2022 (7) TMI 166 - AT - Income Tax

Addition being business loss claimed by the assessee on purchase and sale of skimmed milk powder and channa - assessee failed to give any evidences to prove the transaction of sale and purchase and the loss thereof incurred by the assessee on such transaction - HELD THAT - During the assessment proceedings, the assessee was asked by the Assessing Officer to furnish necessary evidences to prove the transaction of sale and purchase and the loss thereof incurred by the assessee on such transaction. However, the assessee failed to furnish any reliable evidence to prove the transaction. Even the notices by the Assessing Officer u/s 133(6) of the Act issued to the concerned parties with whom the assessee made transaction remained unanswered Even in first appeal, the assessee could not furnish any evidence to prove the aforesaid business transaction and loss thereof. The ld. CIT(A), therefore, dismissed the appeal of the assessee. Thus after hearing the ld. DR, we do not find any reason to interfere with the above order of the ld. CIT(A). The order of the CIT(A) is accordingly upheld. - Decided against assessee.

Summary

Issues Involved:
1. Disallowance of business loss claimed by the assessee on purchase and sale of skimmed milk powder and channa.

Detailed Analysis:
1. The appeal was filed against the order of the Commissioner of Income Tax (Appeals) confirming the disallowance of a business loss of Rs. 23,33,238 claimed by the assessee. The main issue revolved around the lower authorities' decision to disallow the claimed loss due to lack of evidence provided by the assessee regarding the transactions. Despite multiple notices, the assessee failed to substantiate the business loss incurred on the purchase and sale of skimmed milk powder and channa.

2. The Assessing Officer requested the assessee to provide evidence to support the claimed loss, but the assessee could not furnish any reliable proof. Additionally, notices sent to the concerned parties involved in the transactions remained unanswered. Consequently, the Assessing Officer deemed the loss as bogus and disallowed it.

3. In the first appeal, the assessee still failed to provide any concrete evidence to validate the business transactions and the resulting loss. The Commissioner of Income Tax (Appeals) dismissed the appeal based on the findings that the appellant's submissions did not align with the information gathered by the Assessing Officer. The Commissioner highlighted discrepancies in the appellant's claims and lack of supporting documents, such as stock registers and delivery challans, further reinforcing the disallowance of the claimed loss.

4. The Commissioner's decision was based on the observation that the appellant engaged in circular trading with specific entities, leading to inflated commodity trading losses without any actual trading activity. The Commissioner noted the absence of independent and reliable evidence supporting the transactions and deliveries of commodities, ultimately upholding the disallowance of the business loss claimed by the appellant.

5. The Appellate Tribunal, after reviewing the records and hearing the arguments, found no grounds to overturn the Commissioner's order. Consequently, the Tribunal upheld the decision to dismiss the appeal, affirming the disallowance of the business loss claimed by the assessee.

In conclusion, the appellate tribunal upheld the decision to disallow the business loss claimed by the assessee due to the lack of evidence and discrepancies in the transactions, as highlighted by the lower authorities.