M/S PLEASANT VINIMAY PVT. LTD.,KOLKATA vs. ITO, WARD-6(3), KOLKATA

Facts in brief are that the assessee filed return of income on 29.06.2017 disclosing the total income at Rs. 48,273/-. The case of the assessee was selected for limited scrutiny stating the reason that the assessee has returned low income in comparison to high loans/ advances/investments in shares as appearing in the balance sheet. Thereafter the statutory notices were duly issued and served upon the assessee which were also replied by the assessee. Thereafter the AO after taking into account the facts stated in the return of income, replies to queries raised in notice issued u/s 142(1) of the Act and other show notices observed that the assessee had investments to the tune of Rs. 28,93,444/- as on 31.03.2017 and the assessee has not furnished the required details qua the income therefrom as called for in the notice u/s 142(1) of the Act. Thereafter the AO after referring to the show cause notice issued to the assessee wherein it was show caused as to why income on the total investment in the ITR should not be computed @1% and added to the income of the assessee as the assessee has failed to comply with the notice u/s 142(1) of the Act. Finally the AO added the sum of Rs. 28,93,440/ to the income of the assessee.

In the appellate proceedings, the Ld. CIT(A) dismissed the appeal of the assessee by observing that the assessee did not file any response to the notice issued by the AO. During the appellate proceedings the assessee did not file any details in support of its claim and contentions and finally sustained the addition of Rs. 28,93,440/- which was calculated by the Ld. CIT(A) @1% of the total income.

After hearing the rival contentions and perusing the material on record, we find that though the assessee has not responded to the various quarries raised in the notice u/s 142(1) of the Act. But we note that the addition has been made by the AO oin the notional basis sans any substantive basis. In our considered opinion even if the addition is to be estimated it has to done one some reasoned basis and not merely on the basis of conjectures, surmises and presumptions. Even if it is presumed to be disallowance in terms of section 14A of the Act but the same is not applicable as the assessee has derived any income by way dividend or otherwise from these investments. In the appellate proceedings the Ld. CIT(A) dismissed the appeal of the Assessment Year: 2017-18 M/s Pleasant Vinimay Pvt. Ltd. assessee without taking into account the written submission filed by the assessee by stating that the assessee has not filed any details/finding in respect of grounds of appeal

Appellant- M/s Pleasant Vinimay Pvt. Ltd., 6, Lyons Range, Ground Floor, Room No. 1, Kolkata-700001.

Respondent – ITO, Ward-6(3), Kolkata 3. Ld. CIT(A)- NFAC, Delhi 4. Ld. Pr. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail)