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Before: SHRI SANDEEP GOSAIN & SHRI PRABHASH SHANKAR
PER PRABHASH SHANKAR [A.M.] :- The present appeal arising from the appellate order dated 11.03.2024 is filed by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 143(3) r.w.s. 254 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 22.12.2017 for the Assessment Year [A.Y.] 2009-10. P a g e | 2 A.Y. 2009-10 Laffans Petrochemicals Ltd., Mumbai 2. In the only ground of appeal it is stated that the learned CIT ((Appeals) has erred in law and on the facts of the case in disallowance sustaining the of Rs. 1,56,71,031/- u/s. 36(1)(iii) of the Income Tax Act.
At the outset, it may be stated here that as per the intimation of the Registry, the appeal is delayed by 131 days. In this regard, the assessee has submitted an application for condonation of delay alongwith an affidavit. It is contented that the appeal is filed against the order passed by the NFAC dated 11th March, 2024 which was uploaded on 13th March, 2024 on e-filing portal. The last date to file the appeal was 31st May, 2024 whereas the appeal was actually filed by it on 9th October, 2024. Hence, there is a delay of 131 days in filing the same. It is submitted that after receiving the assessment order dated 22ndDecember, 2017, the assessee manually filed an appeal before the NFAC on 23rdJanuary, 2018. Thereafter, the said appeal was migrated to the NFAC. Subsequently, hearing notices were fixed on 26th December, 2020, 29th October, 2021, 16th December, 2022 and 27th February, 2024. In response to the said notices, the assessee filed written submissions on 28th December, 2020, 21st January, 2021, 1st November,2021, 16th November, 2021, 4th November, 2022 and 21st December, 2022 and was not aware of notice dated 27th February, 2024. Thereafter, NFAC passed the impugned order on 11th March, 2024, which the applicant was not aware of as they had not checked the portal
P a g e | 3 A.Y. 2009-10 Laffans Petrochemicals Ltd., Mumbai and the same was not served on them physically. However, it was only in September, 2024 when the Department sought to recover the outstanding demand that the applicant, through their Chartered Accountants, M/s. S. M. Kapoor & Co., checked the e-filing portal and became aware of the impugned order passed for the present AY 2009-
After that the assessee it took necessary steps to file the appeal thereby causing a delay. In view thereof, there was a bonafide reason for the delay. It is submitted that there was no intention on its part to act in a negligent manner and they had a bonafide reason to file the appeal belatedly and as demonstrated above there was sufficient cause shown for the said delay.
We have carefully considered the facts stated by the assessee giving reasons for the delay. We find that the delay is not intentional and bonafide and occurred due to certain lack of communication. Accordingly, we condone the same and proceed to adjudicate the appeal on merits.
As regard merits of the case, it is worth mentioning here that this appeal is the second round of litigation as the matter in hand has travelled upto Tribunal which had set aside the issue to the AO. During the course of original assessment proceeding u/s. 143(3), the AO noticed that the assessee had incurred finance cost of Rs.4,06,06,253/- on the P a g e | 4 A.Y. 2009-10 Laffans Petrochemicals Ltd., Mumbai borrowed funds and it has utilized the fund of Rs.6,43,85,688/- towards acquisition of fixed assets. On analysing the expenditure incurred with respect to the financial statements of the appellant, the AO noticed that borrowings were utilized for acquisition of fixed assets due to which the finance cost increased. The AO worked out the finance cost attributable to borrowings for fixed assets at Rs. 1,56,71,031/- and disallowed the same u/s. 36(1)(iii) of the Act.
On appeal, the Ld. CIT(A) decided the issue in favour of the assessee and allowed relief. The issue was contested by the revenue before the Hon’ble ITAT which vide order ITA NO. 719/Mum/2014 dated 30.09.2016 observed as under: “………….
We have heard the parties and perused the material available on record. At the outset, Id. AR submitted before us that similar disallowance made by the AO and deleted by CIT(A) in AY 2008-09 came up for consideration before the Tribunal while deciding the issue has remitted the matter back to the file of the AO for deciding afresh in terms of the directions contained therein. He therefore, submitted that in consonance with the directions of the Tribunal in AY 2008-09 the matter may be remitted back to the file of the AO. Ld. DR has not opposed the aforesaid contentions of the assessee. We have noted that similar issue of disallowance of proportionate interest for investment of borrowed funds in fixed assets same up for consideration before the ITAT in assessee’s own case for Ay 2008-09. The Tribunal after considering the submissions of the parties remitted the issue back to the file of the AO for deciding afresh in terms of the principle laid down by the Hon’ble juri ictional High Court in case of CIT vs. Reliance utility and Power Ltd. 313 ITR 340. There being no material difference in fact in the impugned A Y, respectfully following the aforesaid decision of the co- ordinate Bench, we restore the matter back to the file of the AO with P a g e | 5 A.Y. 2009-10 Laffans Petrochemicals Ltd., Mumbai similar direction. Needless to mention the AO must afford reasonable opportunity of being heard to the assessee while deciding the issue……… 7. Thus, the Hon’ble ITAT directed the AO to decide the issue afresh in terms of the principles laid down by the Hon’ble juri ictional
The Hon’ble ITAT also directed the AO to decide the matter as per the direction given in assessee’s own case in A.Y. 2008-09. The AO once again retained the addition of Rs.1,56,71,031/- u/s. 36(1)(iii) of the Act with the observation that the assessee failed to bring on record any evidence in support of its contentions.
In the subsequent appeal, the ld.CIT inter alia observed that AO had made out a case based on the analysis of the financial statements of the assessee that borrowed funds were utilized to finance the acquisition of fixed assets and thus interest free funds were not available for utilization for acquiring fixed assets. Therefore, when the AO has given a specific finding that interest free funds were not sufficient to finance the acquisition of fixed assets and borrowed funds were utilized for the purpose, the onus was on the assessee to rebut the findings of the AO by providing necessary details i.e. the statements of the consortium accounts and fund flow statements. But it failed to discharge its onus to do so. It was concluded that the assessee consistently failed to rebut the findings of the AO by providing necessary details/evidences. In view of P a g e | 6 A.Y. 2009-10 Laffans Petrochemicals Ltd., Mumbai the same, he did not find any reason to interfere with the order of the AO which was upheld.
Before us, the ld.AR has reiterated the contentions made before the authorities below. However, we find that both the authorities below have passed adverse orders against the assessee for want of necessary evidence so as to prove that the assets in consideration were not purchased from borrowed fund. However, the assessee is only harping on certain judicial decisions merely without making any effort to prove the necessary nexus. In such a situation, we consider it appropriate to remand the issue back to the file of the ld.CIT(A) with a direction to furnish necessary evidence in support of its contentions. The ld.DR has not objected to this proposition. The ld.CIT(A) would examine the issue in the light of such evidences and decide the issue. Further, he is also allowed liberty to call for remand report from the AO, if required.
In the result, the appeal is allowed for statistical purposes. Order pronounced in the open court on 25.06.2025. SANDEEP GOSAIN PRABHASH SHANKAR (न्याययक सदस्य /JUDICIAL MEMBER) (लेखाका रसदस्य/ACCOUNTANT MEMBER)
P a g e | 7 A.Y. 2009-10 Laffans Petrochemicals Ltd., Mumbai Place: म ुंबई/Mumbai ददनाुंक /Date 25.06.2025 Lubhna Shaikh / Steno
आदेश की प्रयियलयि अग्रेयिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file.
सत्यावपि प्रवि //// आदेशानुसार/ BY ORDER,
उि/सहायक िंजीकार (Dy./Asstt.