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Facts
The assessee, Genex Industries Limited, was subjected to a search operation. The Assessing Officer made additions to the income, including disallowance of bonus, donation, share capital, and capitalized interest on work in progress. The CIT(A) upheld these additions.
Held
The Tribunal found that both the Assessing Officer and the CIT(A) passed speaking orders considering all facts and submissions. Despite numerous opportunities, the assessee failed to comply or provide plausible explanations.
Key Issues
Whether the additions made by the Assessing Officer and upheld by the CIT(A) are justified, especially in light of the assessee's non-compliance and failure to provide explanations.
Sections Cited
153A, 139(1), 143(2), 142(1), 127, 43B, 68, 36(i)(iii), 132
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Income Tax Appellate Tribunal, CHANDIGARH BENCH, ‘A’, CHANDIGARH
Before: SHRI RAJPAL YADAV & SHRI KRINWANT SAHAY
�नधा�रती क� ओर से/Assessee by : None राज�व क� ओर से/ Revenue by : Shri Rohit Sharma, CIT DR (Virtual) सुनवाई क� तार�ख/Date of Hearing : 06.02.2025 उदघोषणा क� तार�ख/Date of Pronouncement : 24.02.2025 आदेश/Order Per Krinwant Sahay, AM : Appeal in this case has been filed by the assessee against the order dated 22.02.2018 of ld. Commissioner of Income Tax (Appeals)-2, Jalandhar [hereinafter referred to as ‘CIT(A)’], for the Assessment Year 2009-10.
2. The Assessee has raised following revised grounds of appeal:
662-Chd-2018 Genex Industries Ltd., Ludhiana 2 1. That on the facts and in the circumstances of the case and in law, the learned AO (ACIT Central Circle -1 Ludhiana) and Learned CIT (Appeals), Jalandhar erred in making assessment u/s 153A of the Act, making illegal additions of Rs 32465000/- to returned income of Rs. Nil/-.
2. That on the facts and in the circumstances of the case and in law, Ld AO and Ld CIT (Appeals) erred in making incorrect addition of Rs 5,000/- being already disallowed while making computation of taxable income.
3. That on the facts and in the circumstances of the case and in law, Id AO and Ld CIT (Appeals ) erred in making addition of Rs. 3,24,60,000/- received from M/s Novo Recycling Company (LLP) which is fully confirmed.
3. It emerges out from the record that and other cases of this group are on Board since 29th March 2017. From the Note Sheet entry, it is seen that Shri Tej Mohan Singh, Shri Jasleen Khera and others have appeared from time to time and thereafter all the Counsels have withdrawn their power of attorney and pleaded no instructions. On 26.9.2024, Shri Tej Mohan Singh, Advocate and Shri Sanjay Sood, CA also withdrew their power of attorney. It is pertinent to note that as and when a counsel withdrew his power of attorney, it is a duty cast upon him to 662-Chd-2018 Genex Industries Ltd., Ludhiana
3 serve a notice through registered post upon the Assessee informing that he is withdrawing his power of attorney so that Assessee can make alternative arrangement thereafter. The Tribunal is not required to serve a fresh notice. But in the interest of justice and for abundant caution, Tribunal issued fresh notice for hearing to the Assessee for 20.11.2024. But none appeared on behalf of the Assessee. It is 50th occasion that this group has been listed for hearing. The notice was issued through the A.O. and the A.O. has informed that notice has been sent on the last e.mail available with the Department. It is further observed that DCIT, Central Circle, Ludhiana vide his letter dated 7.1.2025 informed the Tribunal that officials from the Range visited the premises of the Assessee which was found locked.
4. During proceedings before us, the ld. DR informed the Bench that he has been intimated by the Assessing Officer that the Assessee is absconding. We have been apprised that there are large number of cases pending against the head of the group with different investigating agencies. Looking to all these cumulative setting of circumstances would suggest that the Assessee is not very much interested in persecuting this appeal. Even otherwise, it is trite (‘S. Velu Palandar Vs. DCIT’,
662-Chd-2018 Genex Industries Ltd., Ludhiana
4 83 ITR 686 (Mad.)] and incumbent on the authority to decide an appeal on merit in accordance with the principles of natural justice.
Now coming on merits of the case, the brief facts, as enumerated in the assessment order are as under:
The assessee belongs to Genex Group of cases, Ludhiana where a search and seizure operation u/s 132 of the Income Tax Act was conducted on 23.05.2013. During the search operation, various documents were found and seized from the various business and residential premises of the group. Accordingly, the case was centralized u/s 127 of Income Tax Act, 1961 vide order F .No. CIT-I/ LDH/ TECH /127/2013-14/606 dated 11.06.2013 and a notice u/s 153 A of the IT. Act requiring the assessee to file its return of income was issued on 24.03.2014.
In response thereto, a return declaring income of Rs. Nil was filed by the assessee on 22.04.2014 as against originally filed u/s 139(1) on 29.09.2009 vide acknowledge No. 94251311290909. The case was taken up for scrutiny and statutory notices u/s 143(2) and 142(1) along with questionnaire was issued on 13.05.2015 and the same was duly served on the assessee. Subsequently, notices u/s 143(2) and 142(1) issued and complied with. In response to the notices, Sh. Gaurav Gupta, C.A. and Sh. Gaurav
662-Chd-2018 Genex Industries Ltd., Ludhiana 5 Sharma, C.A., authorized representatives of the assessee attended the proceedings and furnished the requisite information/details/explanation etc., with whom the case was also discussed.
The assessee is a company and deals in the business of acquiring, combing, spinning, bleaching and finishing of all kinds of wool, fiber, natural and hosiery goods and manufacturing of plastic granules. It is maintaining books of account. The books of account were produced and examined on test check basis.
During the year under consideration, the assessee has shown amount of Rs.58,566/- on account of bonus as per tax audit report which has to be added back in the income of the assessee u/s 43B of the I.T. Act, 1961. The counsel of the assessee was asked to justified the same but had not filed any plausible explanation to this after giving opportunity. Therefore, the amount of Rs. 58,566/- is added back to the income of the assessee.
5. During the year under consideration, the assessee has debited amount of Rs.5,00/7- on account of donation in the P & L account which is not allowable under the provisions of the Income Tax Act, 1961. The counsel of the assessee was asked to justified the same but had not filed any plausible explanation to this after giving opportunity.
662-Chd-2018 Genex Industries Ltd., Ludhiana 6 Therefore, the amount of Rs. 5,000/- is added back to the income of the assessee.
During the year under consideration, the assessee has received Share Capital of Rs. 4,67,50,000/- from Sh. Anubhav Aggarwal and Rs. 32460,000/- from M/s Novo Recycling Company (LLP). Sh. Anubhav Aggarwal is separately assessable by the undersigned and the assessee was asked to explain identity, genuineness and creditworthiness of the Share Capital received but the assessee has failed to prove the identity, genuineness and creditworthiness of the Share Capital. Therefore, the amount of Rs. 3,24,60,000/- is added back to the income of the assessee u/s 68 of the I.T. Act, 1961.
During the year under consideration, the assessee has shown capital work In progress of Rs. 2,25,82,436/- on which no interest has been capitalized. Therefore, the amount of Rs. 27,09,892/- (12% of the capital amount) is disallowed u/s 36(i)(iii) of the I.T. Act, 1961 and added back to the income of the assessee.
6. We have gone through the assessment order passed by the Assessing Officer wherein various additions were made by the A.O. and the appellate order passed by the ld. CIT(A). We find that the Assessing Officer has passed a speaking order based on various incriminating documents found and seized
662-Chd-2018 Genex Industries Ltd., Ludhiana
7 from various business and residential premise of the group. Against the order of the Assessing Officer, the Assessee filed an appeal before the ld. CIT(A) on different grounds. The ld. CIT(A), in our view, has passed a speaking order on merit on each and every issue / ground raised by the Assessee in the appeal. The Assessee dissatisfied with the order of the ld. CIT(A) has filed this appeal before the Tribunal but despite giving fifty opportunities to the Assessee, the Assessee has not complied with and further that all the Counsels and C.A. who had filed their Power of Attorney have also withdrawn in the absence of any instruction from the Assessee.
7. The ld. DR relied on the order of the CIT(A) and prayed that the appeal of the Assessee deserves to be dismissed.
In our view, both the Assessing Officer and the ld. CIT(A) have passed the assessment order and the appellate order keeping in view the aspect of natural justice. They have considered all the necessary documents, statements and submissions filed by the Assessee. Since the order passed by the ld. CIT(A) is a speaking order on each issue, therefore, in our considered opinion, there is no need to interfere in the findings given by the ld. CIT(A). Accordingly, the appeal order
662-Chd-2018 Genex Industries Ltd., Ludhiana
8 passed by the ld. CIT(A) on different issues raised by the Assessee are sustained and this appeal filed by the Assessee on different grounds is hereby dismissed
In the result, appeal of the assessee is dismissed.
Order pronounced on 24.02.2025.