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Income Tax Appellate Tribunal, “D” BENCH MUMBAI
Before: SHRI C.N.PRASAD,JM & SHRI REJESH KUMAR, AM
आदेश / O R D E R
PER C.N.PRASAD (J.M.) :
This appeal is filed by the Assessee against the orders of the Ld. CIT(Appeals)-40, Mumbai dated 18.11.2013 for the Assessment Year
2 M/s Dominance Trade Invest P. Ltd 1999 - 2000 arising out of the assessment orders passed u/s 143(3) of the Act. The assessee has raised the following grounds :- “
2. (a) The Learned Commissioner of Income Tax (Appels) erred in facts and law in upholding the addition made on protective basis by the Ld. Assessing Officer on account of monies received from M/s Krishna Filaments Ltd. (b) The Learned Commission of Income Tax (Appeals) erred in facts and law in upholding the addition amounting to Rs.76,82,000/- as undisclosed income made by the Ld. Assessing Officer on protective basis, completely ignoring the fact that the issue of substantive addition is intrinsically connected to the block assessment, which is pending for adjudication before the Hon’ble Settlement Commission and till the said issue of substantive addition is decided, the addition made on protective basis cannot be sustained.
3. Without prejudice to (2) above, the Learned Commissioner of Income Tax (Appeals) erred in appreciating the fact that the identity, genuineness of transaction and creditworthiness of the payer were duly established by the appellant, thereby, discharging its onus in proving the source of the monies received by it and therefore, the addition made is unsustainable.
4. The Learned Commissioner of Income Tax (Appeals) erred in facts and law in upholding the disallowance of business loss made by the Ld. Assessing Officer amounting to Rs1,29,052/- by merely relying on the erstwhile block assessment order passed in the appellant’s case, completely ignoring the facts and circumstances related to the year under consideration.”
2. Inspite of issue of several notices to the Assessee, none appeared nor any adjournment petition has been moved by the assessee. From the record, we observed that the notices issued by registered post on the occasions when the matter was fixed for hearing on 27.10.2015 and 04.11.2016, they
3 M/s Dominance Trade Invest P. Ltd were returned unserved with the endorsement of the postal authorities that the Assessee left the premises. As several opportunities were given to the Assessee and Assessee is not coming forward to prosecute the appeal, we hear the Ld. DR and dispose the appeal on merits.
The Assessing Officer while completing the assessment made addition of Rs.76,82,000/- being the amount received by the Assessee from Krishna Filaments Ltd and Krishna Vinyls Ltd as income of the Assessee on protective basis and substantive addition was made in the Shri Krishna Kumar Agarwal. This addition was made in the Assessee’s hand based on the discussion and findings in the order passed in the block assessment.
The Assessing Officer also disallowed loss of Rs.1,29,052/- while completing the assessment. On appeal by the Assessee, the CIT (Appeals) sustained the addition made by the Assessing Officer and also disallowed the loss while completing the assessment.
The Ld DR vehemently supported the orders of the lower authorities in treating the income received by the Assessee from Krishna Filaments Ltd and Krishna Vinyls Ltd as income of the Assessee. He also submits that the loss claimed by the assessee was rightly disallowed.
We have perused the orders of the authorities below and the Ld. DR. This aspect of the matter has been considered by the CIT (Appeals) in para 9 of the order with regard to the contentions of Assessee in the appeal
4 M/s Dominance Trade Invest P. Ltd and averments in assessment order and sustained the addition observing as under :
“I have considered the facts of the case, findings of the AO and submissions and contentions of the appellant. The addition has been made by the AO in the case of the appellant on protective basis. The same amount has been added in the case of Shri Krishna Kumar Agarwal, on substantive basis. It is further gathered that Shri K.K. Agarwal has filed an application before the Hon’ble Settlement Commission, which has been admitted and the matter is pending. However, it is not clear whether this amount is offered by Shir Krishna Kumar Agarwal in his hands or not. Under the circumstances, the addition made by the AO is upheld for now. However, I would like to advise the AO to give consequential relief to the appellant, if such amount is already assessed in the hands of Shri Krishna Kumar Agarwal on substantive basis in the order passed by the Hon’ble Settlement Commission. This ground of appeal is accordingly dismissed.”
7. Findings of the Assessing Officer as well as the CIT (Appeals) have not been rebutted with evidences by the assessee though several opportunities were given to him. Thus, we inclined to sustain the orders of the CIT (Appeals) in principle on this issue. However, we direct the assessing officer to verify whether the substantive addition made in the hands of Shri Krishna Kumar Agarwal has reached finality or not and in case this addition is confirmed in the case of Sri Krishna Kumar Agarwal and became final, similar addition now made protectively in the hands of the assessee will not stand. Thus we direct the Assessing Officer to verify the same and decide the same in the light of our above observations.
5 M/s Dominance Trade Invest P. Ltd
The CIT (Appeals) sustained the disallowance of loss for the reason that the Assessing Officer in the block assessment order and also in the assessment order held that Assessee Company is a bogus company and this company carried out operations for Shri Krishna Kumar Agarwal. Therefore, since the very basis of existence of the Company for its own is in doubt, the incurring of the expenditure also becomes doubtful and therefore loss of valuation of closing stock was not considered to be relating to Assessee’s business. Consequently, the loss claimed by the Assessee was disallowed. The findings of the CIT (Appeals) or the Assessing Officer was not rebutted before us, hence we sustain the same.
In the result, Assessee’s appeal is partly allowed for statistical purposes.
Order pronounced in the open court on the 30th Day of December 2016.