SRS ENTERTAINMENT INDIA LTD.,FARIDABAD vs. ACIT, CIRCLE-2, FARIDABAD

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ITA 802/DEL/2020Status: DisposedITAT Delhi14 March 2024AY 2016-17Bench: DR. BRR KUMAR (Accountant Member), MS. ASTHA CHANDRA (Judicial Member)4 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

Given the ongoing moratorium on the assessee company, the Ld. AR requested to withdraw the appeal, a request to which the Ld. CIT(DR) had no objection. The tribunal consequently dismissed the appeal as withdrawn, granting the assessee the liberty to revive it after the moratorium is lifted, if so desired, in accordance with law.

What were the facts?

The assessee company, M/s SRS Entertainment India Ltd., appealed against the CIT(A)'s order confirming substantial additions made by the AO for AY 2016-17, including an unexplained credit of Rs. 13,07,50,000/- under section 68 and ad-hoc disallowances of expenses. During the hearing before the ITAT, the Ld. AR informed the tribunal that the assessee company was undergoing liquidation proceedings under the Insolvency and Bankruptcy Code, 2016, and a moratorium was in effect as per an NCLT judgment.

What were the issues?

Whether the CIT(A) erred in confirming additions of unexplained credit and ad-hoc disallowances, and whether the appeal should proceed given the corporate insolvency resolution process and moratorium under the Insolvency and Bankruptcy Code.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “G”: NEW DELHI

Before: DR. BRR KUMAR & MS. ASTHA CHANDRA

For Appellant: Shri Deepesh Garg, Adv
For Respondent: Ms. Monika Dhami, CIT-DR
Hearing: 14.02.2024

The appeal filed by the Assessee is directed against the order dated 31.10.2019 of the Ld. Commissioner of Income Tax (Appeals), [“CIT(A)”], Faridabad, pertaining to Assessment Year 2016-17.

2.

The Assessee has raised the following grounds:-

“1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of the Ld. A.O. in making Rs. 13,07,50,000/- an addition of as unexplained credit u/s 68 of the Act, allegedly on account of Page 1 of 4

ITA No.-802/Del/2020 SRS Entertainment India Ltd., unexplained share capital and that too by recording incorrect facts, findings and making allegations based on surmises and conjectures and without observing the principal of natural justice. 2) That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the addition of Rs. 13,07,50,000/- made in the assessment order is bad in law and against the facts and circumstances of the case. 3) That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of the Ld. A.O. in making adhoc disallowance of Rs. 4,00,000/- being out of travelling and conveyance expenses (Rs. 3,01,722), telephone and communication expenses (Rs. 3,28,761), printing & stationary expenses (Rs.4,00,179/-) and repair & maintenance expenses of (Rs. 12,95,099/-) claimed by the assessee in its profit & loss account and allegedly to cover up possible leakage of revenue on the ground that assessee has failed to furnish any detail of these expenses, and without any basis, material or evidence and is bad in law and against the facts and circumstances of the case. 4) That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the addition of Rs.4,00,000/- made in the assessment order is bad in law and against the facts and circumstances of the case. 5) That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of the Ld. A.O. in charging interest, more so when such interest could not be levied under the law. 6) That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. A.O. in passing the impugned order without giving adequate opportunity of being heard and by not observing the principles of natural justice. 7) That the appellant craves the leave to add, alter or amend the grounds of appeal at any stage and all the grounds are without prejudice to each other.”

ITA No.-802/Del/2020 SRS Entertainment India Ltd.,

3.

At the very outset, the Ld. AR submitted that the assessee company is in liquidation and placed before us copy of The National Company Law Tribunal, Chandigarh Bench (“NCLT”) Judgment delivered on 21.12.2021 u/s 9 of the Insolvency and Bankruptcy Code, 2016 (“Code”) in the matter of M/s Rajpal Theatre, Punjab vs. SRS India Pvt. Ltd. The Ld. AR drew our attention to para 19 of the Judgement of the NCLT (supra) whereby the moratorium in terms of sub-section (1) of section 14 of the Code has been granted. As per para 21 thereof, the order of moratorium shall have effect from 21.12.2021 till completion of the corporate insolvency resolution process or until the Bench approves the resolution plan under sub-section (1) of section 31 or passes an order for liquidation of corporate debtor u/s 33 of the Code, as the case may be.

4.

In view of the above, the Ld. AR sought permission of the ITAT to withdraw the appeal of the assessee. The Ld. CIT(DR) had no objection thereto.

5.

Consequently, we dismiss the appeal of the assessee with liberty to it to revive the appeal after the said moratorium is lifted, if so desired, in accordance with law.

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