KAYFAB ENTERPRISES P.LTD,MUMBAI vs. DCIT 8(2), MUMBAI

In its appeal, assessee has raised the following Grounds of appeal:

The ld. Commissioner of Income tax (Appeals) erred in passing order without giving sufficient opportunity to the appellant.

At the time of hearing, it was noticed that none appeared on behalf of the appellant-assessee inspite of the fact that on the earlier date of hearing on 07.06.2017, the matter was adjourned on the request of the assessee and the date was duly noted by the assessee’s representative. Inspite of the same, there is no appearance nor any application for adjournment on behalf of the assessee and, therefore, in view of Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963, the appeal of the assessee is being disposed off ex-parte the appellant- assessee after hearing the respondent-Revenue on merits.

In brief, the relevant facts as emerging from the orders of the authorities below can be summarised as follows. The assessee is engaged in the business of promoters and builders. The relevant discussion in the assessment order reveals that an addition of Rs.74,15,358/- has been made by the Assessing Officer u/s 41(1) of the Act. In this context, as per the relevant discussion in para 5.1 of the assessment order, it is revealed that Rs.74,15,358/- comprised of Rs.70,00,000/- on account of Provision for taxation and Rs.74,880/- for other creditors. In the absence of any explanation forthcoming, the Assessing Officer treated the said sum as representing liabilities no longer required and hence assessable u/s 41(1) of the Act. The CIT(A) noted that in the appellate proceedings, the assessee did not pursue the appeal and, therefore, he proceeded to adjudicate the issue on the basis of the material on record. The CIT(A) also affirmed the action of the Assessing Officer on the said aspect.

The second aspect before us is with regard to the addition of Rs.5,57,84,627/-. The Assessing Officer noted that assessee could only file confirmations from the concerned parties, but did not furnish any bank or financial statements of the lenders which are necessary ingredients to test the parameters of Sec. 68 of the Act. Accordingly, the Assessing Officer treated the said credits as unexplained within the meaning of Sec. 68 of the Act. The CIT(A) has also affirmed the decision of the Assessing Officer primarily for the reasons which we have noted in the earlier para in the context of the other addition.

Before us, the assessee is in appeal challenging the sustenance of the additions by the CIT(A). So however, assessee has not put in any appearance and there is no material which would require us to distract from the findings of the lower authorities. Notably, with regard to the addition of Rs.5,57,84,627/- u/s 68 of the Act, the Assessing Officer has categorically inferred that in the absence of the requisite proof the identity of the creditors, the credit-worthiness of the creditors and the genuineness of the transactions have not been proved. In the absence of any material to the contrary, the aforesaid findings of the Assessing Officer are liable to be affirmed. We hold so.

Similarly, with regard to the addition of Rs.74,15,358/-, there is no explanation from the side of the assessee as to why the Assessing Officer was wrong in invoking Sec. 41(1) of the Act. Pertinently, in paragraphs 5.2 and 5.3 of the assessment order, the Assessing Officer clearly brought out that assessee had not given even the basic details like addresses of the parties, PAN, etc. and the nature of the amounts outstanding to the creditors. Insofar as the Provision of tax for Rs.70,00,000/- is concerned, on this aspect also, the Assessing Officer has appropriately deduced that such sum could not be treated as an allowable deduction while computing the business income. In sum and substance, in the absence of any cogent material led by the assessee, we find no reason to interfere with the ultimate conclusion of the CIT(A), which we hereby affirm.

Resultantly, the appeal of the assessee is dismissed.