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Income Tax Appellate Tribunal, MUMBAI BENCH “A” MUMBAI
Before: SHRI KULDIP SINGH & SHRI OM PRAKASH KANT
PER OM PRAKASH KANT, AM
This appeal by the assessee is directed against order dated 22.03.2022 passed by the Ld. Commissioner of Income-tax (Appeals)-54, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2009-10, raising following ground:
Ambitious Plastomac Company Ltd. Ambitious Plastomac Company 2 ITA No. 1485/M/2022
1. The Ld. ITO and CIT(A) The Ld. ITO and CIT(A)-54 erred in law and on facts in and on facts in passing the assessment order u/s 144 of IT Act, 1961 which passing the assessment order u/s 144 of IT Act, 1961 which passing the assessment order u/s 144 of IT Act, 1961 which is requested to be quashed. is requested to be quashed.
The Ld. ITO and CIT(A) The Ld. ITO and CIT(A)-54 erred in law by making the 54 erred in law by making the addition of addition of ₹2,39,553/- being disallowance of various being disallowance of various expenses. expenses. 3. Prayer : Prayer :- i. To set-aside the assessment order u/s 144 of the IT Act, To set aside the assessment order u/s 144 of the IT Act, 1961 passed by the DCIT, CC-49, Mumbai. 1961 passed by the DCIT, CC ii. To drop the addition of ₹2,39,553/- being disallowance To drop the addition of being disallowance of various expenses. of various expenses. 2. At the outset, we may like to mention that despite notifying At the outset, we may like to mention that despite notifying At the outset, we may like to mention that despite notifying none attended on behalf of the assessee and therefore, appeal was behalf of the assessee and therefore, appeal was behalf of the assessee and therefore, appeal was heard ex-parte qua the assessee qua the assessee, after hearing arguments of the Ld. after hearing arguments of the Ld. Departmental Representative (DR). Departmental Representative (DR).
Briefly stated, the facts of the case are that Briefly stated, the facts of the case are that the assessee was the assessee was engaged in business of manufacturing engaged in business of manufacturing baby care products. F baby care products. For the year under consideration no return of income was filed by the year under consideration no return of income was filed by the year under consideration no return of income was filed by the assessee. The case was selected by the Assessing Officer under assessee. The case was selected by the Assessing Officer under assessee. The case was selected by the Assessing Officer under compulsory scrutiny and thereafter he issued statutory notices scrutiny and thereafter he issued statutory notices scrutiny and thereafter he issued statutory notices
Ambitious Plastomac Company Ltd. Ambitious Plastomac Company 3 ITA No. 1485/M/2022 under the Income-tax Act, 1961 (in short tax Act, 1961 (in short ‘the Act’). The Assessing ‘the Act’). The Assessing Officer has noted that in assessment year 2008 Officer has noted that in assessment year 2008 Officer has noted that in assessment year 2008-09 also no compliance was made by the Assessing Officer except a letter compliance was made by the Assessing Officer except a letter compliance was made by the Assessing Officer except a letter wherein the company stated that assessee wherein the company stated that assessee was a sick unit and closed a sick unit and closed for more than 7 years. There was no purcha for more than 7 years. There was no purchase or sale or se or sale or business activity and company and activity and company and factories were seized by banks and no seized by banks and no return of income was filed for last 5 years. The assessee also return of income was filed for last 5 years. The assessee also return of income was filed for last 5 years. The assessee also reported that a Promot reported that a Promoter Director Mr. Girish J. Mehta was expired in . Mehta was expired in the month of June 2009 and therefore, the month of June 2009 and therefore, company was facing various company was facing various litigation and liquidation problem. In the year under consideration, litigation and liquidation problem. In the year under consideration, litigation and liquidation problem. In the year under consideration, the Assessing Officer issued notice u/s 271(1)(b) of the Act also but the Assessing Officer issued notice u/s 271(1)(b) of the Act also but the Assessing Officer issued notice u/s 271(1)(b) of the Act also but that was not responded. In view of no information in respect of that was not responded. In view of no information in respect of that was not responded. In view of no information in respect of notices proposing addition notices proposing addition, the Assessing Officer completed the , the Assessing Officer completed the assessment in terms of section 144 of the Act (i.e. the best judgment assessment in terms of section 144 of the Act (i.e. the best judgment assessment in terms of section 144 of the Act (i.e. the best judgment assessment) and estimated the total income at assessment) and estimated the total income at ₹11,00,000/ 11,00,000/- on the basis of records of earlier assessment year basis of records of earlier assessment year including for AY including for AY 2008-09.
Ambitious Plastomac Company Ltd. Ambitious Plastomac Company 4 ITA No. 1485/M/2022 On further appeal, the assessee filed additional evidence before the ppeal, the assessee filed additional evidence before the ppeal, the assessee filed additional evidence before the Ld. CIT(A) giving details of commission income and other expenses Ld. CIT(A) giving details of commission income and other expenses Ld. CIT(A) giving details of commission income and other expenses incurred for protecting its protecting its assets from extinction. The Ld. CIT(A) . The Ld. CIT(A) partly allowed the expenses partly allowed the expenses of ₹8,08,887/- and in respect of other and in respect of other expenses in absence of any evidences in support thereof, the Ld. expenses in absence of any evidences in support thereof, the Ld. expenses in absence of any evidences in support thereof, the Ld. CIT(A) sustained the addition of CIT(A) sustained the addition of ₹2,39,553/-.
Aggrieved, the assessee is in appeal before the Tribunal. Aggrieved, the assessee is in appeal before the Tribunal. Aggrieved, the assessee is in appeal before the Tribunal.
We have heard the submission of the Ld. DR and perused the We have heard the submission of the Ld. DR and perused the We have heard the submission of the Ld. DR and perused the relevant material on record. We find that the Ld. CIT(A) has relevant material on record. We find that the Ld. CIT(A) has relevant material on record. We find that the Ld. CIT(A) has sustained the addition of sustained the addition of ₹2,39,553/- observing as under: observing as under:
“12. The facts of the issue involved, the finding of the AO in the 12. The facts of the issue involved, the finding of the AO in the 12. The facts of the issue involved, the finding of the AO in the assessment order and the submission made by the appellant are order and the submission made by the appellant are order and the submission made by the appellant are identical to that in A.Y. 2008 identical to that in A.Y. 2008-09 in the case of the appellant. For A.Y. 09 in the case of the appellant. For A.Y. 2008-09, the issue involved is discussed at length in para 5.1 to 5.3.2 of 09, the issue involved is discussed at length in para 5.1 to 5.3.2 of 09, the issue involved is discussed at length in para 5.1 to 5.3.2 of this appellate order. On the same issue the appeal of the this appellate order. On the same issue the appeal of the appellant has appellant has been partly allowed for A.Y. 2008 been partly allowed for A.Y. 2008-09. Thus, following the appellate 09. Thus, following the appellate order us 250 of the Act in the case of the appellant for A.Y. 2008 order us 250 of the Act in the case of the appellant for A.Y. 2008 order us 250 of the Act in the case of the appellant for A.Y. 2008-09, expenses in respect of director expenses of Rs.63,972 / expenses in respect of director expenses of Rs.63,972 / expenses in respect of director expenses of Rs.63,972 /-, internet expenses of Rs.6,797/ expenses of Rs.6,797/-, miscellaneous expenses of Rs. 10,222/ us expenses of Rs. 10,222/-, mobile
Ambitious Plastomac Company Ltd. Ambitious Plastomac Company 5 ITA No. 1485/M/2022 expenses of Rs.39,187/ expenses of Rs.39,187/-, telecommunication charges of Rs.33,975/ , telecommunication charges of Rs.33,975/- and general expenses of Rs.85,400/ and general expenses of Rs.85,400/- totaling to Rs.2,39,553/ totaling to Rs.2,39,553/- cannot be allowed as business expenditure. Thus, out of the total addition of be allowed as business expenditure. Thus, out of the total addition of be allowed as business expenditure. Thus, out of the total addition of Rs. 11,00,000/ Rs. 11,00,000/-, addition of Rs.2,39,553/- is upheld and the balance is upheld and the balance addition of Rs.8.60.447/ addition of Rs.8.60.447/- is deleted.”
5.1 We find that the Ld. CIT(A) has followed his finding in We find that the Ld. CIT(A) has followed his finding in We find that the Ld. CIT(A) has followed his finding in assessment year 2008 assessment year 2008-09, where he has observed as under: 09, where he has observed as under:
“5.3.1 The facts of the case are that that th 5.3.1 The facts of the case are that that the assessee had not filed e assessee had not filed return of income for return of income for A.Y.2008-09. The AO had issued notice us.143(2) 09. The AO had issued notice us.143(2) of the Income of the Income-tax Act, 1961 and it was reportedly served on the tax Act, 1961 and it was reportedly served on the appellant by speed post on 27.05.2009. Further, the AO had issued appellant by speed post on 27.05.2009. Further, the AO had issued appellant by speed post on 27.05.2009. Further, the AO had issued notice u/s.142(1) dated 26.07.20 notice u/s.142(1) dated 26.07.2010 and the hearing was fixed on 10 and the hearing was fixed on 05.08.2010. However, nobody attended nor any submission was filed However, nobody attended nor any submission was filed However, nobody attended nor any submission was filed by the appellant. Further, notice u/s.142(1) dated 23.08.2010 was by the appellant. Further, notice u/s.142(1) dated 23.08.2010 was by the appellant. Further, notice u/s.142(1) dated 23.08.2010 was issued and served on the appellant. In response to the notice issued and served on the appellant. In response to the notice issued and served on the appellant. In response to the notice u/s.142(1), the assessee submi u/s.142(1), the assessee submitted a reply vide letter dated 31.08.2010 tted a reply vide letter dated 31.08.2010 stating only general business conditions of the appellant. Thereafter, stating only general business conditions of the appellant. Thereafter, stating only general business conditions of the appellant. Thereafter, the AO issued notice u/s.271(1)(b) on 24.09.2010 so as to levy penalty the AO issued notice u/s.271(1)(b) on 24.09.2010 so as to levy penalty the AO issued notice u/s.271(1)(b) on 24.09.2010 so as to levy penalty for non compliance of notices u/s.143(2) and 142(1). for non compliance of notices u/s.143(2) and 142(1). The AO also issued a showcause notice dated 24.09.2010 asking the assessee as to a showcause notice dated 24.09.2010 asking the assessee as to a showcause notice dated 24.09.2010 asking the assessee as to why the assessment proceedings should not be finalized us. 144 of the why the assessment proceedings should not be finalized us. 144 of the why the assessment proceedings should not be finalized us. 144 of the Act. Even in response to Act. Even in response to showcause notice, the assessee did not respond showcause notice, the assessee did not respond and make any submission. Accordingly. the AO has pas and make any submission. Accordingly. the AO has passed the order us. sed the order us. 144 of the Income 144 of the Income-tax Act and made an estimated of Rs.10 tax Act and made an estimated of Rs.10 lakhs on the Ambitious Plastomac Company Ltd. Ambitious Plastomac Company 6 ITA No. 1485/M/2022 basis of available records including the records relevant to A.Y.2007 basis of available records including the records relevant to A.Y.2007 basis of available records including the records relevant to A.Y.2007- 08.
During the appellate proceedings, it is submitted that the operations of During the appellate proceedings, it is submitted that the operations of During the appellate proceedings, it is submitted that the operations of the company were clos the company were closed from the year 1999-2000. The factories as 2000. The factories as well as the office premises were seized by various banks and financial well as the office premises were seized by various banks and financial well as the office premises were seized by various banks and financial institutions. Further, the promoter director of the company. Shri Girish institutions. Further, the promoter director of the company. Shri Girish institutions. Further, the promoter director of the company. Shri Girish J. Mehta died in the month of June, 2009 and also due to non paymen J. Mehta died in the month of June, 2009 and also due to non paymen J. Mehta died in the month of June, 2009 and also due to non payment of his professional fees, the CA did not properly communicate. Further, of his professional fees, the CA did not properly communicate. Further, of his professional fees, the CA did not properly communicate. Further, there has been change in the management of the appellant company. there has been change in the management of the appellant company. there has been change in the management of the appellant company. Accordingly, it has tried to justify the non compliance to the notices Accordingly, it has tried to justify the non compliance to the notices Accordingly, it has tried to justify the non compliance to the notices u/s.143(2) and 142(1) of the Income u/s.143(2) and 142(1) of the Income-tax Act, 1961.
As discussed above, the appellant has not filed the return of income for As discussed above, the appellant has not filed the return of income for As discussed above, the appellant has not filed the return of income for the A Y 2003 the A Y 2003-09. The various notices u/s.143(2) and 142(1) were 09. The various notices u/s.143(2) and 142(1) were issued by the AO for which there was non compliance on the part of the issued by the AO for which there was non compliance on the part of the issued by the AO for which there was non compliance on the part of the appellant. Further, a showcause notice in appellant. Further, a showcause notice intimating the appellant to timating the appellant to pass the order us.144 of the Act issued by the A also remained non pass the order us.144 of the Act issued by the A also remained non pass the order us.144 of the Act issued by the A also remained non- complied. The non compliance of notices on the part of the appellant complied. The non compliance of notices on the part of the appellant complied. The non compliance of notices on the part of the appellant lead to best judgement order u/s.144 of the Income lead to best judgement order u/s.144 of the Income-tax Act, 1961. tax Act, 1961.
The AO had provided sufficie The AO had provided sufficient opportunities to the appellant to make nt opportunities to the appellant to make the submissions in response to the queries raised by the AO. The AO has the submissions in response to the queries raised by the AO. The AO has the submissions in response to the queries raised by the AO. The AO has specifically mentioned in assessment order that throughout the course specifically mentioned in assessment order that throughout the course specifically mentioned in assessment order that throughout the course of assessment proceedings, the assessee had defaulted at multiple of assessment proceedings, the assessee had defaulted at multiple of assessment proceedings, the assessee had defaulted at multiple instance in response to various statutory notices issued in its case ce in response to various statutory notices issued in its case ce in response to various statutory notices issued in its case leading to inordinate delay in completion of assessment proceedings. leading to inordinate delay in completion of assessment proceedings. leading to inordinate delay in completion of assessment proceedings. However, the appellant had not complied to the notices us.142(1) and However, the appellant had not complied to the notices us.142(1) and However, the appellant had not complied to the notices us.142(1) and 144 issued by the AO. In view of the above. the Assessm 144 issued by the AO. In view of the above. the Assessment Order u/s. ent Order u/s. Ambitious Plastomac Company Ltd. Ambitious Plastomac Company 7 ITA No. 1485/M/2022 144 was passed by the AO after providing sufficient opportunities of 144 was passed by the AO after providing sufficient opportunities of 144 was passed by the AO after providing sufficient opportunities of being heard to the appellant. Thus, the Assessment Order passed by the being heard to the appellant. Thus, the Assessment Order passed by the being heard to the appellant. Thus, the Assessment Order passed by the AO us. 144 of the Act is a valid order and it is upheld. AO us. 144 of the Act is a valid order and it is upheld.
5.3.2 The AO has made an addition of Rs. 10 5.3.2 The AO has made an addition of Rs. 10 lakhs on estimated basis lakhs on estimated basis based on the records relevant to A. Y.2008 based on the records relevant to A. Y.2008-09.
During the appellate proceedings, the appellant had submitted copies During the appellate proceedings, the appellant had submitted copies During the appellate proceedings, the appellant had submitted copies of the audited balance sheet and profit and loss account for the of the audited balance sheet and profit and loss account for the of the audited balance sheet and profit and loss account for the A.Y.2008-09 alongwith the evidences of litigations 09 alongwith the evidences of litigations of various banks of various banks and financial institutions. These additional evidences were forwarded and financial institutions. These additional evidences were forwarded and financial institutions. These additional evidences were forwarded to the AO for remand report. However, till date, no remand report has to the AO for remand report. However, till date, no remand report has to the AO for remand report. However, till date, no remand report has been received from the AO. Therefore, these grounds of appeal are been received from the AO. Therefore, these grounds of appeal are been received from the AO. Therefore, these grounds of appeal are decided on the basis of material decided on the basis of material available on record and the merits of available on record and the merits of the case.
It is submitted by the appellant that that the operations of the It is submitted by the appellant that that the operations of the It is submitted by the appellant that that the operations of the company were closed from the year 1999 company were closed from the year 1999-2000. The factories as well 2000. The factories as well as the office premises were seized by various banks and financial as the office premises were seized by various banks and financial as the office premises were seized by various banks and financial institutions. Further, the promoter of the company, Shri Girish J. Mehta ons. Further, the promoter of the company, Shri Girish J. Mehta ons. Further, the promoter of the company, Shri Girish J. Mehta died in the month of June, 2009 and also due to non payment of fees, died in the month of June, 2009 and also due to non payment of fees, died in the month of June, 2009 and also due to non payment of fees, the CA did not properly communicate. Further, there has been change the CA did not properly communicate. Further, there has been change the CA did not properly communicate. Further, there has been change in the management of the appellant company. The appella in the management of the appellant company. The appella in the management of the appellant company. The appellant has explained the reason for non furnishing of the return for A.Y.2008 explained the reason for non furnishing of the return for A.Y.2008 explained the reason for non furnishing of the return for A.Y.2008-09 and non compliance during the assessment proceedings before the AO. and non compliance during the assessment proceedings before the AO. and non compliance during the assessment proceedings before the AO. From the copy of letters from Development Credit Bank, Resolution the copy of letters from Development Credit Bank, Resolution the copy of letters from Development Credit Bank, Resolution Commercial Management Pvt. Commercial Management Pvt. Ltd., Asset Resolution Company(India) tion Company(India) Ltd. and Cosmos Co Ltd. and Cosmos Co-operative Bank Ltd., it is seen that the various operative Bank Ltd., it is seen that the various litigations with respect to recovery of dues from the appellant litigations with respect to recovery of dues from the appellant litigations with respect to recovery of dues from the appellant
Ambitious Plastomac Company Ltd. Ambitious Plastomac Company 8 ITA No. 1485/M/2022 company were initiated by various banks. It is also noticed that office company were initiated by various banks. It is also noticed that office company were initiated by various banks. It is also noticed that office premises of the appellant situat premises of the appellant situated at 119-120, Yashwant Shopping 120, Yashwant Shopping Center, 7th Carter Road. Borivali. Mumbai 400 066 and the factory Center, 7th Carter Road. Borivali. Mumbai 400 066 and the factory Center, 7th Carter Road. Borivali. Mumbai 400 066 and the factory premises located at Survey No.274, Plot No.6 to 9. Satguru Industrial premises located at Survey No.274, Plot No.6 to 9. Satguru Industrial premises located at Survey No.274, Plot No.6 to 9. Satguru Industrial Estate, Ukharia, Talaja Road, Bhavnagar, Gujarat were attached and Estate, Ukharia, Talaja Road, Bhavnagar, Gujarat were attached and Estate, Ukharia, Talaja Road, Bhavnagar, Gujarat were attached and sealed by various ba sealed by various banks and financial institutions.
Further, the appellant has submitted copies of audited balance sheet Further, the appellant has submitted copies of audited balance sheet Further, the appellant has submitted copies of audited balance sheet and profit and and profit and loss account. . The accounts were audited by Vishves A. . The accounts were audited by Vishves A. Shah, proprietor of M/s. Vishves A Shah, proprietor of M/s. Vishves A Shah & Co, Chartered Accountants. Shah & Co, Chartered Accountants. The audit repor The audit report was signed on 28.08.2008. From the audited balance t was signed on 28.08.2008. From the audited balance sheet and profit and loss account, it is seen that during the year, the sheet and profit and loss account, it is seen that during the year, the sheet and profit and loss account, it is seen that during the year, the appellant company had carried out certain business activities and appellant company had carried out certain business activities and appellant company had carried out certain business activities and shown income of Rs.1,46,500/ shown income of Rs.1,46,500/- being Commission/Brokerage. The being Commission/Brokerage. The expenses incurred during the year have been given by the appellant in enses incurred during the year have been given by the appellant in enses incurred during the year have been given by the appellant in its written submissions, which is reproduced as under: its written submissions, which is reproduced as under:
Sr. No. Expenses Expenses Amount Amount Remarks 1. Opening Stock Opening Stock 37,869/- 37,869/- Related to business activity Related to business activity 2. Administrative expenses Administrative expenses Audit Fees 6,500 Statutory Expenses Statutory Expenses Director Expenses Director Expenses 33,531 Related to business activity Related to business activity Electricity Charges Electricity Charges 65,701 Related to business activity Related to business activity Internet Expenses Internet Expenses 1,685 Related to Business activity Related to Business activity Legal Expenses Legal Expenses 56,500 Statutory Expenses Statutory Misc Expenses Misc Expenses 56,226 Related to business activity Related to business activity Telecommunication Charges Telecommunication Charges 43,589 Related to business activity Related to business activity General Expenses General Expenses 1,348 3,19,814 Related to business activity Related to business activity 3. Finance Charges Finance Charges Bank Charges 4,303 4,303 Related to business activity Related to 4. Depreciation Depreciation 6,72,445 6,72,445 Related to business assets Related to business assets Total 10,34,431 From the above expenses, it is seen that the expenses of audit fees of From the above expenses, it is seen that the expenses of audit fees of From the above expenses, it is seen that the expenses of audit fees of Rs.6,500/-, electricity expenses of Rs.65.701/ , electricity expenses of Rs.65.701/-, legal expenses of , legal expenses of Rs.56.500/-, bank charges of Rs.4,303/ , bank charges of Rs.4,303/- and depreciation of and depreciation of Ambitious Plastomac Company Ltd. Ambitious Plastomac Company 9 ITA No. 1485/M/2022 Rs.6,72,445/- were required to be incurred for day to day were required to be incurred for day to day business activities. Therefore, these expenses cannot be disallowed. However, in activities. Therefore, these expenses cannot be disallowed. However, in activities. Therefore, these expenses cannot be disallowed. However, in respect of director expenses of Rs.33,531/, internet expenses of Rs. respect of director expenses of Rs.33,531/, internet expenses of Rs. respect of director expenses of Rs.33,531/, internet expenses of Rs. 1,685/- S iscellaneous expenses of Rs.56,226/ S iscellaneous expenses of Rs.56,226/-, mobile expenses of , mobile expenses of Rs.54,734/-, telecommunication charges , telecommunication charges of R$.43,589/- and general expenses of Rs. 1,348/ expenses of Rs. 1,348/- totaling to Rs.1,91.113/-, the appellant has not , the appellant has not provided any further details or supporting evidences to justify these provided any further details or supporting evidences to justify these provided any further details or supporting evidences to justify these expenses. In order to qualify for business expenditure u/s.37 of the expenses. In order to qualify for business expenditure u/s.37 of the expenses. In order to qualify for business expenditure u/s.37 of the Income-tax Act, t tax Act, the appellant is required to justify the claim with he appellant is required to justify the claim with supporting evidences showing that these expenses were infact incurred supporting evidences showing that these expenses were infact incurred supporting evidences showing that these expenses were infact incurred for business purpose. In the absence of any supporting evidences, the for business purpose. In the absence of any supporting evidences, the for business purpose. In the absence of any supporting evidences, the expenses amounting to Rs.1,91,113/ expenses amounting to Rs.1,91,113/- cannot be allowed as business cannot be allowed as business expenditure.
The AO has merely made an estimated addition of Rs.10 lakhs without The AO has merely made an estimated addition of Rs.10 lakhs without The AO has merely made an estimated addition of Rs.10 lakhs without any basis.
Therefore, the entire addition of Rs.10 lakhs cannot be sustained, but Therefore, the entire addition of Rs.10 lakhs cannot be sustained, but Therefore, the entire addition of Rs.10 lakhs cannot be sustained, but the action of the AO to the extent of disallowance of business expenses the action of the AO to the extent of disallowance of business expenses the action of the AO to the extent of disallowance of business expenses of Rs.1,91,113/ of Rs.1,91,113/- is upheld.
In view of the above, out of the addition of Rs. 10 lakhs, addition of In view of the above, out of the addition of Rs. 10 lakhs, addition of In view of the above, out of the addition of Rs. 10 lakhs, addition of Rs.1,91,113/- is upheld and the balance addition of Rs.8,08,887/ is upheld and the balance addition of Rs.8,08,887/- is deleted. Therefore, these grounds of appeal are partly allowed. deleted. Therefore, these grounds of appeal are partly allowed. deleted. Therefore, these grounds of appeal are partly allowed.”
5.2 We find that the Ld. CIT(A) We find that the Ld. CIT(A) in assessment year 2008 nt year 2008-09 has sustained disallowance of expenses mainly on the ground that the sustained disallowance of expenses mainly on the ground that the sustained disallowance of expenses mainly on the ground that the assessee failed to file details or supporting evidence to justify those assessee failed to file details or supporting evidence to justify those assessee failed to file details or supporting evidence to justify those
Ambitious Plastomac Company Ltd. Ambitious Plastomac Company 10 ITA No. 1485/M/2022 expenses. We find that Tribunal in AY 2008 We find that Tribunal in AY 2008-09 has restored this 09 has restored this issue to file of the AO in to file of the AO in ITA No. 1484/Mum/2022 observing as /2022 observing as under:
5. I notice that the grievance of the assessee is that the above said sum 5. I notice that the grievance of the assessee is that the above said sum 5. I notice that the grievance of the assessee is that the above said sum of Rs.1,91,113/ of Rs.1,91,113/- is also required to be allowed. I notice that the Ld is also required to be allowed. I notice that the Ld CIT(A) has disallowed this amount on the reasoning that the assessee CIT(A) has disallowed this amount on the reasoning that the assessee CIT(A) has disallowed this amount on the reasoning that the assessee has not substantiate the same. Under these set of facts, I am of the view substantiate the same. Under these set of facts, I am of the view substantiate the same. Under these set of facts, I am of the view that the assessee may be provided with an opportunity to furnish the that the assessee may be provided with an opportunity to furnish the that the assessee may be provided with an opportunity to furnish the details of these expenses before the AO and substantiate the same. details of these expenses before the AO and substantiate the same. details of these expenses before the AO and substantiate the same. Accordingly, I set aside the order passed by Ld CIT(A Accordingly, I set aside the order passed by Ld CIT(A) on the above said ) on the above said addition of Rs.1,91,113/ addition of Rs.1,91,113/- and restore the same to the file of the AO for and restore the same to the file of the AO for examining the claim of the assessee by duly considering the information examining the claim of the assessee by duly considering the information examining the claim of the assessee by duly considering the information and explanations that may be furnished by the assessee. After providing and explanations that may be furnished by the assessee. After providing and explanations that may be furnished by the assessee. After providing adequate opportunit adequate opportunity of being heard to the assessee, the AO may take y of being heard to the assessee, the AO may take appropriate decision in accordance with law. appropriate decision in accordance with law.
5.3 Respectfully following the finding of the Tribunal (supra), the Respectfully following the finding of the Tribunal (supra), the Respectfully following the finding of the Tribunal (supra), the issue-in-dispute in the year under consideration is restored to the dispute in the year under consideration is restored to the dispute in the year under consideration is restored to the file of the AO for decid file of the AO for deciding afresh after considering explanation of the ing afresh after considering explanation of the assessee. The ground is accordingly allowed for statistical purposes. assessee. The ground is accordingly allowed for statistical purposes. assessee. The ground is accordingly allowed for statistical purposes.
Ambitious Plastomac Company Ltd. Ambitious Plastomac Company 11 ITA No. 1485/M/2022 5.4 In ground No. 1, the assessee challenged the action of the In ground No. 1, the assessee challenged the action of the In ground No. 1, the assessee challenged the action of the Assessing Officer u/s 144 of the Act. According to the Assessing Assessing Officer u/s 144 of the Act. According to the Assessing Assessing Officer u/s 144 of the Act. According to the Assessing Officer, assessment made by the Assessing Officer should have been ssessment made by the Assessing Officer should have been ssessment made by the Assessing Officer should have been quashed. We find that the Ld. CIT(A) in assessment year 2008 quashed. We find that the Ld. CIT(A) in assessment year 2008 quashed. We find that the Ld. CIT(A) in assessment year 2008-09 has upheld the assessment order passed by the Assessing Officer u/s has upheld the assessment order passed by the Assessing Officer u/s has upheld the assessment order passed by the Assessing Officer u/s 144 of the Act observing as under: 144 of the Act observing as under:
“5.3.1 The facts of the case are 5.3.1 The facts of the case are that that the assessee had not filed that that the assessee had not filed return of income for return of income for A.Y.2008-09. The AO had issued notice us.143(2) 09. The AO had issued notice us.143(2) of the Income of the Income-tax Act, 1961 and it was reportedly served on the tax Act, 1961 and it was reportedly served on the appellant by speed post on 27.05.2009. Further, the AO had issued appellant by speed post on 27.05.2009. Further, the AO had issued appellant by speed post on 27.05.2009. Further, the AO had issued notice u/s.142(1) notice u/s.142(1) dated 26.07.2010 and the hearing was fixed on dated 26.07.2010 and the hearing was fixed on 05.08.2010. However, nobody attended nor any submission was filed However, nobody attended nor any submission was filed However, nobody attended nor any submission was filed by the appellant. Further, notice u/s.142(1) dated 23.08.2010 was by the appellant. Further, notice u/s.142(1) dated 23.08.2010 was by the appellant. Further, notice u/s.142(1) dated 23.08.2010 was issued and served on the appellant. In response to the notice issued and served on the appellant. In response to the notice issued and served on the appellant. In response to the notice u/s.142(1), the u/s.142(1), the assessee submitted a reply vide letter dated 31.08.2010 assessee submitted a reply vide letter dated 31.08.2010 stating only general business conditions of the appellant. Thereafter, stating only general business conditions of the appellant. Thereafter, stating only general business conditions of the appellant. Thereafter, the AO issued notice u/s.271(1)(b) on 24.09.2010 so as to levy penalty the AO issued notice u/s.271(1)(b) on 24.09.2010 so as to levy penalty the AO issued notice u/s.271(1)(b) on 24.09.2010 so as to levy penalty for non compliance of notices u/s.143(2) and 142(1). for non compliance of notices u/s.143(2) and 142(1). The AO also issued a showcause notice dated 24.09.2010 asking the assessee as to issued a showcause notice dated 24.09.2010 asking the assessee as to issued a showcause notice dated 24.09.2010 asking the assessee as to why the assessment proceedings should not be finalized us. 144 of the why the assessment proceedings should not be finalized us. 144 of the why the assessment proceedings should not be finalized us. 144 of the Act. Even in response to Act. Even in response to showcause notice, the assessee did not respond showcause notice, the assessee did not respond and make any submission. Accordingly. and make any submission. Accordingly. the AO has passed the order us. the AO has passed the order us. 144 of the Income 144 of the Income-tax Act and made an estimated of Rs.10 tax Act and made an estimated of Rs.10 lakhs on the Ambitious Plastomac Company Ltd. Ambitious Plastomac Company 12 ITA No. 1485/M/2022 basis of available records including the records relevant to A.Y.2007 basis of available records including the records relevant to A.Y.2007 basis of available records including the records relevant to A.Y.2007- 08.
During the appellate proceedings, it is submitted that the operations of During the appellate proceedings, it is submitted that the operations of During the appellate proceedings, it is submitted that the operations of the company were closed from the year 1999 pany were closed from the year 1999-2000. The factories as 2000. The factories as well as the office premises were seized by various banks and financial well as the office premises were seized by various banks and financial well as the office premises were seized by various banks and financial institutions. Further, the promoter director of the company. Shri Girish institutions. Further, the promoter director of the company. Shri Girish institutions. Further, the promoter director of the company. Shri Girish J. Mehta died in the month of June, 2009 and also due J. Mehta died in the month of June, 2009 and also due to non payment to non payment of his professional fees, the CA did not properly communicate. Further, of his professional fees, the CA did not properly communicate. Further, of his professional fees, the CA did not properly communicate. Further, there has been change in the management of the appellant company. there has been change in the management of the appellant company. there has been change in the management of the appellant company. Accordingly, it has tried to justify the non compliance to the notices Accordingly, it has tried to justify the non compliance to the notices Accordingly, it has tried to justify the non compliance to the notices u/s.143(2) and 142(1) of the In u/s.143(2) and 142(1) of the Income-tax Act, 1961.
As discussed above, the appellant has not filed the return of income for As discussed above, the appellant has not filed the return of income for As discussed above, the appellant has not filed the return of income for the A Y 2003 the A Y 2003-09. The various notices u/s.143(2) and 142(1) were 09. The various notices u/s.143(2) and 142(1) were issued by the AO for which there was non compliance on the part of the issued by the AO for which there was non compliance on the part of the issued by the AO for which there was non compliance on the part of the appellant. Further, a showc appellant. Further, a showcause notice intimating the appellant to ause notice intimating the appellant to pass the order us.144 of the Act issued by the A also remained non pass the order us.144 of the Act issued by the A also remained non pass the order us.144 of the Act issued by the A also remained non- complied. The non compliance of notices on the part of the appellant complied. The non compliance of notices on the part of the appellant complied. The non compliance of notices on the part of the appellant lead to best judgement order u/s.144 of the Income lead to best judgement order u/s.144 of the Income-tax Act, 1961. tax Act, 1961.
The AO had pro The AO had provided sufficient opportunities to the appellant to make vided sufficient opportunities to the appellant to make the submissions in response to the queries raised by the AO. The AO has the submissions in response to the queries raised by the AO. The AO has the submissions in response to the queries raised by the AO. The AO has specifically mentioned in assessment order that throughout the course specifically mentioned in assessment order that throughout the course specifically mentioned in assessment order that throughout the course of assessment proceedings, the assessee had defaulted at m of assessment proceedings, the assessee had defaulted at m of assessment proceedings, the assessee had defaulted at multiple instance in response to various statutory notices issued in its case instance in response to various statutory notices issued in its case instance in response to various statutory notices issued in its case leading to inordinate delay in completion of assessment proceedings. leading to inordinate delay in completion of assessment proceedings. leading to inordinate delay in completion of assessment proceedings. However, the appellant had not complied to the notices us.142(1) and However, the appellant had not complied to the notices us.142(1) and However, the appellant had not complied to the notices us.142(1) and 144 issued by the AO. In view of the abov 144 issued by the AO. In view of the above. the Assessment Order u/s. e. the Assessment Order u/s. Ambitious Plastomac Company Ltd. Ambitious Plastomac Company 13 ITA No. 1485/M/2022 144 was passed by the AO after providing sufficient opportunities of 144 was passed by the AO after providing sufficient opportunities of 144 was passed by the AO after providing sufficient opportunities of being heard to the appellant. Thus, the Assessment Order passed by the being heard to the appellant. Thus, the Assessment Order passed by the being heard to the appellant. Thus, the Assessment Order passed by the AO us. 144 of the Act is a valid order and it is upheld. AO us. 144 of the Act is a valid order and it is upheld.” 5.5 In view of non- -compliance by the assessee of the notices u/s of the notices u/s 142(1) of the Act, the Assessing Officer is justified in passing the 142(1) of the Act, the Assessing Officer is justified in passing the 142(1) of the Act, the Assessing Officer is justified in passing the assessment order u/s 144 of the Act even without issuing final show assessment order u/s 144 of the Act even without issuing final show assessment order u/s 144 of the Act even without issuing final show cause notice. Accordingly, we do not find any error in the order of cause notice. Accordingly, we do not find any error in the order of cause notice. Accordingly, we do not find any error in the order of the Ld. CIT(A) in sustaining the action of the Assessing Officer of in sustaining the action of the Assessing Officer of in sustaining the action of the Assessing Officer of passing order u/s 144 of the Act. The ground No. 1 of the appeal of passing order u/s 144 of the Act. The ground No. 1 of the appeal of passing order u/s 144 of the Act. The ground No. 1 of the appeal of the assessee is accordingly dismissed. the assessee is accordingly dismissed.
In the result, the appeal filed by the assessee is partly allowed In the result, the appeal filed by the assessee is In the result, the appeal filed by the assessee is for statistical purpose for statistical purpose.