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Facts
The Assessing Officer (AO) made disallowances of Rs. 18,39,295/- for interest expenses and Rs. 1,26,83,205/- for prior period expenses. The assessee contended that interest was paid to M/s. Religare Finvest Ltd., which had offered the income and paid tax, and thus no TDS was required.
Held
The CIT(A) passed an ex parte order, dismissing the appeal in limine without considering the merits. The assessee argued that they were not given sufficient opportunity and requested for a fresh adjudication.
Key Issues
Whether the CIT(A) erred in passing an ex parte order without granting sufficient opportunity to the assessee. Whether the disallowances made by the AO are sustainable on merits.
Sections Cited
40(a)(ia), 143(3), 250(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH ‘C’, MUMBAI
Before: SHRI AMARJIT SINGH, HON’BLE & SHRI RAHUL CHAUDHARY, HON’BLE
O R D E R PER AMARJIT SINGH, AM:
This appeal of the assessee for the assessment year 2015-16 is directed against the order dated 15.03.2024 passed by the ld. Commissioner of Income-tax (Appeal), NFAC, Delhi. The assessee has raised the following grounds of appeal:
“1. On the facts & in the circumstances of the case and in law the Hon’ble CIT(A) erred in passing an ex parte order without providing sufficient opportunity to explain the facts of the case and the reasons assigned for doing so are wrong and contrary to the provisions of Income Tax Act and rules made thereunder.
Without prejudice to the other grounds of appeal, On the facts and circumstances of the case and in law, the Hon’ble CIT(A) erred in dismissing the appellant’s appeal in limine without consideration of the subject issues on merit. Therefore, the appeal may be restored to the Hon’ble CIT(A) for fresh adjudication.
Computility India Private Limited A.Y. 2015-16 3. On the facts and in the circumstances of the case and in law the Hon’ble CIT(A) erred in upholding addition of Rs. 18,39,295/- made u/s 40(a)(ia) of the IT Act, 1961 by the Ld AO to the returned income by disallowing legitimate interest expenses claimed without assigning valid reason and the reason assigned for doing so are wrong and contrary to the Provisions of Income Tax Act and rules made there under.
4. On the facts and in the circumstances of the case and in law the Hon’ble CIT(A) erred in upholding addition of Rs. 1,26,83,205/- made to the returned income by the Ld AO by disallowing prior period expenses claimed without assigning valid reason and the reason assigned for doing so are wrong and contrary to the Provisions of Income Tax Act and rules made there under.
Your Appellant crave, leave to add, alter, amend or modify any or all grounds of appeal on or before the date of hearing.”
2 Fact in brief is that assessment u/s 143(3) of the Act was finalized in the case of the assessee on 29.12.2017. The assessing officer had made disallowance u/s 40(a)(ia) of the Act of interest expenses of Rs. 18,39,295/- for non-deduction of tax in respect of interest payment made to M/s. Religare Finvest Ltd. on the loan received from the said company. The assessee submitted that against the loan received from M/s. Religare Finvest Ltd. and NBFC, the repayment of the said loan was made to the said company by equated monthly instalment and on the instruction of the said company, the assessee had not deducted tax at source on the on the said interest payment as the said company had offered the said interest income for taxation and paid tax thereon. The assessing officer has not agreed with the submission of the assessee and made disallowance of the aforesaid amount of interest payment u/s 40(a)(ia) of the Act. The assessing officer has also disallowed the claim of prior period expenses of Rs. 1,26,83,205/-.
Computility India Private Limited A.Y. 2015-16 3. Aggrieved assessee filed before the ld. CIT(A). During the course of appellate proceedings before the ld. CIT(A), the assessee has not made any compliance to the various notices issued for hearing and requested for adjournment. The ld. CIT(A) has rejected the request of the adjournment made by the assessee repeatedly and sustained the disallowance made by the assessing officer u/s 40(a)(ia) of the Act.
Heard both the sides and perused the material on record. The ld. Counsel submitted that assessee has made adjournment application repeatedly because of unavoidable circumstances however, the request for adjournment were not considered fairly by the ld. CIT(A) therefore requested for providing more opportunities for deciding the case on merits at the level of First Appellate Authority. Looking to the above facts and circumstances, we consider it appropriate to restore this case to the file of the ld. CIT(A) for deciding afresh on merit as contemplate in section 250(6) of the Act after providing three more opportunities to the assessee. The assessee is also directed to make compliance before the ld. CIT(A) without any failure. Accordingly, the appeal of the assessee is allowed for statistical purposes.