FIROZ A. NADIADWALA,MUMBAI vs. ITO WD 16(1)(2), MUMBAI

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ITA 3900/MUM/2017Status: DisposedITAT Mumbai01 November 2017AY 2012-132 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal, in the interest of natural justice, set aside the CIT(A)'s order and restored the issues to the CIT(A)'s file for fresh adjudication. This was subject to the assessee paying a cost of Rs. 2000/-.

What were the facts?

The assessee's appeal was against the CIT(A)'s order confirming a disallowance under Section 36(1)(iii). The assessee did not appear for the hearing, and the CIT(A) had also passed an ex-parte order.

What were the issues?

Whether the CIT(A) erred in confirming the disallowance of interest expenditure without providing sufficient opportunity of being heard to the assessee.

Which sections of the Income-tax Act were involved?

Section 36(1)(iii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” Bench, Mumbai

Before: Shri B.R. Baskaran (AM)

For Respondent: Ms. N. Hemalatha
Hearing: 1.11.2017Pronounced: 1.11.2017

The appeal filed by the assessee is directed against the order dated 03- 02-2017 passed by Ld CIT(A)-4, Mumbai and it relates to the assessment year 2012-13. The assessee is aggrieved by the decision of Ld CIT(A) in confirming the disallowance made u/s 36(1)(iii) of the Act. It is also contended that the Ld CIT(A) has passed the order without giving sufficient opportunity of being heard.

2.

None appeared on behalf of the assessee, even though the notice was issued by registered post. Hence I proceed to dispose of the appeal ex-parte, without the presence of the assessee.

3.

I notice that the Ld CIT(A) was constrained to pass the order ex-parte, since the assessee did not respond to the notice which was served by registered post. The Ld CIT(A) further noticed that the assessee has paid interest on loan taken by him, but did not collect interest from the parties to whom advances were made. In the absence of proper explanations, the AO had disallowed the interest expenditure and it was also confirmed by Ld CIT(A).

2 Mr. Firoz A. Nadiadwala

4.

I am of the view that, in the interest of natural justice, the assessee should be given one more opportunity. But it should be on terms. Accordingly I impose a cost of Rs.2000/- on the assessee, which shall be paid to the credit of Income tax department as other fees. Subject to the payment of the same, I set aside the order passed by Ld CIT(A) and restore all the issues to his file with the direction to adjudicate the grounds afresh by affording adequate opportunity of being heard. The assessee is also directed to co-operate with Ld CIT(A) for expeditious disposal of the appeal.

5.

In the result, the appeal of the assessee is treated as allowed for statistical purposes. Order has been pronounced in the Court on 1.11.2017.

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