MITRA AUXILIARY CHEMICALS PRIVATE LIMITED,RATNAGIRI vs. ASSISTANT COMMISSIONER OF INCOME-TAX, RATNAGIRI CIRCLE, RATNAGIRI

This appeal is filed by the assessee against the order of CIT(A)-2, Kolhapur dated 09.10.2019 for the Assessment Year 2011-12.

The solitary issue raised in the appeal relates to the confirming of disallowance of Rs.19,20,000/- only on the basis of doubts ignoring the submissions and log book. 3. Before me, at the outset, ld. Counsel for the assessee submitted that this is a case where the assessee is a company and is engaged in the business of chemicals productions. The assessee filed the return of income declaring total income of Rs.10,52,070/-. The case was selected for scrutiny. At the end of the assessment u/s 143(3) of the Act, the Assessing Officer assessed the total income at Rs.29,72,070/- against the returned income of Rs.10,52,070/- after making certain addition of Rs.19,20,000/-. The contents of para 5 and 6 of the assessment order are relevant and the same are extracted hereunder :- “5. One of the directors Shri. Milind S, Bapat attended on 25/03/2014 and he was again asked to produce documentary evidences regarding availing of services from sister concern and the case was adjourned to 26/03/2014. On this date the Director Shri. Milind S. Bapat attended and filed a copy of minutes of the meeting held between the Directors of the assessee company and it's sister concern M/s Snehalate Chemicals Pvt. Ltd. He also filed a copy of register a stated to be belonging to visit of consultants to the assessee company.

Assessee cannot claim payments to sister concern merely on the basis of filing a copy of agreement, copy of minutes of the meeting and copy of consultant's visit register. No details regarding the persons deployed from the sister concern for carrying out the desired work have been filed. Therefore, assessee was not able to clearly substantiate as to which personal from the sister concern has been assigned to carry out a particular activity in the assessee company and on what remuneration charges. Since the assessee failed to produce any documentary evidences work wise and personal wise regarding the so called agreement with the sister concern, the total payments made of Rs.19,20,000/- to M/s Snehalate Chemicals Pvt. Ltd. is being disallowed and added back to the total income of the assessee. Penalty proceeding u/s.271(1)(c) are being initiated on this issue.”

Before the first appellate authority, the assessee filed a written submission and chose not to appear personally or represent the case through the authorised representative. The written submissions were not adequate too. The CIT(A) issued number of letters and notices and the assessee did not consider relevant for personal appearance. The CIT(A) dismissed the appeal of the assessee as per the discussion given in para 6 of his order.

Before me, explaining the background facts of the case, ld. Counsel for the assessee submitted that the CIT(A) adjudicated the issue in the absence of the assessee merely relying on the written submission.