Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI G.S. PANNU & SHRI AMARJIT SINGH
The captioned appeal by the assessee is directed against the order passed by the Commissioner of Income Tax-24, Mumbai (in short ‘the Commissioner’) u/s 263 of the Income Tax Act, 1961 (in short ‘the Act’) dated 30.03.2017 pertaining to Assessment Year 2012-13 whereby the assessment order passed by the Assessing Officer u/s 143(3) of the Act dated 19.03.2015 has been held to be erroneous insofar as it is prejudicial to the interests of the Revenue within the meaning of Sec. 263 of the Act.
The Grounds of appeal raised by the assessee read as under :-
“1. In the facts and circumstances of the case, the Hon'ble CIT erred in applying the provisions of S. 263 of the Income Tax Act, 1961 to the case of the assessee and treating the assessment order as erroneous and prejudicial to the revenue. The appellant prays that the impugned order of the Hon'ble CIT be treated as beyond the purview of S. 263 of the Act.
2. In the facts of the case and in law, the Hon'ble CIT erred in considering Rs.4,36,828/- of interest paid for business purpose as interest on loan taken to pay advance for flat. The appellant prays that the amount of interest incurred by the assessee be allowed as business expenditure.
3. In the facts and circumstances of the case, the Hon'ble CIT erred in not considering the submissions filed by the appellant. The appellant prays that the impugned order be treated as a violation of the principles of natural justice.”
At the time of hearing, it was noticed that none appeared on behalf of the appellant-assessee inspite of service of notice by RPAD. On the other hand, the ld. DR appeared on behalf of the Revenue.
Accordingly, in view of Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963, the appeal of the assessee is being disposed off ex-parte qua the appellant-assessee after hearing the respondent- Revenue on merits.
In brief, the relevant facts emerging from the order of the authorities below can be summarised as follows. The assessee is an individual who is engaged in the business of providing services relating to event management, etc. through his proprietary concern. For the assessment year under consideration, assessee filed a return of income declaring total income of Rs.16,08,880/-, which was subject to a scrutiny assessment whereby the total income has been assessed at Rs.16,16,950/- which, inter-alia, included income under the head ‘Salary’, ‘House property’, ‘Business income’, ‘Income from other sources’, etc. Subsequently, the Commissioner issued a notice u/s 263 of the Act noting that the assessment order is erroneous inasmuch as the interest paid on loan used to pay advance for a flat has been wrongly allowed as a deduction. According to the Commissioner, assessee had paid advance for a flat of Rs.61 lacs and claimed interest paid on loan against property of Rs.4,36,828/-. According to the Commissioner, assessee had neither occupied the flat and nor made the full payment for purchase of the property and it was a mere advance and, therefore, deduction for interest expenditure could not have been allowed. According to the Commissioner, the aforesaid error was prejudicial to the interest of the Revenue and, therefore, he show- caused the assessee. The Commissioner notes that inspite of issuance of show-cause notice, no reply was furnished by the assessee. Therefore, the Commissioner considered the material available on record and noted that the Assessing Officer had not made any inquiries on the aforesaid issue; and, accordingly, he set-aside the assessment order dated 19.03.2015 and directed the Assessing Officer to reassess the income of the assessee after examining the aforesaid issue and allowing the assessee an opportunity of being heard as per law.
Against the aforesaid decision of the Commissioner, assessee is in further appeal before us. Notably, in the absence of any material led by the assessee before us, we find that the order of the Commissioner deserves to be affirmed. The Commissioner has brought out that assessee has merely made an advance for purchase of a flat and that under these circumstances the Assessing Officer was required to examine the allowability of interest paid on loan used for the advance made for the flat. It has not been made out at any stage that the assessee had acquired the flat. The charge made by the Commissioner is quite manifest from the perusal of the assessment order itself and, therefore, in the absence of any material to the contrary, we affirm the action of the Commissioner in holding the assessment order as erroneous insofar as it is prejudicial to the interest of the Revenue within the meaning of Sec. 263 of the Act. Thus, the order of the Commissioner is upheld and assessee fails in his appeal.
In the result, appeal of the assessee is dismissed.
Order pronounced in the open court on 15th September, 2017.