A.C.I.T., CIRCLE-1, MIDNAPORE, MIDNAPORE vs. M/S MEDINIMATA AGRO PRODUCTS (P) LTD., MIDNAPORE

The assessee in the present case is a Company, which filed its return of income for the year under consideration on 29.10.2007 declaring total income at ‘nil’. The said return was originally processed by the Assessing Officer under section 143(1). Subsequently information was received by the Assessing Officer regarding the payment of Rs.40,00,000/- made by the assessee during the year under consideration as extortion money. He, therefore, reopened the assessment by issuing notice under section 148 and in the assessment completed under section 143(3) read with section 147, an addition of Rs.40,00,000/- was made by the Assessing Officer on account of disallowance of extortion money paid by the assessee.

Against the order passed by the Assessing Officer under section 143(3) read with section 147, an appeal was preferred by the assessee before the ld. CIT(Appeals) challenging the validity of the said assessment as well as disputing the addition of Rs.40,00,000/- made therein on account of disallowance of extortion money paid. The ld. CIT(Appeals) did not find merit in the case of the assessee on the issue of validity of assessment made by the Assessing Officer under section 143(3) read with section 147 and rejecting the same, he proceeded to uphold the validity of the said assessment. He, however, found merit in the stand of the assessee that no deduction on account of extortion money having been claimed in the return of income, the disallowance made by the Assessing Officer on account of such extortion money was not I.T.A. No. 229/KOL./2014 Assessment year: 2007-2008 & C.O. No. 25/KOL/2014 (arising out of Assessment Year: 2007-2008 Page 3 of 4 sustainable. Accordingly, he deleted the disallowance made by the Assessing Officer on account of extortion money paid by the assessee. Aggrieved by the order of the ld. CIT(Appeals), the Revenue has preferred this appeal before the Tribunal challenging the deletion by the ld. CIT(Appeals) of the addition of Rs.40,00,000/- made by the Assessing Officer on account of disallowance of extortion money paid, while the assessee has filed its Cross Objection raising a preliminary issue relating to the validity of assessment made by the Assessing Officer under section 143(3) read with section 147.

I have heard the arguments of both the parties and also perused the relevant material available on record. The ld. counsel for the assessee has taken us through the Profit & Loss Account of the assessee-company for the year under consideration along with the relevant schedules (copies placed at pages 73 to 75 of the paper book) to point out that no expenditure on account of extortion money paid amounting to Rs.40,00,000/- was actually claimed by the assessee and this position clearly evident from the said documents has not been disputed or controverted even by the ld. D.R. It is thus clear that no deduction on account of extortion money paid was actually claimed by the assessee and there was thus no question of making addition by disallowance of such extortion money as rightly held by the ld. CIT(Appeals). I, therefore, find no infirmity in the impugned order of the ld. CIT(Appeals) deleting the addition of Rs.40,00,000/- made by the Assessing Officer by way of disallowance of extortion money and upholding the same, I dismiss this appeal of the Revenue.

As a result of our decision rendered while disposing of the appeal of the Revenue, whereby the impugned order of the ld. CIT(Appeals) deleting the addition made by the Assessing Officer on account of extortion money is upheld, the issue raised by the assessee in its Cross