COMPREHENSIVE INVESTMENT AND FINANCE CO. P. LTD.,CHENNAI vs. DCIT, CORPORATE CIRCLE-1(1), CHENNAI

This appeal by the assessee is filed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2017-18, dated 23.01.2025.

The assessee has raised the following grounds of appeal: (a) The assessee challenged the assumption of jurisdiction u/s.147 of the Act stating that it is without sanction of law and hence it is bad in law. (b) The ld.CIT(A) erred in sustaining the disallowance of Rs.71,71,064/- in terms of Rule 8D r.w.s 14A of the Act without assigning proper reasons and justification.

Aggrieved, assessee preferred an appeal before the Ld.CIT(A). The Ld.CIT(A) dismissed the appeal of assessee by upholding the order of AO and sustained the additions since the assessee did not participate in the assessment proceedings by passing an order dated 23.01.2025. Aggrieved by the impugned order of the Ld.CIT(A), the assessee is in appeal before us.

The Ld.AR for the assessee submitted that the ld.CIT(A) has passed the impugned order without participation of the assessee and also not considered the submissions made along with the appeal papers. Further, the ld.AR brought to the notice of the bench that the assessee had filed writ petition praying for early disposal of appeal for the assessment year 2017-18 by the NFAC before the Hon’ble High Court of Madras and the same has been allowed on 22.01.2025 vide W.P.No.1684 of 2025 by directing the appellate authority to dispose of the appeal within a period of :-3-: ITA. No:337/Chny/2025 four months. Further, the ld.AR drew our attention and stated that the ld.CIT(A) has passed an order on 23.01.2025 without participation of the assessee by confirming the order of AO. Therefore, the ld.AR prayed for setting aside the order of ld.CIT(A) and remand the issue back to the file of AO.

Per contra, the ld.DR supported the order of lower authorities.

We have heard both the parties, perused materials available on record, and gone through orders of the authorities below. Admittedly, the assessee is engaged in the business of other financial intermediations and had filed return of income for the impugned assessment year 2017-18, which has been accepted as such in the scrutiny assessment completed on 29.11.2019. However, the case was reopened as the assessee’s income has escaped assessment u/s.14A of the Act and passed an order by making disallowance of Rs.71,71,064/- by applying Rule 8D of Income Tax Rules, 1962. The same has been confirmed by the ld.CIT(A) without the participation of the assessee in the appellate proceedings. We note that the ld.AR has submitted that the reopening of assessment carried out by the AO is bad in law as it was done without jurisdiction. Further, we also find that the assessee had filed writ petition and obtained the directions in the order dated 22.01.2025 from the Hon’ble High Court of Madras to dispose of the appeal by the NFAC within four months, provided the petitioner extend co-operation by not seeking any adjournment. However, the ld.CIT(A) has disposed of the appeal on 23.01.2025 without the participation of the assessee in the appellate proceedings by confirming the order of the AO.

In light of the foregoing, the impugned order passed by the ld. CIT(A), NFAC is hereby set aside. The matter is remanded to the ld. CIT(A) for de novo

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