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TMI Blog2023 (5) TMI 1242X X X X Extracts X X X X X X X X Extracts X X X X ..... ting various reasons provided in the assessment order and the first appellate order, we are of the view that the assessee has failed to discharge the onus towards bona fides of the claim. Besides, it is not known as to how the payment made in pursuance of so called agreement entered in 2010 can be seen as loss accrued to the assessee in Assessment Year 2015-16 in question when the business operations were itself suspended in November, 2012. Both the assessee and the SAL are family controlled with common shareholding and therefore are privy to the exact affairs. It is not a case where a third party has been caught unaware resulting in unintended losses. We are not convinced at all by the defense raised by the assessee in justification. We thus decline to interfere with the findings rendered by the lower authorities. Decided against assessee. - Shri Chandra Mohan Garg, Judicial Member And Shri Pradip Kumar Kedia, Accountant Member For the Appellant : Shri D.C. Garg, CA For the Respondent : Shri Jitender Chand, Sr.DR ORDER PER PRADIP KUMAR KEDIA, A.M.: The captioned appeal has been fi led by the Assessee against the order of the Commissioner of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Rs.8,55,17,103/-, the assessee preferred appeal before the CIT(A). 4.1 The CIT(A) took note of the statement of facts and the submissions made on behalf of the assessee but however did not find any merit in the propriety of the claim so made. The CIT(A) accordingly declined to interfere with the action of the Assessing Officer and denied any relief. The relevant operative paragraph of the order of the CIT(A) reads as under: Findings I have considered the facts of the case, the basis of addition made by the Assessing Officer and the arguments of the AR during assessment as well as appellate proceedings. The decision is as below. i. The Appellant Company is engaged in the business of manufacturing of specialized avionic glass. Appellant Company entered into an agreement dated 23.01.2020 with M/s. Samtel Display Systems Limited (Now known as Samtel Avionics Limited) an AE for supply of avionic glass over a period of five years. The appellant deposited as sum of Rs.6,95,80,595/- as security against performance of the contract. Appellant could not manufacture and supply agreed quality of glass and accordingly, in terms of the agreement dated 23-01-2010.Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial practices. Clearly it is a case of sham transaction in which these As have colluded to avoid lawful tax liabilities. The argument advanced by the appellant AR is that this being a company with huge accumulated losses and on the verge of closure would like to raise its losses. In this scenario it is pertinent to note as to why such an enterprise will enter into such a destructive agreement whereby paying security for a technological competence not in its domain. The appellant entity could've procured the technology from market for supplies, instead of blocking significant sum as security and ultimately loosing it. The argument that the AB has paid taxes on the forfeited amount is also specious as this is clearly an exercise to create the entity with losses - which could be later used in some kind of corporate restructuring etc to curtail tax obligations. The entire exercise does not make commercial sense and seems to be part of an elaborate exercise to avoid taxes over a period of time. The case laws relied upon are clearly distinguishable on the facts. Accordingly based on discussions above, I don't find any infirmity in the action of the AO. 5. Further aggrieved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er and CIT(A). The ld. DR submitted that the directors of both the companies are from the same family and Mr. Satish Kaura, the Director of the assessee-company is father of Mr. Puneet Kaura, Director of SAL. The SAL is also a shareholder of the assessee-company with 10.98% shareholdings. The ld. DR thereafter referred to the assessment order and submitted that the assessee has failed to prove the propriety of the transaction in the light of the wide-ranging observations made by the Assessing Officer such as: (i) The agreement dated 23.01.2010 claimed to have been executed is not verifiable as original agreement was never produced despite reminders. (ii) The transactions are between associated enterprises. (iii) The record does not show production of glass meant for supply to SAL. (iv) The amount towards security deposit is an odd amount without showing the logic for such odd payment. (v) No details such as bills / invoices / matching specifications etc. are available on record. (vi) SAL is a major shareholder in the assessee-company and was fully aware of the state of affairs of the assessee-company as an insider. (vii) The assessee suspended its operation w.e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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