PROMISE SECURITIES P.LTD,MUMBAI vs. ITO 13(1)(4), MUMBAI

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ITA 276/MUM/2019Status: DisposedITAT Mumbai22 December 2021AY 2015-164 pages
AI SummaryRemanded

What did the Tribunal hold?

The ITAT set aside the CIT(A)'s order and restored the matter for fresh decision, citing the ex-parte nature of the proceedings and the need to consider findings of higher appellate authorities in earlier years.

What were the facts?

The assessee's return of income for AY 2015-16 was selected for scrutiny, leading to disallowances of interest on unsecured loans and expenses under Section 14A. The assessee did not appear before the CIT(A) or the ITAT.

What were the issues?

Whether disallowances of interest and expenses under Section 14A were correctly confirmed without considering the assessee's arguments and potential higher appellate decisions.

Which sections of the Income-tax Act were involved?

Section 14A,Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES “SMC”, MUMBAI

Before: SHRI OM PRAKASH KANT & SHRI AMARJIT SINGH

For Respondent: Ms. Bhoomika Patel (DR)
Hearing: 02/12/2021Pronounced: 22/12/2021

O R D E R

PER OM PRAKASH KANT, AM

1.

This appeal by the assessee is directed against order dated 31/10/2018 passed by the Ld. Commissioner of Income-tax (Appeals)-21, Mumbai [ in short the Ld CIT(A)] for assessment year 2015-16, raising following grounds: “1.) That the learned Commissioner of Income Tax Appeals 21 confirming the disallowance of interest of Rs. 479440/- is quite illegal. 2) That the disallowance and confirming of expenses u/s 14A Rs. 315866/- is quite illegal.

2 Assessment Year: 2015-16 3) That the appellant further crave to add to and leave alter or to amend any of the aforesaid grounds of appeal as and when necessary.”

2. At the outset, we may like to mention that despite notifying, neither anyone represented on behalf of the assessee nor any request for adjournment has been filed by the assessee and therefore, the appeal was heard ex parte qua the assessee after hearing arguments by the learned departmental representative.

3. Briefly stated facts of the case are that return of income filed on 23/09/2015 declaring NIL income, was selected for scrutiny assessment and statutory notices under the Income-tax Act, 1961 (in short ‘the Act’) were issued and complied with. The scrutiny assessment under section 143(3) of the Act was completed on 31/10/2017 after making disallowance of ₹ 4,79,440/- for interest in respect of unsecured loan disallowed in earlier years and disallowance of ₹ 3, 15, 866/- in terms of section 14A read with Rule 8D of Income -tax Rules, 1962 ( in short ‘the Rules’).

4. Before the Ld. CIT(A) none represented on behalf of the assessee and he passed order on the basis of the written submission. Regarding the issue of disallowance of interest amounting to ₹ 4,79,440/- the Ld. CIT(A) observed that disallowance of interest has been made in view of the fact that interest had been claimed corresponding to unsecured loans, which have been held as unexplained cash credit in terms of section 68 in earlier years. It was submitted on behalf of the assessee before the Ld. CIT(A) that matter in earlier 3 Assessment Year: 2015-16 years i.e. assessment year 2012-13 was pending before the Income Tax Appellate Tribunal (in short ‘the Tribunal’) and therefore the matter might be kept in abeyance.

5.

We have heard submission by the Ld. Departmental Representative. We find that none represented on behalf of the assessee before the Ld. CIT(A) and therefore order has been passed by the Ld. CIT(A) in ex-parte manner without taking into consideration arguments on behalf of the assessee. In the case of the assessee disallowance of interest has made on the basis of the finding of the lower authorities in earlier years and benefit of finding of the higher appellate authorities if any on the issue in dispute has not been allowed to the assessee. In view of the above facts and in the interest of substantial justice, we feel it appropriate to set aside the order of the Ld. CIT(A) and restore the matter back to him for deciding afresh. The assessee is directed to appear before the Ld. CIT(A) in person or through authorised representative and argue its case with supporting documentary evidences. In case of failure on the part of the assessee to represent before the Ld. CIT(A), the Ld. CIT(A) may pass the order after considering the finding of the higher appellate authorities in assessment year 2012-13 on the issue of addition made in the section 68 of the Act, if any. The grounds raised by the assessee are accordingly allowed for statistical purposes.

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