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01-03-2019, Lotus Investments, Section 41(1), 18, 68, Tribunal Mumbai

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2 months 2 weeks ago #8736 by amit
Section - 41(1), 18, 68
Order Date - 01-03-2019
Favouring - Assessee
Court - Tribunal Mumbai
Appellant - Lotus Investments Ltd.
Respondent - ACIT
Citation - 219Taxpundit166
Appeal No. - I.T.A. No. 1417/Mum/2014
Asstt. Year - 2007-08


PER : Sandeep Gosain

The present Appeal filed by the assessee is against the order of Ld. CIT (Appeal) – 37, Mumbai dated 26.12.2013 for AY 2007-08 on the grounds mentioned herein below:-

1. The learned Commissioner of Income Tax (Appeals) - 37, Mumbai has erred, in law and the facts and circumstances of the case in confirming certain additions of the order of the learned A.O. The Asst Commissioner of Income Tax Central Circle-13 Mumbai,

2. The Id. CIT (A) erred in Confirming the addition of Rs. 4,26,66,276/- made by the Id.AO on account of outstanding expenses treating the same as income u/s 41 of the Income Tax Act 1961 The appellant respectfully submits tha the disallowance of this sum may kindly be deleted.

3. The appellant prays that the various grounds of appeal be admitted and allowed.

4. Appellant caves leave to add, alter or amend or delete any or all the grounds of appeal on or before the hearing of the appeal.

2. The brief facts of the case are that the return of income was filed on 15/01/07 declaring NIL income. Vide order dated 24/12/09 income of the assessee was assessed at Rs. 16,25,96,110/- u/s 143(3) of the Act, thereby making additions on account of new loan received during the year and on account of outstanding expenses. As per AO, the assessee could not satisfy with regard to genuineness of trading liabilities and thus additions u/s 41(1) of the I.T. Act was made. Similarly in the absence of confirmation from the parties advancing the new loans during the year, the assessing officer added the same as unexplained credit u/s. 68 of the I.T. Act.

Aggrieved by the order of AO, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) after considering the case of both the parties, partly allowed the appeal of the assessee thereby restricting the additions u/s 41(1) of the Act.

Now before us the assessee has preferred the present appeal by raising the above ground.

3. The solitary ground raised by the assessee relates to challenging the order of Ld. CIT(A) in confirming the addition made by the AO on account of outstanding expenses treating the same as income u/s 41 of the I.T. Act, 1961.

4. Ld. AR appearing on behalf of the assessee reiterated the same arguments as were raised by him before Ld. CIT(A) and submitted that the assessee had claimed outstanding expenses of Rs. 4,26,66,276/- and in this respect, assessee had shown outstanding expenses payable in its balance sheet. It was further submitted that the AO had wrongly treated the same as income u/s 41 of the Act in absence of party details and confirmations.

5. Ld. AR further submitted that the AO had completely ignored the specific reply vide letter dated 18.12.09, wherein it was pleaded that the outstanding amount was payable to various parties and since the assessee could not make the payment as there was insufficient revenue generation and the company had been incurring losses for the past several years.

6. It was further submitted that assessee had specifically mentioned in its reply that they are in the process of generating revenue which will enable them to clear the outstanding sums. But the said reply was not accepted by the AO. Ld. AR further submitted that the liability of making payment of expenses is continued in the books of account of the assessee for a long period and the assessee had not any benefit in respect of such

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