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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: Ms. SUCHITRA KAMBLE & SHRI WASEEM AHMED
PER SUCHITRA KAMBLE, JUDICIAL MEMBER :
This appeal is filed by the Revenue against order dated 26.06.2015 passed by the CIT(A), Jamnagar for the Assessment Year 2009-10.
The Revenue has raised the following grounds of appeal :-
“1. The Id. CIT(A) has erred on facts and in law in not appreciating the factual and legal matrix of addition made by the AO on account of low GP. The Id. CIT(A) ought to have appreciated that the GP was estimated by the AO as the assessee had not attended the assessment proceedings.
2. The Id. CIT(A) has erred on facts and in law in not appreciating the factual and legal matrix of the addition made u/s. 68 of Rs 27,50,000/-. The Id. CIT(A) ought to have appreciated that the addition was made u/s. 68 as the assessee had not produced enough details to establish the genuineness of the unsecured loans.
3. The Id. CIT(A) has erred on facts and in law in not appreciating the factual and legal matrix of the addition made of Rs 4,64,929/- made out of sundry creditors. The Id. CIT(A) ought to have appreciated that, this addition was made because, the assessee did not even produce the Assessment Year: 2009-10 Page 2 of 6 primary bills of the so-called purchases, resulting into such sundry creditors.
4. The Id. CIT(A) has erred on facts and in law in not appreciating the factual and legal matrix of the addition made u/s.43B of Rs 99,549/-. The Id. CIT(A) grossly erred in holding that although the disallowance is rightly made, there should be simultaneous increase in 10B deduction.
5. The ld. CIT(A) has erred on facts and in law in not appreciating the factual and legal matrix of the addition made u/s. 40(a)(ia) of Rs.2,64,702/-. The Id. CIT(A) ought to have appreciated that the disallowance was made because the assessee had not produced enough details to establish the genuineness of the unsecured loans.
The Id. CIT(A) has erred on facts and in law in not appreciating the factual and legal matrix of the addition made of Rs 1,12,500/- on account of director's remuneration. The Id. CIT(A) ought to have appreciated that the addition was made because the assessee failed to produce proof of the same.
7. The Id. CIT(A) has erred on facts and in law in not appreciating the factual and legal matrix of the addition made u/s. 68 of Rs 2,00,00,000/- on account of addition to share capital and share premium. The Id. CIT(A) ought to have appreciated that the addition was made u/s. 68 as the assessee had not produced enough details to establish the genuineness of the same.
8. The Id. CIT(A) has erred oh facts and in law in not appreciating the factual and legal matrix of the addition made of Rs.1,16,328/-. The Id. CIT(A) ought to have appreciated that the addition was made' as the assessee had not produced enough details to establish the genuineness of the same.
9. The Id. CIT(A) has erred on facts and in law in not appreciating the factual and legal matrix of the addition made of Rs 43,72,643/- u/s. 10B of the I T Act. The Id. CIT(A) ought' to have appreciated that the addition was made as the assessee had not produced books of accounts and other documents for verification.
10. The Id. CIT(A) has erred on facts and in law in not appreciating the factual and legal matrix in not allowing claim of b/f loss of Rs.2,99,711/-. The id. CIT(A) ought to have appreciated that the addition was made as the assessee had not produced enough details to establish the genuineness of the same.”
Return of income declaring Rs. nil income was filed by the assessee company dated 09.07.2009 thereby claiming deduction under Section 10B of the Income Tax Act, 1961 of Rs.43,72,643/-. The return was selected for scrutiny and notice under Assessment Year: 2009-10 Page 3 of 6 Section 143(3) of the Act was issued on 25.08.2010. Further notice under Section 142(1) of the Act was issued on 31.01.2011. At the time of hearing, despite giving several opportunities, the assessee failed to give any details and, therefore, the Assessing Officer made addition on account of low GP under Section 68 of the Act, disallowance under Section 43B of the Act, disallowance under Section 40(a)(ia) of the Act, disallowance out of Director’s remuneration and disallowance out of administrative expenses and assessed total income at Rs.2,50,53,070/-.
Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
At the time of hearing none appeared on behalf of the assessee despite giving several notices and the last notice was returned back to the Registry with the Postal remark “left”. There was no new address filed by the assessee. Therefore, we are proceeding on the basis of submissions made by the assessee as well as the remand report, both of which are produced in the order of the CIT(A).
6. The Ld. DR submitted that as relates to ground no.1, the CIT(A) erred in deleting the addition on account of low GP as the GP was estimated by the Assessing Officer. As regards to ground no.2, the Ld. DR submitted that the addition made under Section 68 of Rs.27,50,000/-, the assessee has not produced enough details to establish the genuineness of the unsecured loan. As regards to ground no.3, in respect of addition made of Rs.4,64,929/- made out of Sundry Creditors, the assessee did not produce the primary bills of the purchases resulting into such Sundry Creditors. As regards to ground no.4, the CIT(A) while deleting the addition made under Section 43B of Rs.99,549/-, as the disallowance was rightly made by the Assessing Officer and there should be simultaneous increase in 10B deduction. As regards to ground no.5, Ld. DR submitted that the CIT(A) erred in deleting the addition made under Section 40(a)(ia) of Rs.2,64,702/-, as the disallowance was made because the assessee did not produce enough details to establish the genuineness of the unsecured loans. As regards to ground no.6, the Ld. DR submitted that the addition of Rs.1,12,500/- on account of Director’s remuneration ought to have been sustained because the assessee failed to produce proof of the same. As regards to ground no.7, in respect of addition made under 68 of Rs.2,00,00,000/- on account of addition
Assessment Year: 2009-10 Page 4 of 6 to share capital and share premium, the assessee did not produce details to establish the genuineness of the same. As regards to ground no.8 related to addition of Rs.1,16,328/-, here also the assessee did not produce the details to establish the genuineness of the same. As regards to ground no.9, the Ld. DR submitted that the addition of Rs.43,72,643/- under Section 10B of the Act was wrongly deleted by the CIT(A) as the assessee did not produce any documentary evidence. As regards to ground no.10, regarding allowing the claim of brought forward loss of Rs.2,99,711/- despite non-production of documents & details, here also the assessee did not establish the genuineness of the same.
We have heard the Ld. DR and perused all the relevant material available on record. From the perusal of the order of the CIT(A), in respect of ground no.1, the assessee has given the details related to low GP thereby giving working of GP margin statement and, therefore, the CIT(A) has rightly allowed the said issue in favour of the assessee. There is no need to interfere with the same. Hence, ground no.1 is dismissed.
As regards to ground no.2, the assessee has not fully established the genuineness of the transactions as well as the creditworthiness which can be seen from the remarks of the remand report. Hence, the CIT(A) has not given justification while partly allowing the same. This issue thus needs to be verified and hence the same is remanded back to the file of the Assessing Officer for proper verification and adjudication. Needles to say the assessee be given opportunity of hearing by following the principles of natural justice. Ground no.2 is partly allowed for statistical purpose’s.
As regard to ground no.3, the assessee has not given the details before the CIT(A) as well and hence ground no.3 is allowed.
As regards to ground no.4, the assessee has not given details and hence the CIT(A) was not justified in allowing the said ground. Ground no.4 is, therefore, allowed.
Assessment Year: 2009-10 Page 5 of 6 11. As regards to ground no.5, the assessee has given the details in respect of payments regarding freight & transportation expenses and legal fee and, therefore, the CIT(A) has rightly allowed the same. Hence, ground no.5 is dismissed.
As regards to ground no.6, the assessee has given the details related to Director’s remuneration and hence there is no need to interfere with the finding of the CIT(A). Hence, ground no.6 is dismissed.
As regards to ground no.7, the assessee has given the details related to source of amount and creditworthiness of the parties related to the share premium and share capital raised alongwith the identity and the CIT(A) has considered each and every aspect of the same and granted the relief accordingly. There is no need to interfere with the same. Ground no.7 is thus dismissed.
As regards to ground no.8, the assessee has given the detailed reasoning for increase in advertising and remuneration paid to Directors and justified the same through evidences and, therefore, no need to interfere with the finding of the CIT(A). Ground no.8 is thus dismissed.
As regards to ground no.9 related to deduction under Section 10B of the Act amounting to Rs.43,72,643/-, the said exemption was already allowed in A.Y. 2006-07 and, therefore, the Revenue cannot take a different stand in this particular year. The assessee has given all the details and the same was taken cognisance by the CIT(A). Thus, there is no need to interfere with the same. Ground no.9 is thus dismissed.
As regards to ground no.10 relating to set of of brought forward loss/ unabsorbed depreciation allowance, the same needs to be verified as the CIT(A) has not considered the comments of the remand report and, therefore, ground no.10 relating to claim of brought forward loss is remanded back to the file of the Assessing Officer for proper verification and adjudication. Needless to say, the assessee be given opportunity of hearing by following the principles of natural justice. Hence, ground no.10 is partly allowed for statistical purposes.
Assessment Year: 2009-10 Page 6 of 6 17. In the result, appeal filed by the Revenue is allowed for statistical purpose.
Order pronounced in the open Court on this 15th February, 2023