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Income Tax Appellate Tribunal, “SMC-1” BENCH, MUMBAI
IN THE INCOME TAX APPELLATE TRIBUNAL “SMC-1” BENCH, MUMBAI BEFORE SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA No. 829/Mum/2020 (A.Y: 2012-13) M/s. Nandadeep Vs. ITO, Ward – 28(2)(3) Trading Co. Tower No. 6, 3rd Floor, Gala No. N14, APMC Vashi Rly Stn Market – II, Phase-II, Complex, Navi Mumbai Vashi, Navi Mumbai – – 400 703 400 703 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAEFN4657Q Appellant .. Respondent Appellant by : Shri.Roshan Ochani.AR Respondent by : Shri. Brajendra Kumar.DR Date of Hearing 01.02.2022 Date of Pronouncement 14.02.2022 आदेश / O R D E R PER PAVAN KUMAR GADALE JM:
The assessee has filed the appeal against the order of the Commissioner of Income Tax (Appeals)- 25, Mumbai passed u/s 143(3) and 250 of the Act. The assessee has raised the following grounds of appeal: 1. Because, the Ld. CIT (A) has erred in law and on facts in not appreciating the fact that the Ld Assessing Officer was not justified in disallowing the interest paid of Rs, 9,98,915/- on
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different loans taken for repayment of unsecured loan taken from various lenders for purchase of property charged to tax under the head "Income from house property when it was explained that the loan was taken for repayment of loan taken at the time of purchase of house property, therefore, it partakes the character of housing loan as the same was directly or indirectly utilized for the purpose of purchase of property.
2.Because, the Ld. CII (A) has erred in law and on facts in not appreciating the fact that the Ld AO erred in determining the annual lettable value (ALV) of property for computing income from house property and adding Rs.4,79,302/- under head the income from house property.
3.Because, the Ld. CIT (A) has erred in law and on facts in accepting the addition of Rs. 75,000/- towards disallowance of proportionate interest when the Ld Assessing officer has failed to Appreciate the fact of the appellant case and erred in completing the assessment by disallowing interest expenses amounting to Rs. 75,000 u/s 36(1)(iii) of the Act towards diversion of interest bearing funds even though the loans & advances were made for or in relation to business purpose & loans & advances were made out of tI'e inte: --st free borrowings for which no expenditure has been claimed u/s 36(1)(iii) of the said Act 4.Because, the Ld. CIT (A) has erred in law and on facts in not deleting the addition made by the Assessing Officer of Rs. 14,23,750/- in respect of unsecured loans taker, from seven parties when the Ld AO had not considered various loan confirmations and all the requisite documents required to prove the genuineness & creditworthiness of the loan creditors submitted by the appellant during the assessment proceedings. 5.Because, the Ld. CIT (A) has erred in law and on facts in appreciating that the AC erred has erred in making addition of Rs 16,420/-, being adhoc disallowances at rate of 20% of expenses (General Expenses, Telephone Expenses, Travelling Expenses) without providing any basis or justification for quantifying such
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disallowance. 2. The brief facts of the case are that, the assessee is a partnership firm and is engaged in the business of whole seller of Rawa, Maida, Flours, Food grains and pulses etc. The assessee has filed the return of income for the A.Y 2012-13 on 16.09.2012 disclosing a total income of Rs.35,650/-. Subsequently the case was selected for scrutiny and notice u/s 143(2) and 142(1) of the Act along with questionnaire was issued. In compliance, the Ld. AR of the assessee appeared from time to time and furnished the details. Whereas the A.O on perusal of the various facts and the financial statements has made disallowance of interest claimed u/s 24(b) of the Act. The assessee was called for the explanations to substantiate the claim against the rental income of Rs.2,16,000/-. Whereas, the assessee has filed the submissions in respect of the purchase of the property for a consideration of Rs.80,00,000/-and the interest bifurcation and the unsecured loan verification was carried out and disallowed interest of Rs.9,98,915/- The assessee has not allowed the claim of interest u/s 36(1)(iii) of the Act. The A.O made an addition of
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rental income after allowing the standard deduction@30% which works out to Rs.4,79,302/-. The A.O. made addition of the proportionate interest on loans of Rs.75,000/-and unexplained cash credits of Rs. 14,23,750/- and other expenses of Rs. 16,420/- and finally assessed the total income of Rs. 29,02,120/- and passed the order u/s 143(3) of the Act dated 23.03.2015.
Aggrieved by the order, the assessee has filed an appeal before the CIT(A). In the appellate proceedings the assessee was issued notices of hearing and there was no proper compliance as per the Para 3 of the CIT(A) order. Therefore the CIT(A) dealt on the submissions of the assessee referred at page 4 Para 5 of the order, and the request of the assessee for adjournment as under:
J.J. Enterprises vs. Commissioner of Income-Tax - Where 1. the honorable apex court held that - "in the first place, the Tribunal has held that the addition had been made on the basis of pule guess work and this is a matter of fact in respect of which the Tribunal's conclusion is final. In the second place, there was no question of remanding the matter to the Assessing Officer for re-examination of the same question" 2. On the above mentioned 2 grounds the additions made by the
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LD AC is erroneous and not justified in the nature and hence we request your honor to delete the additions made by the LD AC during the course of his assessment proceedings.
We are in process of compiling the details on other grounds of appeal however the required details could not be compiled as the son of the working partner Mr Prakash Tripathi had expired few days back and due to various rituals Mr Prakash Tripathi the Working partner could not provide the details for making submissions on other grounds of appeal. we request your good self to kindly grant us 15 to 20 days' time and adjourn the case in last week of September 2019.
But the CIT(A) has not considered the assessee’s request which was filed on record for adjournment and passed the order on 06.11.2019 confirming the additions made by the A.O and dismissed the assessee appeal. Aggrieved by the CIT(A) order, the assessee has filed an appeal before the Honble Tribunal.
At the time of hearing, the Ld. AR submitted that the CIT(A) has erred in not considering the various factors and the request for adjournment/ time in the submission of the information. Further due to death of the working partner’s son the information could not be submitted in time and prayed for an
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opportunity to substantiate the case with evidences. Contra, the Ld. DR supported the orders of the lower authorities.
We have heard the rival submissions and perused the material on record. Prima-facie the CIT(A) has passed the order overlooking the adjournment request as envisaged by the Ld.AR. We find that the assessee has raised grounds of appeal challenging the additions of the Assessing officer and there could be various reasons for non appearance which cannot be overruled. We considering the principles of natural justice and to meet the ends of justice, shall provide one more opportunity of hearing to the assessee to substantiate the case along with evidences and information. Accordingly, we set aside the order of the CIT(A) and remit the entire disputed issues to the file of the CIT(A) to adjudicate afresh on merits and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information for early disposal of appeal and allow the grounds of appeal of the assessee for statistical purposes.
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In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 14.02.2022.
Sd/- Sd/- (OM PRAKASH KANT) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated 14.02.2022
KRK, PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / The CIT(A) 4. आयकर आयु�त(अपील) / Concerned CIT �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Mumbai 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy// 1. ( Asst. Registrar) ITAT, Mumbai