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Asst. Year 2009-10

2. The appellant craves leave to add, alter, amend or modify any of the grounds of appeal on or before the date of hearing of appeal.

2. Briefly stated facts as culled out from the records are that assessee is an individual running a sole proprietary concern namely M/s Adinath Impex. Return of income for Asst. Year 2009-10 was filed on 30.09.2009 declaring total income of Rs.4,41, 470/-. The case was selected for scrutiny assessment and notice u/s 143(2) of the Act followed by notice u/s 142(1) of the Act along with detailed questionnaire were issued and served. Necessary details and information as called for were duly supplied by the assessee. Assessee is in the business of trading in gold, silver, bullion, gold ornaments and diamonds. During the year turnover of Rs.395.42 crores was achieved with the GP margin of 0.03% and net profit of Rs.5,79,334/-. After scrutiny of various details, books of account, financial statements, by ld. Assessing Officer was not satisfied with the bonafideness of certain transactions ending up with loss entered into with three parties namely Aryavart Commodities Pvt. Ltd. (ACPL), Jay Jewellers and S. K. Jewellers in relation to sale of gold items. Ld. Assessing Officer calculated the total of such transaction ending up in loss totaling to Rs.77,95,670/- with the observation that they have taken place due to intraday sale at lower rate to its associate concern.

4.5 without prejudice to above, the argument of the appellant that the incurred loss is relatable to the issue of gold and diamond market being highly volatile and fluctuating has been considered and found to be not supporting the appellants case. There is no denying to the fact that the gold and bullion market is volatile and fluctuating but at the same time it is also true that the fluctuations are inter day and not intraday. The gold and bullion market though fluctuates over a period of time but the fluctuations are not sudden unless there is some major catastrophe in the national or international political, economic or social situation. There could be a possibility of a marginal increase or decrease in the prices when a comparison is made between two days but the prices of sale and purchase for a particulars day are always fixed. It does not works like a stock market where the sale purchase price of shares vary during a particular day. The intraday price variations happen only at the MCX -gold and bullion Exchange wherein trading of gold of purchase is done but the fact remains that the appellant has not transacted on the floor of MCX but has merely traded as an ordinary businessman. Even if assuming, that the sale price of gold bought by the appellant on a particular day was less than its purchase price, the appellant could have easily waited for the price to rise either to the level of its purchases or higher than that. No justification is available on records, to indicate as to what were the compelling circumstances with the appellant to sell gold and diamond every time below the purchase price and thereby occurring a loss and eroding his capital,. Thus the argument of the appellant totally fail that the loss is attributable to fluctuations in the gold and diamond market.