2015 (12) TMI 1840

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.... disallowance of Rs. 1,16,738 on the ground that the assessee did not carry out any business during the year. In ground no. 3, which is somewhat interconnected and which we will take up together with ground no. 1, the assessee is aggrieved that the learned CIT(A) was also in error in upholding the disallowance of various expenses, aggregating to Rs. 8,00,962, ion the ground that the business had closed down. 3. The relevant material facts are like this. During the course of the scrutiny assessment proceedings, the Assessing Officer noticed that the while the assessee is said to be engaged in the business of making threads from the colon, there was no activity during the relevant previous year. It was also noted that the office of the ass....

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.... authorities below have disallowed the expenses and the disallowance on the ground that no business activities were carried out but, in our considered view, business activities not being carried out during the year per se cannot even lead to the conclusion that the business was discontinued, leave aside the question of closure of 'assessee's business'. In the case of L. Ve. Veravan Chettiar vs. CIT (1969) 72 ITR 114 (Mad), Their Lordships of Hon'ble Madras High Court were in seisin of a situation where the assessee had obtained an import licence for doing arecanut business but due to adverse conditions in market, he temporarily suspended the arecanut business for the assessment year in question. Nevertheless, he was maintaining the esta....

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....previous year, was to be set off against assessee's business income in the year. As the ratio of the aforesaid judgment is summed up in the ITR headnotes at p. 115 of the report, "As the assessee was maintaining the establishment and waiting for the improved market conditions in arecanuts and there was nothing to show that he completely abandoned or closed the business forever, the business must be deemed to be continuing." In the light of this legal position, it would follow that unless there is some material on record to show that the assessee has completely abandoned the business. There is no finding by any of the authorities below that there was a cessation of business. It is not the case, as has been stated by the AO, that the assessee....