Sona Alloys Pvt. Ltd., Ahmedabad V. The Pr. CIT -4, Ahmedabad

ITA 321/AHD/2020

AI Insights

The case involves two appeals by Sona Alloys Pvt. Ltd. against orders from the Commissioner of Income Tax (Appeals) and the Principal Commissioner of Income Tax, concerning the assessment years 2013-14 and 2014-15. The appeals addressed various additions made to the assessee's income, including share capital, share premium, and other income sources, as well as disallowances related to expenses and loans. The tribunal examined each ground of appeal, considering the submissions and evidence provided, and made determinations based on the provisions of the Income Tax Act, 1961, and relevant judicial precedents.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129785 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 10-09-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 10-06-2020
• Laws Referred To: Income Tax Act, 1961, Insolvency & Bankruptcy Code, 2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 263; 2; 143(3); 40(a)(ia)

Judgement Text

ITA Nos.683/Ahd/2019 & 321/Ahd/2020 A.Ys: 2013-14 & 2014-15 Page 1 of 5 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA Nos.683/Ahd/2019 & 321/Ahd/2020 Assessment Years: 2013-14 & 2014-15 Sona Alloys Pvt. Ltd., 4 th Floor, Medi Max House, Opp. Karnavati Hospital, Ellisbridge, Ahmedabad – 380 006. [PAN – AAKCS 5706 L] Vs. The Deputy Commissioner of Income Tax, Circle – 4(1)(1), Ahmedabad/The Pr. Commissioner of Income Tax-4, Ahmedabad. (Appellant) (Respondent) Assessee by None Revenue by Shri Kamlesh Makwana, CIT (DR) Da te o f He a r in g 11.09.2023 Da te o f P ro n o u n ce m e n t 13.10.2023 O R D E R PER BENCH : These two appeals are filed by the Assessee against two different orders dated 25.02.2019 passed by the Commissioner of Income Tax (Appeals)-8, Ahmedabad for the Assessment Year 2013-14 and 20.03.2020 passed the Principal Commissioner of Income Tax-4, Ahmedabad for the Assessment Year 2014-15. 2. At the time of hearing none appeared on behalf of the assessee despite giving notice. In fact, notice was issued through DR office as well and the service report is filed to that effect dated 02.08.2023. Therefore, we are proceeding on the basis of the records available before us. 3. From the perusal of the records it is found that the assessee company through Resolution Professional Shri Vikash Jain has filed application under Section 30(6) and Section 31 of the Insolvency & Bankruptcy Code, 2016 for approval of Resolution Plan which is decided on 09.02.2023 (IA No.314/(AHM)/2021 in CP (IB)/586/(AHM)/2019 by The National Company Law Tribunal, Ahmedabad Bench. We have noticed that the order of Moratorium dated 16.06.2020 was passed by Adjudicating Authority under ITA Nos.683/Ahd/2019 & 321/Ahd/2020 A.Ys: 2013-14 & 2014-15 Page 2 of 5 Section 14 of the Insolvency & Bankruptcy Code was ceased by the National Company Law Tribunal from the date of order in this Interim Application No.314/AHM/2021 dated 09.02.2023. Order dated 09.02.2023 also gives the guidelines that: “vi. As regards reliefs prayed under various provisions of the Income Tax Act, 1961, the Corporate Debtor/resolution applicant may approach the Income Tax Authorities who shall take a decision on relief and concessions sought by the resolution applicant in accordance with the provisions of the Income Tax Act, 1961”. 4. The Ld. DR relied upon the Assessment Order and the order of the CIT(A). 5. This is assessee’s appeal and none appeared on behalf of the assessee before us. We are perusing order of the CIT(A) in respect of ground no.1 relating to addition of Rs.4,98,32,739/- for the amount received from Shreya Enterprise as share capital inspite of the fact that the same are only opening balances and no new amount has been received during the year under appeal. After perusal, it appears that the view taken by the CIT(A) the assessee has filed the relevant documents including confirmation in the case of Shreya Enterprise and that was categorically mentioned in the Assessment Order as well as in the order of the CIT(A). In fact, no new credits were received from the party during the Assessment Year and the amounts received are actually in the earlier year i.e. A.Y. 2012-13 wherein the assessment framed under Section 143(3) of the Income Tax Act, 1961 the same is credited and, therefore, found genuine. Therefore, ground no.1 is allowed. 6. As regards ground no.2 relating to addition of Rs.1,63,89,724/- in respect of excess value of share premium received calculating the same at Rs..052 (Rs.12- Rs.11.48) per share as per Rule 11UA of the Act and treating the same as income from other sources under Section 56(2)(viib) of the Act. The CIT(A) has correctly dealt with it and there is no need to interfere with the same. Hence, ground no.2 is dismissed. 7. As regards ground no.3 relating to addition of Rs.1,67,661/- for the share application money received from Shreya Enterprise and Sri Narayan Mercantile Pvt. Ltd., the CIT(A) has taken cognisance in respect of opening balances and the ITA Nos.683/Ahd/2019 & 321/Ahd/2020 A.Ys: 2013-14 & 2014-15 Page 3 of 5 assessee has not received any excess amount during the year under appeal. Hence, ground no.3 is allowed. 8. As regards ground no.4 relating to addition of Rs.5,00,000/- for the unsecured loan received from Salasar Conclave Pvt. Ltd., the CIT(A) has rightly given the finding as the assessee has not furnished the details for any of the Authorities. Hence, ground no.4 is dismissed. 9. As regards ground no.5 relating to addition of Rs.73,88,117/- disallowing the interest expenses, the Assessing Officer as well as the CIT(A) was not justified when the same is in respect of the interest earned by the assessee. Thus, ground no.5 is allowed. 10. As regards ground no.6 relating to disallowance of Rs.18,56,452/- for the expenses incurred in relation to issue of shares treating the same as capital in nature, the CIT(A) as well as the Assessing Officer ignored the contentions of the assessee and hence ground no.6 is allowed. 11. As regards to ground no.7 relating to disallowance of Rs.70,57,856/- in respect of unexplained expenses, the said expenses are related to CSR expenses, penalty expenses, prior period expenses and Sales Tax penalty and the relevant documents were provided by the assessee before the CIT(A) and, therefore, the same cannot be doubted and hence the CIT(A) was not right in confirming the disallowance. Hence, ground no.7 is allowed. 12. As regards ground no.8 relating to disallowance of Rs.1,00,000/- for the penalty expenses, the same was Statutory penalty expenses and hence the CIT(A) was not right in disallowing the same. Hence, ground no.8 is allowed. 13. As regards ground no.9 relating to addition of Rs.3,53,33,652/- for the under- valuation of closing stock of raw materials, from the perusal of the submissions of the assessee, it appears that the same are not justifiable on the part of the Revenue as the relevant stock of raw material was given before the Authorities and in fact the ITA Nos.683/Ahd/2019 & 321/Ahd/2020 A.Ys: 2013-14 & 2014-15 Page 4 of 5 valuation was never doubted by the Revenue Authorities. Hence, ground no.9 is allowed. 14. As regards ground no.10 relating to addition of Rs.11,76,03,487/- for the reduction in value of inventory (Granual Slag)/sales in Barsa Steel Pvt. Ltd., from the perusal of the records and the submissions of the assessee before the Revenue Authorities, it appears that the reduction in value of inventory was not done at all by the assessee and, therefore, the addition is not justifiable. Hence, ground no.10 is allowed. 15. As regards ground no.11 relating to addition of Rs.12,46,94,527/- made for the expenses related to A.Y. 2013-14 and earlier years booked in A.Y. 2014-15 shifted to A.Y. 2013-14 in respect of direct expenses of raw materials, manufacturing and direct expenses as well as financial expenses and other expenses, the same was rightly confirmed by the CIT(A) and, therefore, ground no.11 is dismissed. 16. As regards ground no.12 relating to disallowance of expenses of Rs.17,71,79,997/- related to prior period, the assessee has given the details related to prior period expenses and, therefore, the same cannot be totally rejected by the CIT(A) and hence ground no.12 is allowed. 17. As regards ground no.13 relating to addition made in respect of unpaid MAT liability of Rs.7,53,02,164/-, the CIT(A) has ignored the fact that the same was not claimed as expenses and, therefore, the CIT(A) was not right in making the addition. Hence, ground no.13 is allowed. 18. As regards ground no.14 relating to disallowance of Rs.7,18,587/- made by the Assessing Officer under Section 40(a)(ia) of the Act for the non-deduction of TDS, it appears that the same is not justifiable. Hence, ground no.14 is allowed. 19. As regards ground no.15 for not allowing the set off and carried forward of unabsorbed losses, the same is not justifiable. Hence, ground no.15 is allowed. ITA Nos.683/Ahd/2019 & 321/Ahd/2020 A.Ys: 2013-14 & 2014-15 Page 5 of 5 20. Thus, ITA No.683/Ahd/2019 for A.Y. 2013-14 filed by Sona Alloys Pvt. Ltd. is partly allowed. 21. As regards to ITA No.321/Ahd/2020, the same is in respect of order under Section 263 of the Income Tax Act, 1961 passed on 20.03.2020, the said order passed under Section 263 is in fact second opinion of the Principal Commissioner of Income Tax and the very issue relating to expenses against sales quantity discount payments through credits to M/s. Barsa Steel Pvt. Ltd. and amount received from the said Company in the nature of share application money and unsecured loans from various parties has been taken into account by the Assessing Officer in order under Section 143(3) read with Section 142 (2)(A) of the Income Tax Act, 1961 and, therefore, invoking of Section 263 of the Act is not justifiable and hence appeal of the assessee being ITA No.321/Ahd/2020 is allowed. 22. In the result, ITA No.683/Ahd/2019 for A.Y. 2013-14 is partly allowed and ITA No.321/Ahd/2020 for A.Y. 2014-15 is allowed. Order pronounced in the open Court on this 13 th October, 2023. Sd/- Sd/- (WASEEM AHMED) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 13 th day of October, 2023 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad