A-1 FENCE PRODUCTS COMPANY,MUMBAI vs. ASST CIT 15(2), MUMBAI

O R D E R Per N. K. Pradhan, A. M.

This is an appeal filed by the assessee. The relevant assessment year is 2009-10. The appeal is directed against the order of Commissioner of Income Tax (Appeals)-26, Mumbai and arises out of the order u/s. 143(3) of the Income Tax Act, 1961 (the ‘Act’).

filed by the assessee read as under: “I. Disallowance of loss of Rs.2,06,00,981/-:

1. The learned CIT(A) erred in upholding the disallowance of the loss of Rs.2,06,00,981/- incurred on account of write off of unsold stock of moulds/dyes which were purchased for a price of Rs.2,30,41,800/- without appreciating the facts that the supplier has duly confirmed the account, details of payment by A/c payee cheque is furnished, invoice of purchase is furnished, the supplier has appeared and his statement is also recorded, prospective customers quotation was also produced therefore the disallowance may be deleted.

(A.Y. 2009-10) A-1 Fence Products Company vs. Asst. CIT

2. The learned CIT(A) failed to appreciate that the assessee had ventured in the transaction of trading in mould/dyes as there was a prospective overseas customer to purchase the said products. However after the assessee made the purchases the said party backed off and therefore the assessee had to incure the loss.

II. Disallowance of Expenses: 4. The learned CIT(A) erred in upholding the disallowance of expenses of Rs.2,12,417/- on the ground that the expenses are not related, to the business of the assessee without appreciating the correct facts. III. Disallowance of Expenses on ad-hoc basis: 5. The learned CIT(A) erred in upholding the disallowance of expenses of Rs.2,64,135/- (being 10% of 26,41,362/-) on adhoc basis without appreciating the expenses are incurred wholly and exclusively for the purpose of assessee’s business.”

3. After going through the rival submissions and perusing the relevant material on record, we find that the Assessing Officer (AO) has disallowed the entire loss of Rs. 2,06,00,981/- with the conclusion that “ the human probability indicates that the entire trading activity ventured by the assessee of buying old used moulds/dies at a high price and subsequently writing them off immediately was bogus and a colourable device meant to create artificial losses and consequently reduce tax liability of the assessee.” The ld. CIT (A) has dismissed the prayer of the assessee to admit the additional evidence filed before him. As the additional evidence filed by the assessee were relevant to decide the issue in dispute, we think the ld. CIT(A) should have admitted it. Now the assessee has filed before the ITAT an application dated 25.2.2015 under Rule 29 of the ITAT Rules, 1963 to admit the additional evidence being Sales Bills, Ledger Copy of Regal Engineering Co., Assessment Order, Statement of Total Income for (A.Y. 2009-10) A-1 Fence Products Company vs. Asst. CIT the AY 2010-11. We find that the above additional evidence have a direct bearing on the assessment order dated 30/12/2011 passed by the AO and subsequent order dated 6/11/2012 passed by the ld. CIT(A). Thus we admit under Rule 29 of the ITAT Rules, 1963 the additional evidence filed by the assessee on 25/02/2015 before the Tribunal. In view of the above, we set aside the order of the ld. CIT(A) and remit the case to the file of the AO to consider the additional evidence of the assessee and make a fresh assessment as per the provisions of the Act, after giving reasonable opportunity of being heard to the assessee.

Order pronounced in the open court on 28/11/2016