INDIAN CABLE NET CO. LTD.,KOLKATA vs. A.C.I.T, CIRCLE-1., KOLKATA

The assessee in the present case is a Company, which is engaged in the business of transmission and distribution of cable TV signal. The return of income for the year under consideration was filed by it declaring loss of Rs.1,62,84,776/-. In the assessment completed under ./2013 Assessment year: 2005-2006 Page 2 of 6 section 143(3) vide an order dated 31.12.2007, the total loss of the assessee-Company was determined by the Assessing Officer at Rs.1,21,50,280/- after making, inter alia, the following three additions:- (i) Difference in the account of M/s. Star India Pvt. Ltd....Rs. 5,00,000/-; (ii) Disallowance out of various expenses............................Rs.15,83,687/-; (iii) Prior period expenses......................................................Rs. 2,18,838/-.

On appeal, the ld. CIT(Appeals) confirmed all the above three additions made by the Assessing Officer and dismissed the appeal of the assessee. Aggrieved by the order of the ld. CIT(Appeals), the assessee has filed this appeal before the Tribunal on the following grounds:- 1. That, the Order passed by the Ld. CIT (Appeals)-XIV/Kolkata on 20.12.2012 is bad and illegal.

At the time of hearing before us, none has appeared on behalf of the Revenue. This appeal of the assessee is, therefore, being disposed of ex- ./2013 Assessment year: 2005-2006 Page 3 of 6 parte qua the respondent Department after hearing the ld. Counsel for the assessee and perusing the relevant material available on record.

Ground No. 1 of the appeal of the assessee is general in nature, which does not call for any specific adjudication.

As regards the issue raised in Ground No. 2 relating to the addition of Rs.5,00,000/- made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of the amount allegedly received by the assessee from M/s. Star India Pvt. Limited, it is observed that the assessee, as per the information of the Assessing Officer, was paid a sum of Rs.5,00,000/- by M/s. Star India Pvt. Ltd. Since the said amount was not disclosed by the assessee and the explanation offered by the assessee in this regard was not found acceptable by him, the Assessing Officer treated the amount of Rs.5,00,000/- allegedly paid by M/s. Star India Pvt. Ltd. as income of the assessee and added the same to its total income. This addition was confirmed by the ld. CIT(Appeals) on account of the failure of the assessee to file any confirmation letter from M/s. Star India Pvt. Limited in support of its stand that no such amount was actually paid by the said Company. As submitted by the ld. Counsel for the assessee at the time of hearing before us, this addition was made by the Assessing Officer on the basis of some information received by him about the amount of Rs.5,00,000/- paid by M/s. Star India Pvt. Limited. Although the assessee had not received any such sum from M/s. Star India Pvt. Limited, it was not possible for the assessee to get any confirmation from M/s. Star India Pvt. Limited and a request was, therefore, made to the Assessing Officer to get the information again cross verified from the said party. It appears that neither the Assessing Officer nor the ld. CIT(Appeals), however, has made any effort to get this matter cross verified from M/s. Star India Pvt. Limited. We, therefore, consider it just and proper to restore this issue to the file of the Assessing Officer with a direction to get the matter of payment by M/s. Star India Pvt. Limited to the assessee cross verified from the said party in order to find out exactly the nature of such amount, ./2013 Assessment year: 2005-2006 Page 4 of 6 if at all paid by the said party to the assessee and to decide the issue accordingly. Ground No. 2 is accordingly treated as allowed.

As regards the issue involved in Ground No 3 relating to the disallowance of 25% made by the Assessing Officer out of various expenses, it is observed that the disallowance of 15% out of expenses claimed by the assessee under the various heads was made by the Assessing Officer due to the failure of the assessee to establish on evidence that the said expenses were wholly and exclusively incurred for the purpose of its business. Before the ld. CIT(Appeals), it was contended on behalf of the assessee that no proper opportunity was allowed by the Assessing officer to establish its case on this issue during the course of appellate proceedings. The ld. CIT(Appeals), however, did not accept this contention of the assessee, as according to him, sufficient opportunity of being heard was already granted by the Assessing Officer. It is, however, observed that the relevant details to show that sufficient opportunity of being heard was given by the Assessing Officer to the assessee during the course of assessment proceedings are not given by the ld. CIT(Appeals) in his impugned order and the same are also not available in the assessment order. We, therefore, consider it fair and proper and in the interest of justice to set aside the impugned order of the ld. CIT(Appeals) on this issue and restore the matter to the file of the Assessing Officer for deciding the same afresh after giving the assessee proper and sufficient opportunity of being heard. Ground No. 3 is accordingly treated as allowed.

As regards the issue involved in Ground No. 4 relating to the disallowance made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of prior period expenses, it is observed that this disallowance was made by the Assessing Officer merely on the ground that the relevant expenses pertained to the earlier year. The issue as to whether the liability for the said expenses was crystallized during the year under consideration was not examined by the Assessing Officer. As ./2013 Assessment year: 2005-2006 Page 5 of 6 submitted by the ld. Counsel for the assessee, the assesese before the ld. CIT(Appeals) filed additional evidence to establish its case that the relevant liability had crystallized during the year under consideration, but he declined to admit the same on the ground that sufficient opportunity was already given by the Assessing Officer to the assessee during the course of assessment proceedings. As already observed by us while deciding Ground No. 2, the relevant details are not available either in the assessment order or in the impugned order of the ld. CIT(Appeals) to show that sufficient and proper opportunity was given to the assessee during the course of assessment proceedings. Moreover, a perusal of the relevant portion of the assessment order also shows that the issue relating to the crystallization of the liability, which is relevant for the purpose of deciding the claim of the assessee for prior period expenses, was not examined by the Assessing Officer. We, therefore, set aside the impugned order of the ld. CIT(Appeals) on this issue and restore this matter to the file of the Assessing Officer for deciding the same afresh after giving the assessee proper and sufficient opportunity to establish that the liability for the relevant prior period expenses was crystallized in the year under consideration. Ground No. 4 is accordingly treated as allowed.

In the result, the appeal of the assessee is treated as allowed for statistical purposes.