THE ITO, WARD-1(1)(2),, AHMEDABAD vs. M/S. ANIL TRADECOM LTD.,, AHMEDABAD

As identical grounds have been raised in all these three appeals, grounds raised ITA No.2703/Ahd/2016 for the Assessment Year 2012-13 are reproduced as under :-

Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.

The Ld. DR at the time of hearing taken the plea that since the assessee company ceased to function as a corporate body as the assessee company has conducted last AGM on 30.09.2014 and filed Balance Sheet on 31.03.2014 and coming under inactive status required for statutory return to be filed for last two years i.e. 2016-17 & 2017-18. Therefore, filing of the appeal before the CIT(A) by the Director who is not a legal and proper person, order of the CIT itself become void ab initio. Ld. DR further submitted that since the company is in liquidation process, the official liquidator needs to file the fresh appeal. Ld. DR further prayed that all appeals need to be restored to the file of concerned CIT. The written submission given by the ld. DR dated 25.05.2022 is reproduced as under :-

At the time of hearing none appeared on behalf of the assessee despite giving notice to the assessee Company. The notice dated 24.12.2021 was returned as ‘left’ by the addressee i.e. the company. Since on several occasions this appeal was adjourned from the year 2018 onwards, we find that appeal may be proceeded with the submissions of the assessee filed before the CIT(A) and before the Assessing Officer which are quoted in the respective orders.

We have heard the learned DR. Since the company is in liquidation as per the company status report obtained from the company’s master data the status of the company is submitted as ‘active’. Therefore, the Ld. DR’s contention that filing of appeal by the Director was not proper, cannot be entertained at this juncture and hence rejected.

From the perusal of the order of the CIT(A) it can be seen that the CIT(A) has categorically given finding that the assessee has mixed fund being interest free and interest bearing funds and neither the Assessing Officer established the advances from the borrowed funds nor the assessee has established that the advances are from his own fund. Thus, the Assessing Officer was factually incorrect to apply the rate of interest for the purpose of disallowance under Section 36(1)(iii) of the Act. The operative portion of the CIT(A)’s order has given the proportionate interest to be considered for disallowance under Section 36(1)(iii) which comes to Rs.1,51,47,357/-. We do not find any discrepancy in the said finding of the CIT(A) and, therefore, appeal of the Revenue being ITA No.2703/Ahd/2016 is dismissed.

ITA No.208/Ahd/2018 for A.Y. 2014-15. Ground no.1 is identical to earlier assessment years which are decided hereinabove. Hence, ground no.1 for A.Y. 2014- 15 is dismissed.

Ground no.2 relating to disallowance of Rs.1,85,66,229/- made under Section 41(1) on account of cessation of liability. The CIT(A) has observed that the outstanding balance is creditors account and the same is shown as liability in its books of account and, therefore, such amount was not reflected back in Profit & Loss account applying provision of Section 41(1) and, therefore, the CIT(A) held that no such addition can be made even though the date is time barred or outstanding for more than 3 years. The CIT(A) has rightly held that the said addition under Section 41(1) has to be deleted. There is no need to interfere with the findings of the CIT(A). Hence, ITA No.208/Ahd/2018 is dismissed.

In the result, all the three appeals filed by the Revenue are dismissed.