normal course of business. The assessee had failed to discharge this onus to establish that the loss happened in normal course of and it was not a manufactured transaction with a motive to incur loss on paper to set off its profit from dealing 6.3.21 In the case of Shri Charan Singh vs. Chandra Bhan Singh (AIR 1988 SC 6370), the Hon'ble Supreme Court have clarified that the burden of proof lies on the party who substantially asserts the affirmative of the issue and not upon the party who denies it. It has been further held that the party cannot, on failure to establish a prima facie case, take advantage of the weakness of his adversary's case. The party must succeed by the strength of his own right and the clearness of his own proof. He cannot be heard to say that it was too difficult or virtually impossible to prove the matter in question. In the case under consideration, since it is the assessee who had made the claim that it had a genuine loss in transactions which had no involvement of any third parties, all the facts were especially within it's knowledge. Section 102 of Indian Evidence Act makes it clear that initial s is on person who substantially asserts a claim. In the present case, it is seen that the assessee has failed to discharge its burden of proof and the Assessing Officer, on the other hand, has brought in sufficient evidences to prove that the claim of the assessee was incorrect. 6.3.22 On the issue of circumstantial evidence and in the matters related to the discharge of 'onus of proof and the relevance of surrounding circumstances of the case, the ITA No. 1645/M/2020 11 M/s Vision Mellenium Exports Pvt. Ltd. aterial facts and after taking into account the substance behind the vail of form of the impugned transactions. A genuine transaction must be proved to be genuine in all respect. The onus was on the assessee to prove that the transaction leading to claim of loss in commodity trade was distinctly genuine transaction and not bogus, premeditated transaction arranged with a view to evade taxes. The onus was on the assessee to establish the substance of the transactions which had absolutely no and had no transfer of goods as well. I find that the whole paraphernalia of the claimed genuine transactions is only on paper. The onus was on the assessee to prove that it has had genuine loss in the impugned ade a claim that it was engaged in genuine contract to supply coriander a commodity in which it does not deal in its normal course of business. The assessee had failed to discharge this onus to establish that the loss happened in normal course of and it was not a manufactured transaction with a motive to incur loss on paper to set off its profit from dealing 6.3.21 In the case of Shri Charan Singh vs. Chandra Bhan Singh (AIR 1988 SC 6370), the Hon'ble Supreme Court have e burden of proof lies on the party who substantially asserts the affirmative of the issue and not upon the party who denies it. It has been further held that the party cannot, on failure to establish a prima facie case, is adversary's case. The party must succeed by the strength of his own right and the clearness of his own proof. He cannot be heard to say that it was too difficult or virtually impossible to prove the matter in ince it is the assessee who had made the claim that it had a genuine loss in transactions which had no involvement of any third parties, all the facts were especially within it's knowledge. Section 102 of Indian Evidence Act makes it clear that initial s is on person who substantially asserts a claim. In the present case, it is seen that the assessee has failed to discharge its burden of proof and the Assessing Officer, on the other hand, has brought in sufficient evidences to prove 6.3.22 On the issue of circumstantial evidence and in the matters related to the discharge of 'onus of proof and the relevance of surrounding circumstances of the case, the Honible Supreme Court in the case of CIT Vs. Durga Prasad More I(1972) 82 ..that though an appellant's statement must be considered real until it was shown that there were reasons to believe that the appellant was not the real, in a case where the party relied on self in the documents, it was for the party to establish the transfer of those recitals, the taxing authorities were entitled to look into the surrounding circumstances to find out the reality of such recitals. Science has not yet invented any instrument to evidence placed before a Court or Tribunal. the Courts and the Tribunals have to judge the evidence before them by applying the test of human probability. Human minds may differ as to the reliability of piece of decision of the final fact finding authority is made conclusive by law." 6.3.23 The above ratio as laid down by the Hon'ble Supreme Court has been reiterated and applied by the Hon'ble Apex Court in the case of Sumati Daya which acknowledges that what is apparent may not be real and test of human probabilities has to be applied to understand if the apparent is real and if the transaction fails to withstand the test of human probabilities it has to be taken as an in evidences suggest otherwise. 6.3.24 In this regard, it is also pertinent to refer to the decision of the Hon'ble Punjab and Haryana High Court in the case of Som Nath Maini v. CIT [2008] 306 IT 414 (P Har.), confirming the order of the Tribunal, the Hon'ble High Court held that the burden of proving that income is subject to tax is on the revenue but, on the facts, to show that the transaction is genuine, burden is primarily on the assessee. As per the Hon'ble High Court, the Assessing Officer is to apply the test of human probabilities for deciding genuineness or otherwise of a particular transaction. Mere leading of the evidence that the transaction was genuine, cannot be conclusive. Any such ev assessed by the Assessing Officer in a reasonable way. Genuineness of the transaction can be rejected in case the assessee leads evidence which is not trustworthy, and the department does not lead any evidence on such an issue. M/s Vision Mellenium Exports Pvt. Ltd. Honible Supreme Court in the case of CIT Vs. Durga Prasad More I(1972) 82 ITR540], have observed as under: ..that though an appellant's statement must be considered real until it was shown that there were reasons to believe that the appellant was not the real, in a case where the party relied on self-sewing recit in the documents, it was for the party to establish the transfer of those recitals, the taxing authorities were entitled to look into the surrounding circumstances to find out the reality of such recitals. Science has not yet invented any instrument to test the reliability of the evidence placed before a Court or Tribunal. Therefore, the Courts and the Tribunals have to judge the evidence before them by applying the test of human probability. Human minds may differ as to the reliability of piece of evidence, but, in the sphere, the decision of the final fact finding authority is made conclusive by law." 6.3.23 The above ratio as laid down by the Hon'ble Supreme Court has been reiterated and applied by the Hon'ble Apex Court in the case of Sumati Dayal vs. CIT (214 ITR which acknowledges that what is apparent may not be real and test of human probabilities has to be applied to understand if the apparent is real and if the transaction fails to withstand the test of human probabilities it has to be taken as an in-genuine transaction even if documentary evidences suggest otherwise. 6.3.24 In this regard, it is also pertinent to refer to the decision of the Hon'ble Punjab and Haryana High Court in the case of Som Nath Maini v. CIT [2008] 306 IT 414 (P Har.), confirming the order of the Tribunal, the Hon'ble High Court held that the burden of proving that income is subject to tax is on the revenue but, on the facts, to show that the transaction is genuine, burden is primarily on the assessee. er the Hon'ble High Court, the Assessing Officer is to apply the test of human probabilities for deciding genuineness or otherwise of a particular transaction. Mere leading of the evidence that the transaction was genuine, cannot be conclusive. Any such evidence is required to be assessed by the Assessing Officer in a reasonable way. Genuineness of the transaction can be rejected in case the assessee leads evidence which is not trustworthy, and the department does not lead any evidence on such an issue. ITA No. 1645/M/2020 12 M/s Vision Mellenium Exports Pvt. Ltd. Honible Supreme Court in the case of CIT Vs. Durga Prasad ..that though an appellant's statement must be considered real until it was shown that there were reasons to believe that the appellant was not the real, sewing recitals in the documents, it was for the party to establish the transfer of those recitals, the taxing authorities were entitled to look into the surrounding circumstances to find out the reality of such recitals. Science has not yet test the reliability of the Therefore, the Courts and the Tribunals have to judge the evidence before them by applying the test of human probability. Human minds may differ as to the evidence, but, in the sphere, the decision of the final fact finding authority is made 6.3.23 The above ratio as laid down by the Hon'ble Supreme Court has been reiterated and applied by the Hon'ble Apex l vs. CIT (214 ITR 801), which acknowledges that what is apparent may not be real and test of human probabilities has to be applied to understand if the apparent is real and if the transaction fails to withstand the test of human probabilities it has to be genuine transaction even if documentary 6.3.24 In this regard, it is also pertinent to refer to the decision of the Hon'ble Punjab and Haryana High Court in the case of Som Nath Maini v. CIT [2008] 306 IT 414 (Punj. & Har.), confirming the order of the Tribunal, the Hon'ble High Court held that the burden of proving that income is subject to tax is on the revenue but, on the facts, to show that the transaction is genuine, burden is primarily on the assessee. er the Hon'ble High Court, the Assessing Officer is to apply the test of human probabilities for deciding genuineness or otherwise of a particular transaction. Mere leading of the evidence that the transaction was genuine, idence is required to be assessed by the Assessing Officer in a reasonable way. Genuineness of the transaction can be rejected in case the assessee leads evidence which is not trustworthy, and the department does not lead any evidence on such an issue. 6.3.25 In the landmark judgement, in the case of McDowell &: Co. Ltd. (1985) 154 ITR Court have observed as under: "Tax planning may be legitimate provided it is within the framework of law. Colourable devices cannot be part of entertain the belief that it is honourable to avoid the payment of tax by resorting to dubious methods. It is the obligation of every citizen to pay the taxes honesly without resorting to subterfuges." 6.3.26 Needless to say that every person is entitled to so arrange his affairs as to avoid taxation but the arrangement must be real and genuine and not a sham or make believe. In this regard, it is reiterated that the view expressed by the Hon'ble Supreme Court in CIT (1985) 154 ITR 148 was upheld once again in the case of Vodafone International holding BV v. Union of India 17 taxman.com 202 by Hon'ble Supreme Court clearing the doubts about the perceived overruling effect of deci Hon'ble Supreme Court in the case of Azadi Bachao Andolan 263 IT 706 over the findings in the case of McDowell & Co. Ltd. (supra). 6.3.27 In this regard, it is most pertinent to note that an inference about the genuineness of apparent Commodity Trade Loss transactions, which had not been carried through any Stock exchange and which does not even involve any third party who could testify the genuineness or otherwise of the transactions has to be drawn on the basis of the surrounding circumstances and of the assessee in making payments, delivering the goods as well as other material available on the record. 6.3.28 In the given facts and circumstances of the case as discussed previously and in the light of guidance available from the judicial pronouncements referred to above, I am of the considered view that documents submitted as evidences to prove the genuineness of the said transactions are themselves found to serve as smoke screen to cover up the true nature of the transa of the case, as it is revealed that the assessee entered into the forward contracts of the said commodity trading with the sole motive to incur loss to set off with the income arising out of purchase and sale of shares M/s Vision Mellenium Exports Pvt. Ltd. .25 In the landmark judgement, in the case of McDowell &: Co. Ltd. (1985) 154 ITR 148 (SC)], the Hon'ble Supreme Court have observed as under: "Tax planning may be legitimate provided it is within the framework of law. Colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid the payment of tax by resorting to dubious methods. It is the obligation of every citizen to pay the taxes honesly without resorting to subterfuges." edless to say that every person is entitled to so arrange his affairs as to avoid taxation but the arrangement must be real and genuine and not a sham or make believe. In this regard, it is reiterated that the view expressed by the Hon'ble Supreme Court in the case of McDowell & Co. Ltd Vs. CIT (1985) 154 ITR 148 was upheld once again in the case of Vodafone International holding BV v. Union of India 17 taxman.com 202 by Hon'ble Supreme Court clearing the doubts about the perceived overruling effect of deci Hon'ble Supreme Court in the case of Azadi Bachao Andolan 263 IT 706 over the findings in the case of McDowell & Co. 6.3.27 In this regard, it is most pertinent to note that an inference about the genuineness of apparent Commodity de Loss transactions, which had not been carried through any Stock exchange and which does not even involve any third party who could testify the genuineness or otherwise of the transactions has to be drawn on the basis of the surrounding circumstances and having regard to the conduct of the assessee in making payments, delivering the goods as well as other material available on the record. 6.3.28 In the given facts and circumstances of the case as discussed previously and in the light of guidance available from the judicial pronouncements referred to above, I am of the considered view that documents submitted as evidences to prove the genuineness of the said transactions are themselves found to serve as smoke screen to cover up the true nature of the transactions in the facts and circumstances of the case, as it is revealed that the assessee entered into the forward contracts of the said commodity trading with the sole motive to incur loss to set off with the income arising out of purchase and sale of shares. | further find that the ITA No. 1645/M/2020 13 M/s Vision Mellenium Exports Pvt. Ltd. .25 In the landmark judgement, in the case of McDowell 148 (SC)], the Hon'ble Supreme "Tax planning may be legitimate provided it is within the framework of law. Colourable devices cannot be tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid the payment of tax by resorting to dubious methods. It is the obligation of every citizen to pay the taxes honesly edless to say that every person is entitled to so arrange his affairs as to avoid taxation but the arrangement must be real and genuine and not a sham or make believe. In this regard, it is reiterated that the view expressed by the the case of McDowell & Co. Ltd Vs. CIT (1985) 154 ITR 148 was upheld once again in the case of Vodafone International holding BV v. Union of India 17 taxman.com 202 by Hon'ble Supreme Court clearing the doubts about the perceived overruling effect of decision of Hon'ble Supreme Court in the case of Azadi Bachao Andolan 263 IT 706 over the findings in the case of McDowell & Co. 6.3.27 In this regard, it is most pertinent to note that an inference about the genuineness of apparent Commodity de Loss transactions, which had not been carried through any Stock exchange and which does not even involve any third party who could testify the genuineness or otherwise of the transactions has to be drawn on the basis of the having regard to the conduct of the assessee in making payments, delivering the goods as 6.3.28 In the given facts and circumstances of the case as discussed previously and in the light of guidance available from the judicial pronouncements referred to above, I am of the considered view that documents submitted as evidences to prove the genuineness of the said transactions are themselves found to serve as smoke screen to cover up the ctions in the facts and circumstances of the case, as it is revealed that the assessee entered into the forward contracts of the said commodity trading with the sole motive to incur loss to set off with the income arising out . | further find that the contracts entered into by the assessee with the said two parties were sham transaction entered into for the purpose of evading tax. I note that the landmark decision of the Hon'ble Supreme Court in the case of McDowell and Company Limited, 154 IT 148 is squarely applicable in this case wherein it has been held that tax planning may be legitimate provided it is within the framework of the law and any colourable devices cannot be part of tax planning and it is wrong to encourage or e honourable to avoid the payment of tax by dubious methods. 6.3.29 Observation of Hon'ble Supreme Court in the case of CIT vs Sumati Dayal 214 this context may be relied upon in which it each and every matter has to be considered in the light of human probabilities. Any reasonable person considering the surrounding circumstances in the case and applying the test of human probabilities will conclude that the assessee arranged these losses by manufacturing transactions out of bogus forward contracts to minimize its tax liability which is otherwise payable by the assessee company legitimately and the claim of the assessee regarding losses in commodity trading is not genuine Decision of Hon'ble Supreme Court in the case of CIT vs. Durga Prasad More 82 IT 540, also referred to earlier, may also be relied upon in which their lordship has observed that " If all that an assessee who wants to evade some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look into surrounding circumstances to find out the reality of the recitals made in those documents." 6.3.30 On appreciation of the circumstances, the irresistible conclusion in this case is that the meticulous paper work by the assessee in entering into the said contracts and making transactions apparently as per the terms of the said contracts gets exposed in th the glaring facts and surrounding circumstances and that the contracts entered into by the assessee were nothing but smokescreen to carry out bogus transactions of loss in the garb of sale of commodity which was not real and assessee has failed to dispel all the quarries raised by the AO to M/s Vision Mellenium Exports Pvt. Ltd. contracts entered into by the assessee with the said two parties were sham transaction entered into for the purpose of evading tax. I note that the landmark decision of the Hon'ble Supreme Court in the case of McDowell and Company Limited, 154 IT 148 is squarely applicable in this case wherein it has been held that tax planning may be legitimate provided it is within the framework of the law and any colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid the payment of tax by dubious methods. 6.3.29 Observation of Hon'ble Supreme Court in the case of CIT vs Sumati Dayal 214 IT 801 (SC), as referred to earlier, in this context may be relied upon in which it is stated that the each and every matter has to be considered in the light of human probabilities. Any reasonable person considering the surrounding circumstances in the case and applying the test of human probabilities will conclude that the assessee anged these losses by manufacturing transactions out of bogus forward contracts to minimize its tax liability which is otherwise payable by the assessee company legitimately and the claim of the assessee regarding losses in commodity trading is not genuine although in paper it appears so. Decision of Hon'ble Supreme Court in the case of CIT vs. Durga Prasad More 82 IT 540, also referred to earlier, may also be relied upon in which their lordship has observed that " If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look into surrounding circumstances to find out the reality of the recitals made in those documents." 6.3.30 On appreciation of the facts and surrounding circumstances, the irresistible conclusion in this case is that the meticulous paper work by the assessee in entering into the said contracts and making transactions apparently as per the terms of the said contracts gets exposed in the light of the glaring facts and surrounding circumstances and that the contracts entered into by the assessee were nothing but smokescreen to carry out bogus transactions of loss in the garb of sale of commodity which was not real and assessee to dispel all the quarries raised by the AO to ITA No. 1645/M/2020 14 M/s Vision Mellenium Exports Pvt. Ltd. contracts entered into by the assessee with the said two parties were sham transaction entered into for the purpose of evading tax. I note that the landmark decision of the Hon'ble Supreme Court in the case of McDowell and Company Limited, 154 IT 148 is squarely applicable in this case wherein it has been held that tax planning may be legitimate provided it is within the framework of the law and any colourable devices cannot be part of tax planning and it is ntertain the belief that it is honourable to avoid the payment of tax by dubious methods. 6.3.29 Observation of Hon'ble Supreme Court in the case of IT 801 (SC), as referred to earlier, in is stated that the each and every matter has to be considered in the light of human probabilities. Any reasonable person considering the surrounding circumstances in the case and applying the test of human probabilities will conclude that the assessee anged these losses by manufacturing transactions out of bogus forward contracts to minimize its tax liability which is otherwise payable by the assessee company legitimately and the claim of the assessee regarding losses in commodity although in paper it appears so. Decision of Hon'ble Supreme Court in the case of CIT vs. Durga Prasad More 82 IT 540, also referred to earlier, may also be relied upon in which their lordship has observed that tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look into surrounding circumstances to find out the reality facts and surrounding circumstances, the irresistible conclusion in this case is that the meticulous paper work by the assessee in entering into the said contracts and making transactions apparently as e light of the glaring facts and surrounding circumstances and that the contracts entered into by the assessee were nothing but smokescreen to carry out bogus transactions of loss in the garb of sale of commodity which was not real and assessee to dispel all the quarries raised by the AO to establish that the transaction in question was real and not beyond human probabilities. 6.3.31 Hence, I find it only proper to hold that in the given facts and circumstances of the case and in consideration of the surrounding circumstances and applying the test of human probabilities, it has rightly been concluded by the Id.A that the forward contracts entered into by the assessee and the transactions claimed to have happened as per the said contracts for sale assessee were sham transactions which could not be held as genuine. The findings of the Id.A are accordingly upheld. The ground No. 1 is dismissed. 4.1 Further, the Ld. CIT(A) has also rejected the claim of the assessee of validity of the speculation loss eligible for set non-speculation profit. The relevant finding of the Ld. CIT(A) is reproduced as under: “7.3 Since, I have already held that the impugned transactions of commodity dealings claiming to ha in loss to the assessee were not a genuine transaction, this ground becomes infructuous and does not require adjudication. However, even if the substance of the transaction is ignored for the sake of discussion and only form is to be looked int that the transaction has to be treated as speculative in nature and hence, the loss arising on settlement of contracts has to be treated as speculation loss /s.43(5) and consequently, the same would not be available fo except against profits and gains, if any, of another speculation business in view of the provisions of section 73(1) of the Act. The Ground No. 2 is accordingly dismissed for statistical purposes. 5. Before us, no documentary evidence given by the assessee to controvert the finding of the lower authorities. The lower authorities have contract for purchase transactions were made within the related M/s Vision Mellenium Exports Pvt. Ltd. establish that the transaction in question was real and not beyond human probabilities. 6.3.31 Hence, I find it only proper to hold that in the given facts and circumstances of the case and in consideration of the surrounding circumstances and applying the test of human probabilities, it has rightly been concluded by the Id.A that the forward contracts entered into by the assessee and the transactions claimed to have happened as per the said contracts for sale of coriander resulting into loss to the assessee were sham transactions which could not be held as genuine. The findings of the Id.A are accordingly upheld. The ground No. 1 is dismissed.” Further, the Ld. CIT(A) has also rejected the claim of the ssee of validity of the speculation loss eligible for set speculation profit. The relevant finding of the Ld. CIT(A) is reproduced as under: 7.3 Since, I have already held that the impugned transactions of commodity dealings claiming to have resulted in loss to the assessee were not a genuine transaction, this ground becomes infructuous and does not require adjudication. However, even if the substance of the transaction is ignored for the sake of discussion and only form is to be looked into, I agree with the view of the Id AO that the transaction has to be treated as speculative in nature and hence, the loss arising on settlement of contracts has to be treated as speculation loss /s.43(5) and consequently, the same would not be available for set off except against profits and gains, if any, of another speculation business in view of the provisions of section 73(1) of the Act. The Ground No. 2 is accordingly dismissed for statistical purposes.” re us, no documentary evidence or explana given by the assessee to controvert the finding of the lower ities. The lower authorities have duty observed that the contract for purchase transactions were made within the related ITA No. 1645/M/2020 15 M/s Vision Mellenium Exports Pvt. Ltd. establish that the transaction in question was real and not 6.3.31 Hence, I find it only proper to hold that in the given facts and circumstances of the case and in consideration of the surrounding circumstances and applying the test of human probabilities, it has rightly been concluded by the Id.A that the forward contracts entered into by the assessee and the transactions claimed to have happened as per the of coriander resulting into loss to the assessee were sham transactions which could not be held as genuine. The findings of the Id.A are accordingly upheld. The Further, the Ld. CIT(A) has also rejected the claim of the ssee of validity of the speculation loss eligible for set off against speculation profit. The relevant finding of the Ld. CIT(A) is 7.3 Since, I have already held that the impugned ve resulted in loss to the assessee were not a genuine transaction, this ground becomes infructuous and does not require adjudication. However, even if the substance of the transaction is ignored for the sake of discussion and only o, I agree with the view of the Id AO that the transaction has to be treated as speculative in nature and hence, the loss arising on settlement of contracts has to be treated as speculation loss /s.43(5) and r set off except against profits and gains, if any, of another speculation business in view of the provisions of section 73(1) of the Act. The Ground No. 2 is accordingly dismissed for or explanation has been given by the assessee to controvert the finding of the lower duty observed that the contract for purchase transactions were made within the related parties, no actual payment was made on the letter head of AMPL and BOL without any identification numbers, transactions were not carried out on any commodity exchange, agreement was not stamped etc. documentary evidence to contradict the finding of the Ld. CIT(A have no option other than We accordingly uphold the order of ld CIT(A). T of the assessee are dismissed. 6. In the result, the appeal of the assessee is dismissed. Order pronounced in Sd/ (KAVITHA RAJAGOPAL JUDICIAL MEMBER Mumbai; Dated: 22/08/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// M/s Vision Mellenium Exports Pvt. Ltd. parties, no actual payment was made, the debit notes w on the letter head of AMPL and BOL without any identification transactions were not carried out on any commodity agreement was not stamped etc. In absence of any documentary evidence to contradict the finding of the Ld. CIT(A have no option other than to uphold the finding of the Ld. CIT(A). We accordingly uphold the order of ld CIT(A). The grounds of appeal of the assessee are dismissed. In the result, the appeal of the assessee is dismissed. Order pronounced in the open Court on 22/08/2023. Sd/- Sd/ KAVITHA RAJAGOPAL) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai ITA No. 1645/M/2020 16 M/s Vision Mellenium Exports Pvt. Ltd. the debit notes was printed on the letter head of AMPL and BOL without any identification transactions were not carried out on any commodity In absence of any documentary evidence to contradict the finding of the Ld. CIT(A), we uphold the finding of the Ld. CIT(A). he grounds of appeal In the result, the appeal of the assessee is dismissed. /08/2023. Sd/- (OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai