M/S. MULTIMAX ENGINEERING WORKS PVT. LTD.,MEERUT vs. DCIT, NEW DELHI

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ITA 2231/DEL/2017Status: DisposedITAT Delhi28 September 2017AY 2012-132 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the AO did not seek clarification from the assessee on the issue. Considering the submissions, the Tribunal set aside the impugned order and remanded the matter back to the CIT(A) for a fresh speaking order after providing the assessee an opportunity to be heard.

What were the facts?

The assessee's appeal challenges an addition made by the Assessing Officer (AO) regarding excessive interest on unsecured loans. The assessee contended that no clarification was sought by the AO during assessment proceedings and that the CIT(A) confirmed the addition without basis.

What were the issues?

Whether the addition made by the AO was justified without seeking proper clarification from the assessee, and whether the CIT(A) erred in confirming the addition without a proper basis.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

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

Before: SMT. DIVA SINGH

PER DIVA SINGH, JUDICIAL MEMBER :

1.

The present appeal has been filed by the assessee assailing the correctness of the order dated 07.03.2017 of CIT(A)-6, New Delhi pertaining to assessment year 2012-13 on various grounds including ground no. 3 which read as under :

• “As pointed out on the face of the assessment order, no query- clarification was ever sought by the learned A.O. about the said interest payment during the assessment proceedings as per records.”

2.

The Ld. AR appearing on behalf of the assessee submitted that the addition had been wrongly made not only on the facts of the case but even the procedure followed was incorrect. This issue it was submitted has been argued before the CIT(A). For ready reference, ground no. 1 raised before the CIT(A) is reproduced here as under :-

That the Ld. A.O. has erred in law as well as on the facts of the case by adding- disallowing a sum of Rs. 2,03,593/- as excessive interest on unsecured loans beyond 7.5% and Ld. CIT(A) has confirmed the same without any basis.

3.

Ld. AR inviting attention to the impugned order submitted that the Assessing Officer at no point of time asked the assessee to explain the facts qua the issue. Had a question been asked the assessee would have been in a position to explain the same because even on merits the addition was not maintainable considering the proposition of law as laid down by the Apex Court in the case of S.A. Builders 288 ITR 1 (SC). Accordingly it was his prayer that the addition be deleted on merits or the impugned orders, in the alternate be set aside back to the file of the CIT(A) or the Assessing Officer to first consider the facts.

ITA 2231/Del/2017 Page 2 of 2

4.

The Ld. Sr. D appearing on behalf of the Revenue considering the material available on record submitted that he has no objection if the issue is remanded back to the CIT(A). However, remand to the assessing officer was objected to.

5.

In the light of the submissions of the parties before the Bench and considering the material available on record, I am of the view that in the peculiar facts and circumstances of the case it would be appropriate to set aside the impugned order back to the file of the CIT(A) with the direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. It is hoped that the opportunity so provided, is not abused by the assessee and is utilised fully and fairly by making a proper representation before the CIT(A). In the eventuality of abuse of the same, it is made clear that the CIT(A) would be at liberty to pass an order on the basis of material available on record.

6.

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

(Order Pronounced in the Open Court on 28th Sept., 2017)

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