Law:

Section:

Section 73 of the Income-tax Act, 1961 [Corresponding to section 24 of the Indian Income-tax Act, 1922] - Losses - In speculation business - Assessment year 1946-47 - Assessee did business of speculation in silver, gold and linseed - During relevant assessment year, he showed a gross loss in speculative transactions - ITO however, rejected assessee's claim on ground that assessee had not maintained contemporaneous record of speculative transactions - Tribunal upheld ITO's order - Whether it was for assessee to establish that he had incurred loss in speculative transactions - Held, yes - Whether since assessee failed to do so, revenue authorities were justified in rejecting assessee's claim - Held, yes FACTS The applicant was a cloth merchant, but he also did business on his own behalf at the material time both in piece-goods and in speculation in silver, gold and linseed. In his income-tax return for the relevant assessment year the applicant showed his total net income as Rs. 26,000 odd but he showed a gross loss in speculative transactions of Rs. 24,000 odd. In support of his claim for loss on the speculative transactions the applicant produced eight invoices from arhtias. The amounts of these losses were also entered in his books. He produced no sauda bahi, nor did he produce any yearly statement from his arhtias showing the total transactions entered into by him with them. The ITO accepted the gross income of the applicant as appearing in his books but in respect of his claim for loss on speculative transactions held that the books could not be accepted as no sauda bahi or other contemporaneous record of the transactions as and when made was maintained, that there was only one item of profit shown, and that there was nothing to show that all the satta transactions had been incorporated in the account books. The ITO remarked that any number of profit transactions could with impunity be kept outside the books. In the circumstances he disallowed the claim for an alleged net loss of Rs. 24,000. On appeal, the AAC upheld the findings of the ITO. The applicant then went to the Appellate Tribunal which dismissed his appeal. On reference: HELD The Income-tax…

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