GAGAN GANDHI,NEW DELHI vs. ITO WARD 54(1), NEW DELHI

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ITA 1173/DEL/2019Status: DisposedITAT Delhi20 November 2019AY 2014-153 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found merit in the assessee's grounds of appeal, noting that the CIT(A) may have ignored the principle that disallowance under Section 36(1)(iii) is not permissible if sufficient interest-free funds are available. The CIT(A) also may not have provided adequate opportunity to the assessee.

What were the facts?

The assessee filed an appeal against the CIT(A)'s order regarding disallowance of interest on an interest-free advance. The assessee did not appear before the ITAT, and the appeal was decided ex-parte.

What were the issues?

Whether disallowance of interest under Section 36(1)(iii) is justified when the assessee has sufficient interest-free funds, and whether the assessee was given a proper opportunity to present their case.

Which sections of the Income-tax Act were involved?

Section 36(1)(iii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC’ NEW DELHI

Before: SHRI H. S. SIDHU

ORDER This appeal is filed by the assessee against the Order dated 07.12.2018 passed by the Ld. CIT(A)-18, New Delhi relating to Assessment Year 2014-15 on the following grounds:-

1.

Under the facts and circumstances of the case, the appellate order passed by the Ld.

CIT(A) is illegal being against the principles of natural justice and against the provisions of I.T. Act, 1961.

2. The Ld. CIT(A) has grossly erred on facts as well as in law in restricting the disallowance

to the proportionate interest with regard to the interest free advance of Rs. 73,43,526/- given by the appellant u/s. 36(1)(iii) of the I.T. Act.

3. The Ld. CIT(A) has grossly erred on facts as well as in law in ignoring the facts that disallowance u/s. 36(1)(iii) cannot be made

if assessee has got sufficient interest free funds.

4.

The appellant craves leave to add, alter,

modify and withdraw any ground of appeal before or during the appellate proceedings.

2.

In this case, Notice of hearing to the assessee was sent by the Registered AD post, in spite of the same, assessee, nor his authorized representative appeared to prosecute the matter in dispute, nor filed any application for adjournment. Keeping in view the facts and circumstances of the present case and the issue involved in the present Appeal, I am of the view that no useful purpose would be served to issue notice again and again to the assessee, therefore, I am deciding the present appeal exparte qua assessee, after hearing the Ld. DR and perusing the records.

3.

Ld. DR relied upon the orders of the authorities below.

4. I have heard Ld. DR and perused the records available with me especially the impugned order passed by the Ld. CIT(A). I find considerable cogency in the contention raised in the grounds of appeal that Ld. CIT(A) has ignored the fact that disallowance u/s. 36(1)(iii) cannot be made if assessee has got sufficient interest free funds and did not give proper opportunity to the assessee to substantiate his case.

Keeping in view of the fact and circumstances of the case, the issues in dispute are set aside to the file of the Ld. CIT(A) with the directions to decide the same afresh, after considering all the evidences/documents and give adequate opportunity of being heard to the assessee. Assessee is also directed to fully cooperate with the Ld. CIT(A) and did not take any unnecessary adjournment and file all the necessary documentary evidences before him.

5.

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

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