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Income Tax Appellate Tribunal, DELHI BENCHES, NEW DELHI
Before: SHRII.C. SUDHIR & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M. 01. This appeal is preferred by the assessee against the order of the CIT(A), Meerut dated 28.11.2014for the Assessment Year 2011-12 on the following grounds : “
1. That in the balance sheet the assessee claim carry forward loss of Rs.1,42,91,952/- which is not set off with the current year income. A.O. was requested to rectify the mistake was apparent on the face of" the records. CIT (A) is in error in confirming the disallowance of set off the earlier year loss.
2. That Ld. A.O. has not justified in making addition of Rs.5,20,000/- as the loan was taken by account payee cheque and duly confirmed by the loan creditors. The action of the A.O. is not justified because he has not made any efforts to examine the loan creditors and CIT (A) is in error in confirming the same.
3. That Ld. A.O, has not justified in making addition of Rs.4,98,417/-, however the assessee has filed complete books of accounts along with its return. The addition is also not justified if expenses are justified it can be capitalize and CIT (A) has not justified in confirming the same.
4. That the addition of Rs.23.21.409/- on account of depreciation is against the facts and law, which was allowed by A.O. in Section 154. In case of close business,it may be carrying forward and CIT (A) has not justified to confirming the same.
This appeal is prima facie time-barred by 2 days. Before us, assessee filed an application to control the delay in filing of the appeal. The reason stated by delays due to the postal delay in late deposit of challan of court fee and Internet of the assessee counsel was not working for 3 days. Learned departmental representative did not object to condonation of delay and therefore delay in filing of appeal of 2 days is condoned and appeal is being disposed off on merits of the case. The 1st ground of appeal
is against not allowing claim of carryforward of loss of 03. RS.14291952/-which is not set of against the current year income. Learned authorized representative of the assessee submitted that assessee has not been allowed carry forward of losses, which is determined in previous years. Ld. departmental representative did not object to this ground, but submitted that this ground should be set-aside to the file of assessing officer and if assessee is found to be eligible for setoff of carryforward of loss then it may be allowed. We have carefully considered the rival contentions and we agree with the submission of Ld. departmental representative and therefore we set aside this ground of appeal to the file of assessing officer and if assessee is found to be eligible for carryforward of losses, then same may be allowed in accordance with the law. In the result ground No. 1 of the appeal is allowed with above direction.
04. Second ground of appeal is against addition of Rs. 5,20,000/-under section 68 of the act. Brief facts of this ground is that assessee has borrowed Rs. 5,00,000/- from one Sh. Sachin Kumar on 05/10/2010. Before assessing officer confirmation of this depositor was not filed, it was also not filed before CIT (A) and before us too. What assessee hasfiled is merely a copy of account of that party from the books of assessee. Therefore, addition was made under section 68 of the income tax act. Before us. Ld. authorized representative submitted that amount is received by cheque and therefore the assessing officer should not have added it. Ld. departmental representative submitted that the assessee has failed to establish the identity, creditworthiness and genuineness of the transaction and therefore the addition is rightly made.
5. We have carefully considered the rival contentions and we are of the view that the assessing officer has rightly made the addition as assessee has failed to submit confirmation of this party, which is the basic onus cast upon the assessee to prove the cash credit. This is done neither before the assessing officer or before the first appellate authority or before us. Merely statement made by the Ld. authorized representative of the assessee that the payment is received by cheque cannot discharge assessee from the onus cast upon him. From what submitted before us, it is found that the narration stated in the Ledger account at page No. 7 of the paper book shows it is a journal entry. Hence, it cannot also be believed that the amount is received by cheque. In the result, we do not find any infirmity in the orders of lower authorities. Hence, ground No. 2 of the appeal of the assessee is dismissed.
The third ground of appeal is against disallowance of Rs. 498417/- whereassessee has filed complete books of accounts along with its return of income. During the course of assessment proceedings It was found by the Ld. assessing officer that assessee has claimed Selling and administrative expenses. However, before the assessing officer assessee Nether produced books of accounts or any bills and vouchers to verify the claim of the expenses. It was further stated by the assessee before the assessing officer that the business of the company was closed during the year, and no sale or purchases were made. Hence, assessing officer disallowed the claim of the expenses as not verifiable. On appeal before CIT (A) assessee submitted the details of payment of salary to the staff However, CIT (A) was of the view that as the business of the assessee has closed There is no justification for making salary payment to as many as eight Persons during the year and therefore he confirmed disallowances.
7. Before us. Ld. authorized representative submitted that assessee has made this payment for regularizing the formalities of the company and made payment. Against this Ld. departmental representative submitted that when the businesses close there is no need of employing so many persons. 08. We have carefully considered the rival contention. Assessee has submitted the details of payment of salaries of various persons. It was the contention of assessee that these persons were required forregularizing the formalities of the assessee company. Here the disallowance has been made by assessing officer for the reason that no details were produced beforehim and CIT (A) confirmed for the reason that assessee does not need so many employees. We are of the view that revenue cannot step into the shoes of assessee to say that these persons were not required. Revenue just need to verify whether the payments were incurred for the purpose of business or not. As assessee has submitted the details of persons and the amount of salary paid to them, we are of the view that the expenditure incurred on salary should have been allowed to the assessee. Therefore, we reverse the finding of the CIT (A) and direct assessing officer to allow the expenditure of salary. In the result ground No. 3 of the appeal is allowed. 09. Ground No. 4 of the appeal is against disallowance of depreciation of Rs. 23,21,409/-. Ld. assessing officer disallowed the depreciation because the assets were not used during the relevant previous year as the business of the assessee was closed. On appeal before CIT (A), he confirmed disallowance, as assessee did not submit anything before him. He also held that as the business of the assessee was closed and therefore, the assets of the assessee could not have been used for the purpose of the business and therefore depreciation cannot be allowed. 10. Before us Ld. authorized representative did not make any specific argument on this issue. Ld. departmental representative submitted that when the assessee has not used the assets. The depreciation cannot be allowed as it violates the basic conditions of section 32 of the income tax act. 11. We have carefully considered the rival contentions and we have noted that the business of the assessee has closed during the year and therefore the assets were not used, and this fact is not disputed or challenged by the assessee before the lower authorities as well as before us, therefore, we upheld the disallowance of depreciation and confirmed the finding of the CIT(A). In the result ground No. 5 of the appeal is dismissed. 12. In the result, appeal of the assessee is partly allowed.