AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 809
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....tice under section 142(1) read with section 144 of the Act was issued on 15.11.2016. Even then, no one appeared on behalf of the assessee. On the basis of the information available on record, the Assessing Officer completed the assessment by making substantial additions under section 68 of the Act in respect of share capital and trade creditors. The Assessing Officer further disallowed current liabilities, various expenses, depreciation and warranty provisions. 3. Aggrieved by the assessment order, the assessee preferred an appeal before the NFAC, Delhi. Before the learned CIT(A), the assessee filed detailed submissions, raised several grounds of appeal and also furnished additional evidences to substantiate its claim that the information reflected in the financial statements was genuine. 4. After considering the submissions and additional evidences, a remand report was called for from the Assessing Officer. In response Assessing Officer vide his report dated 22.06.2018 submitted as under :- "5.1.2 During the instant appellate proceedings, the Additional evidences submitted by the appellant were sent by the CIT(A)-3, New Delhi, to the assessing officer for remand rep....
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....called for from the assessee. In response assessee has submitted as under :- "5.1.9 The remand report dated 17.02.2025 was provided to the appellant to give his comments on it. The relevant part of submissions of the appellant are reproduced as under: "It may be verified that the Assessing officer had served all the Notices at the Address which the Assessee had already left, prior to the start of Assessment proceedings and when the Assessee had duly intimated and updated the new address to the department. Further, the Notice send by the Assessing officer has also been served on assessee from the personal email ID i.e, '[email protected]' on 25.11.2016, which couldn't be received by the Assessee, as the same was got rejected by the firewall security features of the IT system of the Company. Had the mail been send by the Assessing officer from the official email ID of the Department, the same wouldn't have been rejected by the 'firewall' as emails having the domain name as 'gov.in' has specially be allowed by the firewall. The addition had been made by the Assessing officer based on the non compliance by the Asses....
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....d the submissions of the appellant have been perused. From the evidence submitted by the Appellant, it is apparent that during the relevant previous year the appellant had allotted 27,56,250 Equity Shares of Rs. 10 each to M/S Ebaspaecher Climate Control System-International, for which the appellant had received consideration through foreign remittances. During the appellate proceedings, the appellant has also submitted all the necessary evidences in support of transactions in respect of increase in share capital. Further, despite given numerous opportunities, the assessing officer has not given any adverse findings of the evidences/documents submitted by the appellant in this regard. 5.4.5 In view of the above, it is held that the appellant has successfully explained with all necessary documents, the source of the increase of share capital of Rs. 2,75,62,500/-. Therefore, the addition of Rs. 2,75,62,500/- u/s 68 of Income Tax Act on account of unexplained increase in share capital is not sustainable on the basis of the facts of instant case. Therefore, the addition of Rs. 2,75,62,500/- made u/s 68 of Income Tax Act is hereby deleted. 5.5 Further, the assessing officer has....
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....as made the additions of trade payables only on the ground of non-submission of the details by the appellant. However, during the instant appellate proceedings the appellant has submitted details in respect of the trade payables. The appellant has also submitted confirmations from the trade creditors. Further, from the perusal of the copy of the ledger of the trade creditors, it is observed that there has been regular purchases and payments in the ledger accounts. It is also relevant that the payments were made to these trade creditors through banking channels. 5.5.4 During the instant appellate proceedings, the appellant had submitted the closing balance at the end of financial year 2010-11, 2011-12 and 2013-4, of the creditors having closing balance of more than Rs. 10,00,000/- as on 31.03.2014. The details submitted by the appellant is reproduced as under: Financial Year 2012-13 Financial Year 2011-12 Financial Year 2010-11 Eberspaecher Suetrak GMBH & Co. KG(Germany) 35,863,345 2,59,72,937 12,065,075 Eberspacher Climate Control Systems GmbH & Co KG 65,362 - 129,840 GEA Bock (India) Pvt Ltd 28,54,846 - - J.Eberspa....
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....und of appeal numbered as 4(i) is allowed. 5.6 Vide 4(ii) ground of appeal the appellant has challenged the addition of Rs. 70,41,169/- i.e., 25% of the Current Liabilities amounting to Rs. 2,81,64,676/- as on 31.03.2014. While making this addition the assessing officer has observed that: 5.1 On examining the ITR of the assessee for AY 2014-15, it was observed that the assessee has current liabilities to the tune of Rs. 2,81,64,676/-. Vide notice dated 15/11/2016 the assessee was asked to produced proper details to prove the genuineness of the current liabilities. The assessee was also informed that in absence of proper details 25% of the amount of current liabilities will be disallowed which is worked out to Rs. 70,41,169/-. 5.2 The approach used by the assessee company toward the scrutiny proceedings imply that assessee is deliberately trying to evade the proceedings and was not intend to furnish any details before the assessing officer. In view of the facts and circumstances the undersigned has no option but to treat the amount of trade payable as income from undisclosed sources and added back to the income of the assessee. 5.6.1 Duri....
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....enure of the contract period, rent equalization reserve is created to give effect the actual rent paid and rent equalization amount. Detail calculation is attached for reference. (iii) That the details in respect payment of "withholding & other duties" outstanding as on 31.03.2014, in next financial year along with copies of challan is enclosed herewith at Page 51 to 64 of this letter. d) That the details in respect of the Short Term Provisions shown under the Note -9 attached to the Financial statement is detailed hereunder :- S No Nature of Liability Rupees Remarks 1 Provision for Gratuity 3,44,195/- a) The detailed Accounting Policy for accounting of Gratuity has already been explained in Note 31 attached to Financial statement for the year ended 31.03.2014 (Placed at Page 31 of First submission made before CIT(A) dated 21.09.2016 b) 2 Provision for leave Encashment 7,77,806/- 3 Provision for warrantee 1,30,27,650/- The detailed Accounting Policy for accounting of Warranty along with movement in account has already been explained in Note 36 attached to Financial statement for the year ended 31.03.2014 (Placed at Pag....
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.... amounting to Rs. 31,63,04,609/- in its profit and loss account for the F. Y. 2013-4 6.2 The assessee has failed to produce any supporting details of its expenses even after availing lots of opportunities to attend the proceedings. The assessee failed to comply with the notices and thereby did not produce supporting bills and vouchers to support the veracity of the expenses claimed. 6.3 The approach used by the assessee company toward the scrutiny proceedings imply that assessee is deliberately trying to evade the proceedings and was not intended to furnish any details before the Assessing officer. 6.4 A specific show cause was issued on 15.11.2015 intimating that in case books of accounts and vouchers are not produced on 25.11.2016, 40% of the expenses claimed will be disallowed. On this date too no books of accounts and vouchers were produced. Keeping in view of the above discussion and also in the absence of any supporting documents on an estimated basis, 40% of total expenses of Rs. 31,63,04,609/- as claimed by the assessee during the year which works out to be Rs. 12,81,81,369/- is hereby disallowed and added to the income of the assessee. 5....
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....the appellant. The assessing officer has not given any reason for choosing adhoc disallowance of 40% of expenditures claimed by the appellant. The appellant has also submitted the ledger of the parties for whom payments for the expenses have been made. From the perusal of the ledger of the parties, it is observed that for all the payments for the expenditures claimed have been made through banking channels. Thus, it is held that during the appellate proceedings the appellant has submitted all the necessary documents in support of genuineness of the expenditure claimed. Further, the documents submitted by the appellant were sent to the assessing officer for remand report. Despite given several opportunities, the assessing officer has not pointed any defect in the submissions of the documents submitted by the appellant. 5.7.4 In view of the above, it is held that the appellant has successfully explained the genuineness of the expenses claimed in its profit and loss account of Rs. 31,63,04,609/- outstanding at the end of the relevant financial year. Therefore, the adhoc disallowance of 40% of the above-mentioned current liabilities is not sustainable on the facts of instant a....
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....re sent to the assessing officer for verification and remand report. In none of the several remand reports, the assessing officer has made any adverse inference on the documents submitted by the appellant in respect of the depreciation claimed by the appellant. 5.8.3 The submissions of the appellant, the order appealed against and the remand report submitted by the assessing officer have been perused. In the instant case the assessing officer has made an adhoc disallowance of 50 % of depreciation claimed in the profit and loss account .. The assessing officer has not given any reason for choosing adhoc disallowance of 50% of depreciation claimed by the appellant. The appellant has also submitted the details of assets, copies of invoices of the additions made during the relevant financial year. It is also worth mentioning that most of the fixed assets on which the depreciation was claimed by the appellant were brought forward from last years and no disallowances were made by the assessing officers in earlier years despite the assessments were completed u/s 143(3) of Income Tax Act. Thus, it is held that during the appellate proceedings the appellant has submitted all the ne....
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.... quantum of sales made during the year. It may be verified that the amount of Warranty provision made during the year, represents the present/ current ascertained liability of Warranty obligation to be met in subsequent year, as period of warranty has not expired on such sales. By no means of imagination, the liability may be termed as "Contingent Liability". Accordingly, the claim of warrantee expenses debited to profit & loss A/c is allowable as expense, while computing the total income. On the allowability of claim of warranty provisions the appellate has placed its reliance of the Judgment of the Hon'ble Supreme Court of India in the case of M/s Rotork Controls India Pvt Ltd Vs CIT, Chennai, Civil Appeal No. 3506- 3510 of 2009 and some other judicial precedents. 5.9.3 Along with the submissions of the appellant the above-mentioned documents were sent to the assessing officer for verification and remand report. In none of the several remand reports, the assessing officer has made any adverse inference on the documents submitted by the appellant in respect of the warranty provisions claimed by the appellant. 5.9.4 The submissions of the appellant, the order ....
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....lso been questioned. 5.10.1 Since in the earlier para of this appellate order, the appellant has already got substantial relief on merit of the case, the technical and procedural ground raised by the appellant have become academic in nature. Therefore, these grounds of appeal are not adjudicated. 5.11 Vide ninth ground of appeal the appellant has request to allowed an opportunity to submit addition details, documents, information within the provisions of Rule 46A of the Income Tax Rules. 5.11.1 As the additional details, documents, information submitted by the appellant have already been admitted in earlier part of the instant appellate order, this ground of appeal needs no separate adjudication. 5.12 Vide tenth ground of appeal the appellant has challenged the initiating penalty proceedings u/s 271(1)(c) of the Income Tax Act, 1961. 5.12.1 This ground of appeal is premature, therefore, is liable to be dismissed as premature. 5.12.2 Thus, tenth ground of appeal is dismissed as premature. 5.13 Vide eleventh ground of appeal the appellant has challenged the interest charged under section 234B of Income Tax Act, the appell....