UDAY ESTATE PRIVATE LIMITED,NEW DELHI vs. ACIT, CENTRAL CIRCLE-27(1), NEW DELHI

Though the assessee has raised above 11 grounds of appeal, the only issue emanating is with regard to the sustaining the addition of Rs. 1,18,69,471/- out of additions of Rs. 5,89,40,017/- made by the Assessing Officer.

We find from the records that the assessee has sought adjournments on several occasions and since last two occasions have failed to attend the hearing. We also find that the NCLT has passed an order on 16.10.2023 approving the Resolution Plan where the assessee company has been taken over by Silver Duck Traders P Ltd and the ld AR submitted that M/s Silver Duck Traders P Ltd needs to come on record. We also note that M/s Silver Duck Traders P Ltd has so far not recorded their presence in the appeal proceedings.

Briefly stated, the facts of the case are that the assessee was engaged in the business of real estate and electronically filed its Return of Income on 16.03.2016 declaring loss of Rs. 3,99,327/. The Assessing Officer doubted the genuineness of 15 sundry creditors of total amounting to Rs. 5,89,40,017/- and in absence of satisfactory explanation added the same to the income of the assessee.

The assessee went in appeal before the ld. CIT(A) who observed that the contentions of the assessee are not sustainable as once a liability ceased to exist, it becomes the profit of the assessee as the same are no longer payable by the assessee and is liable to be taxed in the hands of the assessee. It was further observed by the ld. CIT(A) that it is irrelevant whether these profits are on account of trading liability or capital liability so long it is directly arising from the business activity of the assessee. The claim of the assessee that no revenue expresses has been claimed in the P&L account on these credit liabilities in any earlier year is also not sustainable as even otherwise, these credit liability is held to be incurred for capital expenditure for which the assessee would be claiming depreciation expenses on such capital assets over a period of years in the future. In view of the above observations, the ld. CIT(A) sustained the addition of an amount of Rs. 5,89,40,017/- in the hands of the assessee treating it as profit of the assessee u/s 41(1) of the Act.

The assessee is aggrieved and has come in appeal before us.

As nobody was present from the assessee side, the ld DR assisted the court in this case. We have heard the submissions of the ld DR and have perused the relevant material on record. At the very outset, we find that National Company Law Tribunal, New Delhi (NCLT)vide its order dated 16.10.2023 under Corporate Insolvency Resolution Process [CIRP] against Uday Estates Pvt Ltd under the provisions of the Insolvency and Bankruptcy Code, 2016 (I & B Code], has approved the Resolution plan submitted by M/s Silver Duck Traders P Ltd (Successful Resolution Applicant).

In such a situation, we are of the considered view that as M/s Silver Duck Traders P Ltd (Successful Resolution Applicant) has failed to join the appeal proceedings, there is nothing presented before us to differ from the views of the CIT(A). In view of the above facts and circumstances we are not inclined to differ from the decision of the CIT(A). Accordingly, all the grounds from 1 to 11 are dismissed.

However, liberty is given to the assessee to approach this Tribunal as per the provisions of the law pursuant to the final outcome of the proceedings under the I & B Code.

In the result, appeal of assessee in ITA No. 468/DEL/2020 is dismissed.