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Income Tax Appellate Tribunal, DELHI BENCHES: ‘G’, NEW DELHI
PER NK SAINI, ACCOUNTANT MEMBER
This is an appeal filed by the assessee against the order of the Ld.CIT(I), New Delhi dated 19.02.2013. The following grounds have been raised in this appeal. “1. That on the facts and circumstances of the case and in law the revenue has erred in disallowing loss of Rs.34,87,278/- as returned by the assessee company.
2. That on the facts and circumstances of the case and in law the revenue has erred in holding that the assessee company has not commented any business and earned no income and therefore disallowing loss as per the financial statements amounting to Rs.4,007,177/- and loss as the return of income amounting to Rs.34,87,278/-.
The assessee company craves leave to add, alter, amend the grounds of appeal at the time of hearing.”
Facts of the case in brief are that the assessee filed return of income on 30.10.2017 declaring ‘nil’ income which was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’). Later on the case was selected for scrutiny. The A.O. made the disallowance of Rs.39,36,578/- by observing that the assessee had not done any business in the year under consideration and earned no income. Being aggrieved the assessee carried the matter to the Ld.CIT(Appeals) who sustained the disallowance made by the A.O. by observing in para 2.3 of the impugned order as under. “2.3. After going through the observations of the A.O. and submissions of the A.R of the appellant, it is observed that the assessing officer had given various opportunities to the appellant to provide the various details as well as supporting vouchers and documents relating to the expenses claimed during the year. On going through the submissions of the A.R, it is observed that at this stage, copies of agreements, license deal, etc. are being provided to argue that the business had commenced during the year. However, the A.R of the appellant has never given any reasons as to why these documents and other details called by the assessing officer were never produced before the A.O during the assessment proceedings. There is no reason for these documents and evidences to be admitted at this stage.
Now the assessee is in appeal, the Ld.Counsel for the assessee submitted that the assessee company was incorporated in the earlier year in the month of August, 2016 i.e. the period relevant to the A.Y. under consideration and started functioning. It was further stated that the assessee produced the books of accounts which were duly audited along with vouchers. Therefore the A.O. was not justified in observing that the assessee did not start functioning and the Ld.CIT(A) wrongly sustained the disallowance made by the A.O. It was also stated that the Ld.CIT(A) had not considered various documents furnished by the assessee and sustained the disallowance in arbitrary manner. In his rival submissions the ld.D.R. strongly supported the orders of the authorities below.
We have considered the submissions of both the parties and carefully gone through the material available on record. In the present case it is noticed that the Ld.CIT(Appeals) in para 2.1 of the impugned order stated that the A.O. had observed that the assessee had functioned only for four months and had claimed losses during the year. On the contrary disallowance has been made on this basis that the assessee did not function during the year udner consideration and claimed the expenses, so, there is contradiction in the stand taken by the A.O. It is also noticed that the Ld.CIT(A) admitted in para 2.3 of the order that the assessee furnished copies of agreements, deeds etc. to argue that the business had commenced during the year under consideration but he did not consider those documents, only for the reason that the assessee had not produced those before the Assessing Officer. We therefore considering the totality of the facts and circumstances of the case, set aside this issue back to the file of the A.O. to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee.
In the result the appeal is allowed for statistical purposes. Order pronounced in the open court on 10th November, 2017.