Shanti Prime Publication Pvt. Ltd.
Section 72 of the Income Tax Act, 1961 – Business Loss – Reasons given by A.O. are merely a presumption which could not reject the explanation of assessee that he has suffered genuine business loss, thus loss claimed by assessee was allowed.
Facts: Being aggrieved, assessee went on appeal before Tribunal and raised the ground that CIT(A) has erred in sustaining the disallowance of business loss made by AO on the basis that assessee has failed to produce any evidence to prove that loss claimed by the assessee was genuine despite the fact that assessee has furnished all the evidences to establish the genuineness of business transactions of purchase and sale of design fabrics.
Held, that assessee has produced two parties to prove that he has received orders from those parties which were later on cancelled. Both parties have confirmed the transaction with the assessee in their statement made before CIT(A) as well as confirmed in reply to the notice under section 133(6) before the A.O. The sale and purchase of the items under reference from independent parties have not been doubted by the authorities below. The assessee shall have to maintain business relation with the parties and for business interest some times shall have to suffer the losses, therefore, it is always not advisable to resort to civil litigation for a small amount for the betterment of the business activities. For a small amount the authorities below should not have doubted the explanation of the assessee and others. The reasons given by A.O. are merely a presumption which could not reject the explanation of assessee that he has suffered genuine business loss. The assessee furnished copy of the invoices and ledger account in support of the above explanation. Therefore, the documentary evidences which have not been rebutted by the A.O. could not have been disbelieved by the A.O. on irrelevant reasons. The A.O. did not examine the parties from whom assessee has purchased the items under reference which were later on sold to other parties when the parties refused to accept the goods from the assessee. AO has failed to establish that loss suffered by the assessee is not genuine. Thus, there is no reason to sustain the addition. Thus, the entire addition was deleted . In the result, appeal of the assessee is allowed – RAMESH KUMAR AGARWAL Vs. ITO  80 ITR (TRIB) 436 (ITAT-DELHI)