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Facts
The assessee, Mrs. Uma Aarun Patil, filed her ITR for AY 2018-19 declaring an income of Rs.15.75 lakhs, which was assessed u/s 143(3) at Rs.97.88 lakhs after scrutiny. Her subsequent appeal against this assessment was dismissed ex-parte by the CIT(A)/NFAC for want of prosecution without providing sufficient opportunity of hearing.
Held
The ITAT condoned the delay in filing the appeal and set aside the ex-parte order of the CIT(A)/NFAC, finding that the assessee was not given a reasonable opportunity of hearing. The matter was remanded back to the CIT(A) with directions to decide the appeal afresh on all grounds, after providing the assessee a proper hearing and requiring her to produce all relevant documents.
Key Issues
The key legal issue was the CIT(A)'s ex-parte dismissal of the appeal without providing a reasonable opportunity of hearing. Substantive issues raised by the appellant related to disputed remuneration and interest on capital from partnership firms, and the disallowance of home loan interest deduction under Section 24.
Sections Cited
Section 143(2), Section 142(1), Section 143(3), Section 24
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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI MANISH BORAD & SHRI VINAY BHAMORE
ORDER
PER VINAY BHAMORE, JM:
This appeal filed by the assessee is directed against the order dated 16.01.2025 passed by Ld. CIT(A)/NFAC for the assessment year 2018-19.
There is delay in filing of the present appeal. We are satisfied with the reasons mentioned in the application for condonation of delay duly supported by an affidavit that the applicant was prevented by sufficient cause for not filing the appeal within the prescribed time limit. After hearing Ld. DR, we condone the delay and proceed to adjudicate the appeal.
The appellant has raised the following grounds of appeal :- “1) The Ld. AO has overlooked the fact that as per the Books of Accounts and ITR of Partnership Firm M/s Radhika Developers (RD), the Appellant was not paid any amount towards her Remuneration. In spite of this Ld. A0 has taken Rs.1,77,694 as Remuneration paid to her. The Hon. CIT [Appeals) has assumed this figure of remuneration to the Appellant without basis or document. 2) The Hon. CIT [Appeals) erred in not considering the practical situation that the Appellant was in the process of applying for a Business Loan from Axis Bank which needed the copy of the filed ITR and audited Balance Sheet and Profit & Loss account from the Appellant to sanction and disburse the Loan to the Appellant Hence, the Appellant was in urgent need of the ITR, due to which the Appellant could not wait till the ITR's of the Partnership Firms were filed. 3) The Ld. AO has overlooked fact that in the case of Partnership Firm M/s. Arun Patil Promoter, Builder & Developer (APPBD), the Appellant had wrongly taken Rs. 14,38,030 as Remuneration and Interest on Capital from APPBD. However, after the ITR of the Appellant was filed, several changes/corrections in Book Profit resulting in changes/corrections in Remuneration and Interest on Capital paid to the Appellant were made while finalising the Books of Accounts of APPBD. Due to these changes/revisions, the said Partnership Firm APPBD filed its ITR one month later on 29.10.2018. 4) The Hon, CIT (Appeals) has erred in not considering the fact that the Appellant inadvertently erred in not considering Remuneration nor Interest on Capital from Partnership Firm M/s Om Realtors (OR) as it had not paid any Remuneration nor Interest on Capital to the Appellant during the past
6. Assessment Years and that hence the appellant presumed that for this year too, she will not receive any Remuneration or Interest on Capital for the year.
The Hon. CIT (Appeals) erred in not taking cognizance to the fact that the Appellant filed her ITR 1 month prior to the dates on which the ITR's of the Partnership Firms and, that, hence the situation of change/revision of Remuneration and Interest on Capital as per the Books of Accounts of all Partnership Firms cropped in. And that, this is the precise reason why the Appellant's ITR contained the earlier figures of Remuneration and Interest on Capital. 6) The Hon. CIT (Appeals) ignored the plea of the Appellant regarding Partnership Firm M/s. Om Realtors since the beginning that there was a dispute with the other Partner Rakesh Agarwal and that the accountant belonged to such Partner’s family business and hence was inclined them. Due to the said dispute, the Agarwal Family was not sharing all the necessary information about Om Realtors with the Appellant, which resulted in non-sharing of the fact that the figure of Remuneration and Interest on Capital had changed/corrected. 7) The Hon. CIT (Appeals) has not considered the fact that the Remuneration and Interest on Capital were all shown as paid to the Appellant by way of mere Journal entries and not actual payment entries. Hence, the Appellant had no means to know beforehand whether she will receive any/what will be the quantum of Remuneration or Interest on Capital from the said Partnership Firms resulting in default in reflecting these amounts in the Appellant’s ITR. 8) The Ld. AO through oversight has disallowed deduction u/s. 24 on account of payment of Interest on Home Loan for the reason that there was no evidence of Interest paid to Financial Institution. However, the Hon. CIT (Appeals) erred in never asking for the Interest Certificate on Home Loan to the Appellant. The Appellant has enclosed Interest Certificate from the Lender to the tune of Rs.11,32,050. Hence the same is fully allowed. 9) The Appellant craves leave to add, delete, amend, modify, extend and change any of the aforesaid Ground of Appeal
.”
4. Facts of the case, in brief, are that the assessee is an individual deriving income from salary, house property income, income from profits and gains of business or profession and also income from other sources and has furnished return of income on 22.09.2018 declaring total income of Rs.15,75,000/-. The case of the assessee was selected under scrutiny through CASS, accordingly notices u/s 143(2) and 142(1) respectively were issued to the assessee. A draft assessment order was also issued to the assessee. After considering the reply of the assessee, the assessment was completed u/s 143(3) of the IT Act by determining total income at Rs.97,88,740/- as against the income returned by the assessee at Rs.15,75,000/-.
Being aggrieved with the above assessment order, the assessee preferred an appeal before Ld. CIT(A)/NFAC. Since the assessee remained absent, Ld. CIT(A)/NFAC dismissed the appeal filed by the assessee.
It is the above order against which the assessee is in appeal before the Tribunal.
When the appeal was called for hearing, neither anybody appeared on behalf of the appellant-assessee nor any application for adjournment was filed despite due service of notice of hearing. Therefore, we proceed to decide the appeal on the basis of material available on record as well as after hearing Ld. DR. We have heard Ld. DR and perused the material available on record. In this regard, we find that Ld. CIT(A)/NFAC dismissed the appeal for want of prosecution. We further find that Ld. CIT(A)/NFAC has issued total three notices of hearing to the assessee in a time period of 25 days which cannot be said to be reasonable opportunity of hearing.
Considering the totality of the facts of the case and in the interest of justice & without going into merits of the case, we deem it fit to set-aside the ex-parte order passed by Ld. CIT(A)/NFAC and remand the matter back to the file of Ld. CIT(A)/NFAC with a direction to decide the appeal afresh and as per fact and law on all the grounds raised
before him after providing reasonable opportunity of hearing to the assessee. The assessee is also hereby directed to respond to the notices issued by Ld. CIT(A)/NFAC in this regard and to produce relevant submissions, documents and evidences in support of grounds of appeal without taking any adjournment under any pretext, otherwise Ld. CIT(A)/NFAC shall be at liberty to pass appropriate orders as per law. Thus, the grounds raised by the assessee are allowed for statistical purposes.
10. Since the matter has been remanded back to the file of Ld.