Unreported Tribunal Decisions- September 2022
By Ajay R. Singh, Advocate and CA Rohit Shah
1. S. 41(1): – Remission/Cessation of Trading Liability- Assessee Failed to Furnish Confirmation from Loan Creditors
Facts:
Assessee undertook unsecured loans and accordingly, he was asked to furnish confirmation from loan creditors. Since the assessee did not furnish confirmations from some of the creditors and also some of the confirmations produced by the assessee did not contain PAN; the AO concluded that the assessee failed to establish creditworthiness of the lenders. Thus, the AO treated such amount as cessation of liability under section 41(1). On appeal, CIT(A) confirmed the addition holding that despite several opportunities, the assessee could not furnish any further confirmation from the loan creditors.
Held:
Admittedly, it was loan creditors and not a trading liability. So, assessee did not obtain allowance or deduction in computing profits and gains of business or profession in respect of assessment of any year. Therefore, the first condition enumerated under section 41(1) did not have application to the facts of instant case. Hence, the addition made by AO and sustained by CIT(A) under section 41(1) was deleted.
KA Rame Gowda vs. ACIT, Exemption
[ITA No.456/Bang/2019]2.Income from undisclosed sources-Addition under section 68-Receipt of unsecured loan-Section 133(6) notice remained unserved
Facts:
Assessee received unsecured loan from (P). AO doubted creditworthiness of the lender and issued notice under section 133(6) which remained unserved. Therefore, AO treated loan amount received by assessee as unexplained credit under section 68.
Held:
AO had not disputed the identity of lender, rather made addition solely alleging creditworthiness. So far as creditworthiness was concerned, assessee had furnished audited balance-sheet of P which duly incorporated all the entries once, assessee discharged the onus as required under section 68, it could not be penalized for non-compliance of notice under section 133(6) by the lender especially when section 133(6) notice remained unserved, rather notice remained uncomplied with.
Mahalaxmi Saws (P). Ltd. v. ITO
3.Appeal (Tribunal)–Delay in filing appeal-Condonation of delay-non-receipt of notice of hearing
Facts:
There was a delay of 655 days in filing of this appeal, attributed to the fact that neither the notice of hearing had been received by the assessee from CIT(A) nor the order passed by the latter. The assessee could come to know about the order of CIT(A) on going through the ITBA portal. Only then, he could file appeal before the ITAT.
Held:
The Tribunal, under section 253, may admit an appeal or cross-objection after the expiry of prescribed period, if it is satisfied that there was sufficient cause for not presenting it within that period. The expression ‘sufficient cause’ for condonation of delay in section 5 of Limitation Act, 1963 should receive a liberal construction so as to advance the substantial justice, especially when no negligence or inaction or want of bona fide is imputable to the assessee. In every case of delay, there can be some lapse of the litigant concerned. That alone is not enough to turn down the plea and to shut the doors against him. If explanation does not smack of mala-fide or does not put forth a dilatory strategy, the Court must show utmost consideration to such litigant. Further, the length of delay is immaterial, it is the acceptability of the explanation and that is the only criteria for condoning the delay. Thus, looking into the reasons, advanced by the assessee that he had no knowledge of either any notice given by the CIT(A) or any order passed by him subsequently, coupled with the fact that the revenue had neither refuted the contention of the assessee nor had brought anything to record to validate that copy of either any notice or any order from CIT(A) was duly served upon the assessee, the delay in filing of appeal by the assessee was condoned and also the case was restored to the file of CIT(A).
Pepperazzi Hospitality (P). Ltd. v. ITO