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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI MANOJ KUMAR AGGARWAL
आदेश /O R D E R PER MAHAVIR SINGH, VP: This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals)-2, Chennai in ITA No.18/2017-18/A.Y.2015-16/CIT(A)-2 dated 14.08.2018. The assessment was framed by the ACIT, Non-Corporate Circle 1(1), Chennai for the assessment year 2015-16 u/s.143(3) of the Income Tax Act, 1961, (hereinafter ‘the Act’) vide order dated 29.12.2017.
At the outset, it is noticed that this appeal is time barred by limitation by 19 days as the order of CIT(A) is dated 14.08.2019 and the order of CIT(A) was served on assessee on 04.09.2018. The assessee filed this appeal before Tribunal on 22.11.2018 thereby there is a delay of 19 days. The assessee has filed affidavit for condonation of delay, stating the following reasons:- “3) I state that I was looking for a counsel to represent me before the Hon’ble Income Tax Appellate Tribunal and was able to engage a counsel only during 2nd week of November 2018. Immediately, thereafter the appeals were drafted and likely to be filed before this Tribunal on 21/11/2018.”
As the delay is small just of 19 days, which was not contested by Revenue, hence, seeing the reason cited, we condone the delay and admit the appeal.
The only issue in this appeal of assessee is as regards to the order of CIT(A) confirming the disallowance of interest of Rs.60,86,345/- without providing sufficient opportunity to the assessee. For this, assessee has raised the following ground No.2:-
2. The Commissioner of Income Tax (Appeals) erred in sustaining the disallowance of interest expenditure of Rs.60,86,345/- without giving adequate opportunity to the appellant to substantiate that the capital borrowed were for the purpose of business.”
Brief facts are that the assessee is engaged in the operation of corporate guest house cum service apartments as the proprietrix of M/s. D & A Corporate Residency. She filed her return of income for the relevant assessment year 2015-16 on 29.09.2015. The assessee had taken loans for the purpose of her business and paid interest on the same and claimed deduction u/s.36(1)(iii) of the Act. The AO during the course of scrutiny assessment proceedings noted the loans taken by assessee i.e., loan from Canara Bank, loan against property, personal loan in Canara Bank, Canara Bank loan against property at Jagadambal Street, interest expenses on loan availed from HDFC Loan account No.600528420, loan availed from HDFC account No.352041158, loan availed from HDFC loan account No.605747651 and OD loan and paid interests on the same. According to AO, these loans are not wholly and exclusively for the purpose of business and hence, the AO disallowed the following interest paid:- Particulars Amount Interest DPN 6478 2145266 LAP A/c 1 413380 Central Bank Rental 926411 DHF Floating 330772 HDFC 600528420 294736 HDFC 352041158 1108318 HDFC NRP 374628 OD Loan 492834 6086345
- 4 - Aggrieved, assessee preferred appeal before CIT(A).
The CIT(A) also confirmed the action of AO and also noted that the assessee failed to discharge her onus to prove the funds raised from the financial institutions were actually utilized for the purpose of business. The CIT(A) also considered the remand report of the AO and also noted that the assessee cannot rely on the earlier decision of CIT(A) for assessment year 2013-14 i.e., immediate preceding year because principle of Res judicata does not apply to income-tax proceedings and therefore, he confirmed the disallowance. Aggrieved, assessee came in appeal before the Tribunal.
Now before us, the ld.counsel for the assessee filed copies of loan proposal taken from Canara Bank, HDFC Bank and other banks and also filed CIT(A) order in 2 dated 23.04.2018 for assessment year 2013-14 and stated that some loans were under consideration in earlier year as under:- i. Rs.35,193/- to Canara Bank on account of car loan. ii. Rs.28,139/- to Central Bank of India on account of ML loan iii. Rs.11,09,117/- two Central Bank of India on account of loan towards property at No.4/7, Jagadambal Street iv. Rs.35,48,299/- to Canara Bank on account of loan towards property at No.39/4, Kannadasan Salai.
- 5 - The ld.counsel stated that not all the loans but out of 8 loans discussed in AO’s order, 4 are the same. He stated that he could not produce evidences as time allowed was very short before the AO and even before the CIT(A). He took us through the assessment order and the order of CIT(A) and argued that none of the authorities below have given a factual finding and simpliciter dismissed the claim of assessee. Hence, he requested that let the matter be remanded back to the file of the AO for fresh adjudication after allowing reasonable opportunity of being heard to the assessee.
When these facts were confronted to ld.Senior DR, he could not controvert the above facts.
After hearing rival contentions and going through the facts, we are of the view that none of the authorities below have gone into the facts of the case and also not considered the decision of CIT(A) in earlier year, which is not under challenge i.e, for assessment year 2013-14. In entirety of facts, we set aside the orders of lower authorities and remand the matter back to the file of the AO for fresh adjudication. In term of the above, the appeal of the assessee is allowed for statistical purpose.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 7th December, 2022 at Chennai.