GEOFIN INVESTMENTS PVT. LTD.,NEW DELHI vs. DCIT, CIRCLE- 10(1), NEW DELHI

“That the order of the learned Commissioner of Income Tax(Appeals) is against law and facts.

That in the facts and circumstances of the case of the appellant company the order of the learned Commissioner of Income Tax in confirming disallowance of bad debt claim of Rs.76900000/- u/s 36(l)(vii) in respect of outstanding debt against M/s. Liberty Whiteware Ltd.(LWL) New Delhi is altogether arbitrary, against the provisions laid under law, illegal, void and uncalled for. 3. That the learned Commissioner of Income Tax(Appeals) has grossly erred in confirming Long Term Loss of Rs.6,97,39,151/- suffered by appellant company in respect of sale of shares of M/s. Liberty White ware Ltd. which is altogether arbitrary, illegal, void and uncalled for.

Aggrieved against this, the assessee preferred appeal before Ld.CIT(A) who after considering the submissions of the assessee, partly allowed the appeal. Thereby, Ld.CIT(A) sustained the addition related to disallowance of bad debt and long term loss and restricted the addition made by invoking the provision of section 14A of the Act to the extent of INR 1,07,333/- i.e. to the extent of the exempt income, earned by the assessee.

Aggrieved against this, the assessee preferred appeal before this Tribunal.

At the time of hearing, Ld. Counsel for the assessee submitted that Ground No.1 is general in nature, needs no separate adjudication. Hence, Ground No.1 needs no separate adjudication.

Ld. Counsel for the assessee further submitted that he does not wish to press Ground No.4 due to smallness of the amount of disallowance. Considering the submissions of Ld. Counsel for the assessee, Ground No.4 is dismissed as not pressed.

Ld. Counsel for the assessee submitted that the authorities below have not considered the fact in right prospective and wrongly applied the judgement rendered by the Hon’ble Supreme Court in the case of S.A. Builders Ltd. vs CIT 288 ITR 1 [SC]. Ld. Counsel for the assessee submitted that the assessee had provided all the relevant evidences before the authorities below that they failed to consider the same and proceeded to pass the impugned order without giving any meaningful and effective opportunity to the assessee.

On the contrary, Ld. CIT DR opposed these submissions and supported the orders of the authorities below.

We have considered the submissions of the Ld. Authorized Representatives of the parties and perused the material available on record. 3 | P a g e

Ground No.3 raised by the assessee against the confirmation of disallowance of Long Term Loss of INR 6,97,39,151/-.

Ld. Counsel for the assessee qua Ground No.3, submitted that the AO failed to consider the material filed before him. He submitted that the AO did not advert to the submissions and explanation offered alongwith supporting evidences. He submitted that no meaningful and effective opportunity was afforded to the assessee. He therefore, prayed that on this issue, the matter may be remanded back to the Assessing Officer for fresh decision. He submitted that the assessment was framed in haste as the impugned assessment was getting time barred. He contended that the assessee had submitted before Ld.CIT(A) regarding non-providing of opportunities to the assessee for supporting its claim. He also brushed aside the categoric submissions made in this regard and mechanically affirmed the finding of the AO.

Ld. CIT DR supported the orders of the authorities below. However, he submitted that the Hon’ble Tribunal if feel in its wisdom that the issues need re-verification by the AO in the light of evidence placed on record. The Revenue would have no objection for the same.

We have heard Ld. Authorized Representatives of the parties and perused the material available on record. In respect of Ground No. 3, the finding of the AO is as under:- “The AR of the company has not filed any evidence/justification in support of such a huge loss of Rs.6.97 crores. No detail, even has been filed in support of sales consideration being received of Rs.32 lakh and valuation of such shares as required under the Act. Therefore, the same cannot be allowed as such. Further, considering the collusion between these sister concerns, when the assessee company was very much aware of the financial health of M/s LWL, this transaction cannot be held as a 5 | P a g e real one. Therefore, capital loss of Rs.6,97,39,151/- is hereby disallowed and added back to income of the assessee. I am satisfied that the assessee has furnished inaccurate particulars of its income, penalty proceedings u/s 271(l)(c) are being initiated separately.”

The above finding of AO is affirmed by the Ld.CIT(A) on the basis that AO recorded that no evidence was furnished by the assessee. It is transpired from records that the above finding of the AO is factually incorrect as all details are available on record. It is also found that certificate to this effect is appended with the Paper Book stating that these details were also available on record during the assessment proceedings. The AO ought to have verified the veracity and correctness of the evidences placed on record. There cannot be any justification for disallowance made purely on the basis of suspicion without controverting the claim of the assessee. We therefore, considering the totality of the facts and submissions made by the Ld. Counsel for the assessee and in the interest of principle of nature justice, deem it proper to restore and remand this ground to the file of the AO to re-consider the submissions of the assessee and re-verify the claim of loss suffered by the assessee and thereafter, decide the issue afresh in accordance with law. Hence, Ground No. 3 of assessee’s appeal is allowed for statistical purposes.

In the result, the appeal of the assessee is partly allowed for statistical purposes.