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Income Tax Appellate Tribunal, “SMC” BENCH,
Before: SHRI ABY T. VARKEY, JM
O R D E R
PER ABY T. VARKEY, JM:
This is an appeal preferred by the assessee against the order of the Ld. CIT(A)/NFAC, Delhi dated 15.12.2022 for AY. 2016-17.
The ground raised
by the assessee is against the action of the Ld. CIT(A) disallowing the interest of Rs.12,78,517/- (housing loan paid to PNP).
3. Brief facts noted by the AO are that the assessee had filed return of income (ROI) on 28.05.2016 declaring total income at Rs.15,46,072/-. Thereafter, he filed revised return of income on 28.05.2016 declaring total income at Rs.15,33,760/- and then, again he revised return of income on 22.08.2016 declaring total income at Rs.4,54,940/. Then, the ROI was selected for scrutiny. According to the AO, the assessee has filed twice (2) revised return (within a short span of three (3) months) and reduced the returned income of 2 A.Y. 2016-17 Lalit Yashwant Kanungo Rs.15,46,072/- to Rs.4,54,940/-. Therefore, assessee’s claim of deduction in respect of interest expense to the tune of Rs.12,78,517/- incurred on account of housing loan paid to the Punjab National Bank (PNB) was not entertained by the AO citing the decision of the Hon’ble Supreme Court in the case of Goetze (India) Pvt. Ltd. Vs. CIT 284 ITR 323 (SC). Thereafter, he disallowed the claim of deduction in respect of interest of Rs.12,78,517/- and added it to the income of the assessee and re-computed the total income at Rs.17,33,460/-. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) who noted that the despite notices issued on four (4) occasions, the assessee neither submitted any submissions nor complied with the notices. Therefore, according to him, assessee has nothing more to state except raising the ground. Therefore, he confirmed the action of the AO. Aggrieved, the assessee has preferred this appeal before this Tribunal.
4. After hearing the Ld. DR and having perused the records, it is noted that the Ld. CIT(A) has not adjudicated the grounds of appeal as per section 250(6) of the Income Tax Act, 1961 (hereinafter “the Act”) which reads as under’; Procedure in appeal. 250. (1) The [Commissioner (Appeals)] shall fix a day and place for the hearing of the appeal, and shall give notice of the same to the appellant and to the [Assessing] Officer against whose order the appeal is preferred. (2) The following shall have the right to be heard at the hearing of the appeal – 3 A.Y. 2016-17 Lalit Yashwant Kanungo (a) the appellant, either in person or by an authorized representative; (b) the [Assessing] Officer, either in person or by a representative. (3)…………………. (4)…………………. (5)…………………. (6) The order of the [Commissioner (Appeals)] disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for decision. (6A)………………..[Emphasis by me]
5. Be that as it may, as noted above, the AO has not adjudicated the claim of the assessee in respect of interest expenses by citing the decision of the Hon’ble Supreme Court in the case of Goetze (India) Pvt. Ltd. (supra). In this context, it is noted that even though, the restriction to entertain a new issue during assessment proceedings other than by way of preferring a valid return of income is only on the AO and this position has been made clear in that order itself by the Hon’ble Supreme Court that the aforesaid restriction was only on AO and will not impinge upon the power of the Tribunal to admit such a claim before it. Taking note of the in-action of AO & Ld. CIT(A), the issue (claim of interest to the tune of Rs. 12,78,517/-) is admitted by this Tribunal; and since the AO has not adjudicated the claim, the impugned order of the Ld. CIT(A) is set-aside and the issue is restored back to the file of the AO as held by the Hon’ble Supreme Court in the 4 A.Y. 2016-17 Lalit Yashwant Kanungo case of Tin Box Company Vs. CIT (249 ITR 216) (SC) wherein it has been held that if the assessee has not got proper opportunity before the AO, then it should be restored back to the AO for denovo assessment. The Hon’ble Supreme Court held in the case of Tin Box Company (supra) as under:- “ It is unnecessary to go into great detail in these matters for there is a statement in the order of the Tribunal, the fact-finding authority, that reads thus : "We will straightway agree with the assessee's submission that the ITO had not given to the assessee proper opportunity of being heard." That the assessee could have placed evidence before the first appellate authority or before the Tribunal is really of no consequence for it is the assessment order that counts. That order must be made after the assessee has been given a reasonable opportunity of setting out his case. We, therefore, do not agree with the Tribunal and the High Court that it was not necessary to set aside the order of assessment and remand the matter to the assessing authority for fresh assessment after giving to the assessee a proper opportunity of being heard. 2. Two questions were placed before the High Court, of which the second question is not pressed. The first question reads thus: "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not setting aside the assessment order in spite of a finding arrived at by it that the Income-tax Officer had not given a proper opportunity of hearing to the assessee ?"
5 A.Y. 2016-17 Lalit Yashwant Kanungo In our opinion, there can only be one answer to this question which is inherent in the question itself: in the negative and in favour of the assessee. 3. The appeals are allowed. The order under challenge is set aside. The assessment orders, that of the Commissioner (Appeals) and of the Tribunal are also set aside. The matter shall now be remanded to the assessing authority for fresh consideration, as aforestated. No order as to costs.”
Therefore, the claim of deduction of interest expenditure claimed by the assessee to the tune of Rs.12,78,517/- (paid as housing loan to PNB) is admitted and restored to the file of the AO for de-novo assessment. The assessee is at liberty to file documents/material, written-submission before the AO to substantiate its claim. And the assessee to be diligent during the proceedings before the AO. With this observation, the appeal of the assesse is allowed for statistical purpose.