MEHUL PAREKH ,BANGALORE vs. INCOME TAX OFFICER, WARD-2(2)(1), BANGALORE

The brief facts of the case are that the assessee is an individual and filed his return of income on 04/10/2018. Thereafter the case was selected for complete scrutiny and notice u/s. 143(2) as well as u/s. 142(1) were issued to the assessee. The assessee also submitted their reply and thereafter the AO sought for some more details about the interest paid and the interest received. The assessee also submitted their reply and explained that the assessee had obtained loans from individuals at 7% for the Page 2 of business purpose after setting off the interest obtained from the debtors and therefore there is a loss and therefore the said excess interest paid is an eligible expense for the purpose of earning the income and therefore the said difference could not be added to the income of the assessee. The AO had not accepted the submissions. As against the said order, the assessee filed an appeal before the Ld.CIT(A). The Ld.CIT(A) sent six hearing notices and on three occasions, the assessee filed an application for adjournment and not filed any response to the other notices and therefore the Ld.CIT(A) had decided the appeal based on the materials available before him and finally dismissed the appeal.

The assessee is before this Tribunal against the said ex-parte order of the Ld.CIT(A).

At the time of hearing, the Ld.AR submitted that the assessment order is bad in law and submitted that in spite of furnishing the various documents before the AO, the AO had confirmed the disallowance being the difference between the interest paid and the interest received on the reason that the expenses are not for earning the income. The Ld.AR submitted that the assessee had by oversight not followed up the appeal filed before the Ld.CIT(A) and prayed an opportunity to appear before the AO along with the records to establish that the expenses are incurred for earning the income only.