GRAND FOUNDRY LIMITED,MUMBAI vs. THE ASST. COMMISSIONER OF INCOME-TAX,CIRCLE -7(1)(1), MUMBAI, MUMBAI

The Assessee has claimed travelling expenses including foreign travelling expenses of Rs.31,94,089/-. From the details filed, the Assessing Officer noticed that persons other than directors have also travelled. On query qua directors, no purpose of travel has been brought on record and no income is shown as derived from such travel. Therefore, the Assessing Officer held that the Assessee has not been able to substantiate the said claim of expenses for the purpose of business, as per section 37(1) of the Act. Accordingly, the Assessing Officer, disallowed the amount of Rs.31,94,089/- claimed to has been incurred towards foreign travel.

Further, during the year under consideration, the Assessee entered into „One Time Settlement‟ arrangement with Life Insurance Corporation of India from whom a loan of Rs.1,00,00,000/- (principal) was taken. Accordingly, the 3 ITA 3051Mum/2023 Grand Foundry Limited Assessee company has received waiver of the said loan from LIC. While accounting for the same, the Assessee company has directly credited the amount of Rs.1,00,00,000/- to the capital reserve account in the balance sheet. Therefore vide order sheet entry dated 15/03/2016, the Assessee was asked “as to why said amount be not considered as income during the year under consideration, in view of the decision of the Bombay High Court in the case of Solid Containers vs. DCIT 308 ITR 417 (Bom)”. The Assessee has not brought on record any material in support of its action, therefore, the Assessing Officer also added the amount of Rs.1,00,00,000/- under section 41(1) of the Act, to the income of the Assessee.

Further, the Assessing Officer also observed that for the year under consideration, the Assessee has claimed loss of Rs.8,84,38,000/- which was wrongly claimed. When confronted the same, the Assessee accepted the same and furnished revised computation of income, which was accepted as per paragraph 3 of the assessment order and resultantly, the claim of loss made by the Assessee was denied.

Finally, the Assessing Officer computed income at “NIL” after set off brought forward loss and unabsorbed deprecation of Rs.1,41,29,331/- & Rs.45,922/- respectively. The Assessee being aggrieved, challenged the aforesaid additions by filling first 4 ITA 3051Mum/2023 Grand Foundry Limited appeal before the CIT(A) who vide ex-parte order dated 30/06/2023, dismissed the appeal of the Assessee for non compliance. Further aggrieved, the Assessee filed second appeal before the Tribunal.

Though the Assessee through his Counsel, has filed an adjournment application, however by considering the peculiar fact that the impugned order is an ex-parte, we are not inclined to allow the same and thus heard the Ld. DR and perused materials on record, to decide this appeal.

It is an admitted fact that before the Ld. Commissioner, the Assessee has not made any substantive reply/submission specifically in response to the final show cause notice dated 13/03/2023 by the Ld. Commissioner , as well, which reflects the inaction and negligence of the Assessee, therefore the Assessee do not deserve any leniency, however for the just decision of the case and in the interest of substantial justice, we are inclined to remand the instant case to the file of the Ld. Commissioner for decision afresh but subject to deposit of Rs. 2100/-, in the Prime Minister National Relief funds (PMNRF) within 30 days of the receipt of this order. Suffice to say, the ld. Commissioner shall afford reasonable opportunity of being heard to the Assessee. We also direct the Assessee to co-operate with the appellate proceedings before the Ld. Commissioner and to file the relevant reply / documents which would be essential and to be needed by the Ld. Commissioner for proper adjudication of the issues under appeal.