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Facts
The assessee, engaged in road construction, filed a nil return for AY 2015-16, capitalizing interest income of Rs. 1,33,61,068/- from fixed deposits as business income. The Assessing Officer reclassified this as "income from other sources" and made an addition. The Ld. Commissioner (Appeals) dismissed the assessee's subsequent appeal due to repeated non-compliance and failure to submit documentary evidence.
Held
The Tribunal set aside the Ld. Commissioner's order and remanded the case for fresh adjudication, considering the Commissioner's inability to decide the issue on merits due to lack of information. The remand is conditional on the assessee depositing a token amount of Rs. 11,000/- within 15 days and cooperating by providing all necessary documents to the Ld. Commissioner.
Key Issues
Whether interest income from fixed deposits should be classified as business income or 'income from other sources'. The propriety of dismissing an appeal due to non-compliance by the assessee.
Sections Cited
Section 250, Section 92CA(3), Section 143(3), Section 115JB
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Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI RATNESH NANDAN SAHAY
Per : Narender Kumar Choudhry, Judicial Member:
These appeals have been preferred by the Assessee against the orders even dated 04.04.2024, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) under section 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2015-16, 2016- 17 & 2017-18.
2 2994 & 2995/M/2024 M/s. Kiratpur Ner Chowk Expressway Limited 2. The issues involved in all the three appeals are identical and therefore for the sake of brevity, the same were heard together and are being disposed of by this composite order and considering ITA No.2993/M/2024 as a lead case and result of the same shall apply mutatis mutandis to all the three appeals under consideration.
Coming to we observe that the Assessee had declared its total income at “Rs.Nil” by filing its return of income for the A.Y. 2015-16 on 30.09.2015, which was subsequently selected for complete scrutiny and consequently statutory notices were issued to the Assessee calling for details, in response to which the Assessee filed the relevant details. On perusing the details filed by the Assessee, the Assessing Officer (AO) observed that the Assessee company is engaged in the business of road construction, operation and maintenance and during the year under consideration has earned interest of Rs.1,33,61,068/- on fixed deposit and capitalized the same by treating it as business income and adjusted against the expenses incurred. Though the case of the Assessee was referred to transfer pricing, however, vide order dated 23.10.2018 u/s 92CA(3) of the Act the value of Assessee’s specified domestic transaction qua arms length price was not disturbed. Accordingly, the AO completed the scrutiny assessment u/s 143(3) r.w.s.92CA(3) of the Act vide order dated 21.12.2018, whereby the total income of the Assessee as per MAT u/s 115JB of the Act to the tune of Rs.(-) 99,77,941/- adding the interest income of Rs.1,33,61,068/- under the head “income from other sources” has been computed. The Assessee, being aggrieved, challenged the aforesaid addition, before the Ld. Commissioner, who though issued 5 notices to the Assessee, however, the Assessee except seeking adjournments on four occasions, made no compliance and therefore in the absence of any documentary evidence/information which the Assessee failed to file despite giving opportunities, the Ld. Commissioner dismissed the appeal of the Assessee by presuming and 3 2994 & 2995/M/2024 M/s. Kiratpur Ner Chowk Expressway Limited holding “ that it can be safely presumed that the Assessee is not interested in pursuing its appeal and therefore the undersigned sees no reason to interfere with the order of the AO, thus the appeal raised by the Assessee is dismissed”. The Assessee, being aggrieved, is in appeal before us.
Heard the parties and perused the material available on record. Admittedly, in spite of affording various opportunities by the Ld. Commissioner, the Assessee made no compliance and on four occasions out of 5, sought adjournments only and therefore the Assessee does not deserve any leniency, however, considering the peculiar facts and circumstances in totality, as the Ld. Commissioner in the absence of relevant reply/documents was unable to decide the issue involved in its right perspective and proper manner, hence for the just decision of the case and for substantial justice, we are inclined to set aside the impugned order and consequently remanding the same to the file of the Ld. Commissioner for decision afresh, however, subject to deposit of token amount of Rs.11,000/- in the account of the Revenue Department within 15 days of the receipt of this order. Suffice to say, the Ld. Commissioner shall afford reasonable opportunity to the assessee to substantiate its claim before the Ld. Commissioner.
We also direct the assessee to cooperate with the appellate proceedings and to file the relevant submissions/documents which would be essential and required by the Ld. Commissioner for proper adjudication of the case. We clarify that in case of further default the assessee shall not be entitled for any leniency. Hence, the case is remanded accordingly. In the result, the instant appeal i.e. filed by the Assessee stands allowed for statistical purposes in the above terms.
Order pronounced in the open court on 31.07.2024.