2016 (10) TMI 1105 - AT - Income Tax

Setoff of business loss denied - non filing of any loss in return of income - Held that - Sub-section 1 of Section 71 contemplates that where the net result of computation made for any assessment year in respect of any head of income, is a loss, the same can be set off against the income from other heads. Similarly, in the case of K.R. Automobiles (2014 (2) TMI 1309 - ITAT AHMEDABAD) the Tribunal has allowed set off income against the loss. The Tribunal has placed reliance upon the decision in the case of CIT Vs. Shilpa Dyeing & Printing Mills P. Ltd., (2015 (7) TMI 691 - GUJARAT HIGH COURT ). As far as proposition of law is concerned, there is no dispute with regard to them. But in the present case, the assessee has not filed any return declaring loss. She has not shown loss in her books of accounts. She has just claimed loss by way of submission. Factum of loss was not proved before the AO. The ld.AO did not take cognizance of her bald submissions. Loss has nowhere been assessed. In such situation, how an assessee can claim set off against of this alleged income under any other head against such unverified unclaimed loss. Therefore, the ld.Revenue authorities have rightly not granted any set off such loss to the assessee - Decided against assessee.

Summary

Issues:

1. Ex-parte order without sufficient opportunity of hearing to assessee.
2. Addition of unexplained cash credit and undisclosed interest income.
3. Disallowance of set-off of loss on trading of shares against additions made.

Analysis:

1. The appeal was against an order by the ld.CIT(A)-IV, Surat, where the assessee contended that the ex-parte order was passed without sufficient opportunity of hearing. The AO found unexplained cash credit in the assessee's bank account and rejected the plea for set-off against share trading losses. The appellate tribunal noted that the assessee failed to prove the source of deposits and upheld the addition of unexplained cash credit, dismissing the appeal due to lack of merit.

2. The assessing officer made additions for unexplained cash credit and undisclosed interest income. The AO found discrepancies in the assessee's bank transactions and rejected the claim of set-off against share trading losses. The appellate tribunal upheld the AO's decision, stating that the assessee failed to provide sufficient evidence to support the claimed losses and that the revenue authorities were correct in not granting the set-off.

3. The assessee argued for the set-off of losses on trading of shares against the additions made by the AO. The tribunal referred to Section 71 of the Income Tax Act, which allows for the set-off of losses against income from other heads. However, in this case, the tribunal found that the assessee did not declare the losses in the return or books of accounts, and the claimed losses were not proven before the AO. Therefore, the tribunal dismissed the appeal, stating that the assessee could not claim set-off against unverified losses.

In conclusion, the appellate tribunal upheld the additions made by the assessing officer for unexplained cash credit and interest income, and dismissed the appeal regarding the disallowance of set-off against share trading losses due to lack of evidence and verification of losses.