DCIT, CHENNAI vs. MADANLAL FORGE PVT. LIMITED, CHENNAI

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ITA 330/CHNY/2017Status: DisposedITAT Chennai20 November 2017AY 2012-135 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(A) violated Rule 46A by admitting documents for the first time without confronting them to the AO and without calling for a remand report. Therefore, the issue was remitted back to the AO for fresh consideration.

What were the facts?

The Revenue appealed against the deletion of disallowance of unsecured loans and interest by the CIT(A). The AO had disallowed a portion of interest claimed on unsecured loans due to insufficient substantiation.

What were the issues?

Whether the CIT(A) erred in admitting additional evidence without confronting it to the Assessing Officer and without obtaining a remand report.

Which sections of the Income-tax Act were involved?

Rule 46A

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Income Tax Appellate Tribunal, B/“SMC” BENCH, CHENNAI

Before: SHRI CHANDRA POOJARI

Pronounced: 20.11.2017

: Mr.B.Sagadevan, JCIT, D.R अपीलाथ" क" ओर से / Appellant by : None ""यथ" क" ओर से/Respondent by : 09.11.2017 सुनवाई क" तार"ख/ Date of hearing घोषणा क" तार"ख /Date of Pronouncement : 20.11.2017 आदेश / O R D E R

PER CHANDRA POOJARI, ACCOUNTANT MEMBER:

1.

This appeal is filed by the Revenue and the Cross objections by the assessee are directed against the order of the Learned Commissioner of Income Tax(A)-8, Chennai dated 21.11.2016 pertaining to assessment year 2012-13.

2.

The main grievance of the Revenue in its appeal is with regard to deleting the disallowance of `87,18,425/- made by the AO as 2 unexplained increase in unsecured loans and deleting the claim of interest of `7,49,958/-

3.

The facts of the case are that during the assessment year under consideration, there was an increase in unsecured loans from the following parties.

` Name AdarshJalan a/c 6,03,500/- AdarshJalan a/c 50,000/- Tamilnadu Rolling Mills ltd 80,64,925/- The AO found that the assessee claimed an amount of `25,96,253/- as interest and keeping in view the average secured loans of `1,53,85,790/- (average of opening balance of `1,83,00,589/- and closing balance of `1,24,70,990/-) for the previous year relevant to assessment year under consideration, restricted the interest to `18,46,295/- being 12% of the average secured loans. The balance amount of `7,49,948/- was brought to tax observing that the reasons to substantiate the claim were not furnished by the assessee.

Aggrieved by the order of ld. Assessing Officer, the assessee carried the appeal before the Ld.CIT(A). On appeal, Ld.CIT(A) admitted that PAN details and the relevant ledger extracts in support of its claim on 3 (142 ITD 118), the above said two disallowances made by the ld. Assessing Officer were deleted. Against the order of Ld.CIT(A), now the Revenue is in appeal before us.

4.

Before us, the ld.D.R submitted that the documents produced first time before the Ld.CIT(A) are not confronted to the ld. Assessing Officer and Ld.CIT(A) decided without calling of Remand Report from the AO.

5.

At the time of hearing, none appeared on behalf of the assessee. I took up the case for adjudication after hearing the ld.D.R.

In my opinion, there is merit in the argument of the ld.D.R. As per Rule-46A of Income Tax Rules, 1962, the ld.CIT(A) should have confronted the documents to the ld. Assessing Officer, which were 4 produced first time before him. The ld.CIT(A) considered this plea of the assessee without calling for a Remand Report from the AO. As such there is violation of Rule 46A. Accordingly, in my opinion it is appropriate to remit the issue to the file of AO to consider the same afresh after affording reasonable opportunity of hearing to the assessee, and ld. Assessing Officer shall consider the same in accordance with law and decide it afresh.

5.1 The Cross objections filed by the assessee is time barred by 134 days, and no condonation petition has been filed for belatedly filing the appeal, which is defective. Accordingly, I hereby dismiss the Cross Objections filed by the assessee in limine.

6.

In the result, the appeal of the Revenue is partly allowed for statistical purposes. Order pronounced on 20th November, 2017. (चं" पूजार") (CHANDRA POOJARI) लेखा सद"य /ACCOUNTANT MEMBER Chennai, Dated the 20th November, 2017. 5 K s sundaram.

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