NARESH KUMAR JAIN,CHENNAI vs. ITO, NCW-5(1), CHENNAI

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ITA 1558/CHNY/2025Status: DisposedITAT Chennai02 June 2026AY 2013-146 pages
AI SummaryRemanded

What did the Tribunal hold?

The ITAT found that the CIT(A) had dismissed the appeal summarily without properly considering the assessee's submissions and evidence. Therefore, the ITAT set aside the CIT(A)'s order and remitted the issues back for fresh adjudication.

What were the facts?

The assessee filed an appeal with a significant delay, which was condoned. The Assessing Officer made additions to the assessee's income, which were upheld by the CIT(A). The assessee then appealed to the ITAT.

What were the issues?

Whether the CIT(A) properly adjudicated the appeal on merits after considering all the evidence and submissions, and whether principles of natural justice were followed.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 40(a)(ia)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & SHRI S.R. RAGHUNATHA

Hearing: 05.05.2026Pronounced: 02.06.2026

आयकर अपीलीय अधिकरण, ‘ए’ न्यायपीठ, चेन्नई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI श्री जॉजज जॉजज के, उपाध्यक्ष एवं श्री एस.आर.रघुनाथा, लेखा सदस्य के समक्ष BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT AND SHRI S.R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं/.ITA No.1558/Chny/2025 ननिाारण वर्ा / Assessment Year: 2013-14 Naresh Kumar Jain, The Income Tax Officer, No.33, Venkaiyer Street, vs. Non-Corp Ward-5(2), Kondithope, Chennai. Chennai – 600 079. [PAN: AAPPN-0443-B] (प्रत्यर्थी/Respondent) (अपीलार्थी/Appellant) अपीलार्थी की ओर से/Appellant by : Mr. Anandd Babunath, FCA प्रत्यर्थी की ओर से/Respondent by : Mr. D. Balachandar, JCIT सुनवाई की तारीख/Date of Hearing : 05.05.2026 घोर्णा की तारीख/Date of Pronouncement : 02.06.2026 आदेश/ O R D E R PER S. R. RAGHUNATHA, AM : This appeal by the assessee is arising out of the order dated 21.08.2023, passed by the Learned Commissioner of Income Tax (Appeal), NFAC, Delhi (in short “ld.CIT(A)”) for the assessment year (A.Y) 2013-14 against the reassessment order u/s.143(3) of the Income Tax Act, 1961 (hereinafter the ‘Act’) passed by the AO, dated 31.03.2016.

2.

At the threshold, we observe that there is a delay of 576 days in the filing of the present appeal by the assessee. The assessee has furnished an affidavit explaining that the assessee has not regularly checked the e-mail

:-2-: ITA. No.1558/Chny/2025 and e-filing portal during the appellate proceedings. The assessee became aware of the impugned order passed by the first appellate authority in the last week of April 2025 only after checking the status of the appeal before the ld.CIT(A) and was informed about the disposal of appeal on 21.08.2023 itsefl and immediately took steps to file the appeal before the Hon’ble ITAT, Chennai Benches and appeal was filed by the ld.AR of the assessee on 29.05.2025. Upon perusal of the affidavit and after affording due opportunity of hearing from both parties, we are satisfied that the assessee has demonstrated sufficient and reasonable cause for not presenting the appeal within the statutory period prescribed under law. Accordingly, in the interest of justice, the delay in filing the appeal is hereby condoned, and the appeal is admitted for adjudication on merits.

3.

Brief facts of the case are that the assessee is an individual, engaged in the business of iron and steel pipes and has filed his return of income on 27.09.2013 for AY 2013-14, declaring total income of Rs.7,12,920/-. The case was selected for scrutiny under CASS, accordingly statutory notices were issued to the assessee and by calling for details. In response, the assessee submitted the reply along with its supporting documents for verification. On perusal of the documents submitted by the assessee, the AO completed the assessment by passing an order u/s.143(3) of the Act dated 31.03.2016 by making additions of Rs.19,46,549/- on account of disallowance of interest payment, prior period expenses, deduction u/s.40a(ia) and telephone expenses by arriving the total income of Rs.26,59,469/-.

4.

Aggrieved by the order of the AO, the assessee preferred an appeal before the ld.CIT(A) on 15.06.2016.

5.

The assessee filed certain details before the ld.CIT(A) and the ld.CIT(A) has dismissed the appeal stating that the expenditure crystalized during the previous year in which the claim is made against the income of the

:-3-: ITA. No.1558/Chny/2025 assessee has been claimed under income from other sources, which is not in accordance with law and confirmed the order of the AO by passing an order dated 21.08.2023 by holding as under:

“Upon due consideration of the presented facts, arguments, and pertinent legal provisions, it is regrettable to convey that the appeal put forth stands dismissed on. the following grounds:

5.1. Disallowance of Interest Payment: The disallowance of interest payment associated with loans acquired for business endeavors adheres to the stipulations of the Income Tax Act. While acknowledging the utilization of funds for business purposes, the disallowance arises from the erroneous categorization of expenditures under the "Income from Other Sources" classification. Additionally, the reference to a legal precedent does not supersede the fact that the claim was not in alignment with the designated regulations. Previous treatment of a similar nature in a preceding assessment year does not inherently establish a consistent and accurate practice. 5.2. Disallowance of Prior Period Expenses: The rationale underlying the disallowance of prior period expenses is rooted in the principles governing accounting and taxation. Although the explanation regarding the crystallization of interest and principal amounts is duly noted, the disallowance is predicated upon the fact that such expenses are not directly attributable to the present assessment year. The treatment of such expenses necessitates meticulous adherence to established accounting standards and the provisions enshrined in the Income Tax Act. 5.3. Disallowance under Section 40(a)(ia) The disallowance under Section 40(a)(ia) pertains to the failure to withhold tax at source on commission disbursements. While the submission underscores the applicability of a 30% disallowance, it is imperative to recognize that compliance with tax deduction obligations is of paramount importance. The magnitude of disallowance remains secondary to the fundamental responsibility of withholding tax at the source of payment. The judgements relied upon by the appellant hence are distinguished. Having conducted a thorough examination of the assessment order, along with a meticulous consideration of relevant legal statutes and established legal precedents, it has been ascertained that the arguments and contentions put forth in the appeal have been exhaustively reviewed and found unsubstantiated. As a result, the appeal is hereby dismissed.”

Aggrieved by the order of the ld.CIT(A), the assessee preferred an appeal before us.

6.

The ld.AR submitted that the assessee filed certain details before the ld.CIT(A) and the ld.CIT(A) has dismissed the appeal stating that the

:-4-: ITA. No.1558/Chny/2025 expenditure crystalized during the previous year in which the claim is made against the income of the assessee has been claimed under income from other sources, which is not in accordance with law. The ld.AR also filed a paper book consisting of 21 pages of written submission relying on various judicial precedents along with audited financials, tax audit report from page No.22 to 51 of the Paper book in support of the claims made by the assessee. In view of the above, the ld.AR prayed that the Tribunal may be pleased to set aside the order of ld.CIT(A) and remit the issues back to the file of ld.CIT(A) and consider the entire submissions of the assessee made before this Tribunal. Further, ld.AR assured the bench that the ld.AR will represent on behalf of the assessee before the ld.CIT(A) to complete the appellate proceedings effectively.

7.

Per contra, the ld.DR submitted that the assessee has already been given sufficient opportunity and there is no error in the order of the ld.CIT(A) and hence, prayed for confirming the order of the ld.CIT(A).

8.

We have heard the rival submissions and perused the material available on record. It is an admitted fact that the assessee had filed certain details before the Ld.CIT(A). Further, before us, the ld.AR has also filed a paper book containing written submissions, audited financial statements, tax audit report and various judicial precedents in support of the claims made by the assessee. However, on perusal of the impugned appellate order, we find that the ld.CIT(A) has dismissed the appeal in a summary manner without properly adverting to the detailed submissions and documentary evidences placed on record by the assessee.

9.

In our considered opinion, the principles of natural justice require that adequate opportunity should be granted to the assessee and the issues raised in appeal should be adjudicated on merits after proper examination of

:-5-: ITA. No.1558/Chny/2025 the evidences and judicial precedents relied upon by the assessee. Since the paper book and supporting materials now placed before this Tribunal require proper verification and consideration at the level of the first appellate authority, we deem it fit and proper to set aside the impugned order passed by the ld.CIT(A).

10.

Accordingly, we remit the entire issues in dispute back to the file of the ld.CIT(A) with a direction to consider the paper book, written submissions and all supporting evidences filed by the assessee and thereafter adjudicate the issues afresh in accordance with law, after providing adequate opportunity of being heard to the assessee. The ld.CIT(A) is further directed to pass a speaking and well-reasoned order dealing with each of the contentions and evidences furnished by the assessee. The assessee is also directed to extend full cooperation and furnish all requisite details/documents as may be called for by the ld.CIT(A) during the appellate proceedings.

10.

In the result, appeal filed by the assessee is allowed for statistical purposes.

Order pronounced in the open court on 02nd June, 2026 at Chennai.

Sd/- Sd/- (जॉजज जॉजज के) (एस. आर. रघुन थ ) (S. R. RAGHUNATHA) (GEORGE GEORGE K) लेख सिस्य/ACCOUNTANT MEMBER उप ध्यक्ष /VICE PRESIDENT

चेन्नई/Chennai, दिन ांक/Dated, the 02nd June, 2026 Devadas

:-6-: ITA. No.1558/Chny/2025 आदेश की प्रतिलिपि अग्रेपिि/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3.आयकर आयुक्त/CIT– Chennai/Coimbatore/Madurai/Salem 4. ववभागीय प्रनतननधि/DR 5. गार्ा फाईल/GF DEVADAS Digitally signed by DEVADAS GOPALANACHARY GOPALANACHARY Date: 2026.06.08 14:26:26 +05'30'

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