ARUMUGAM MURUKIAH,CHENNAI vs. ACIT, CHENNAI

आदेश / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER:

ITA No.1733/Mds/2015. :- 2 -:

No.206/2013-14, Dated 30.03.2015 for the assessment year 2007- 2008 passed u/s.143(3) r.w.s 147 and 250 of the Income Tax Act, 1961.

The assessee has filed appeal on the grounds of reopening 2. of assessment, and interest disallowance and also no opportunity of hearing.

The Brief facts of the case are that the assessee is an 3. individual and in the business of computer sales, servicing and consultancy and filed return of income on 31.10.2007 admitting Total income of �1,23,77,940/- and the return was processed u/s.143(1) of the Act and the case was selected for scrutiny and assessment was completed u/s.143(3) of the Act order dated 21.12.2009. The Assessing Officer subsequently issued notice u/s.148 of the Act on 31.03.2012. In response to notice of Sec.148 the assessee filed letter dated 04.08.2012 stating the original return filed may be treated as return filed in response to the notice.

ITA No.1733/Mds/2015. :- 3 -:

The Assessing Officer believed that the assessee has not offered any interest income on such advance. A show cause notice was issued to the assessee and in response to show cause notice the assessee replied that the loan and advance mentioned in the balance sheet comprises of advance tax, TDS deducted, investment in sister concern advance for purchase and staff advanc. On the basis of the submission of the assessee the Assessing Officer relied on the decision of Jurisdictional High Court in the case of K. Samasundaram Brothers vs. CIT 238 ITR 939 under the presumption that the assessee had to first utilize the fund for repayment of loan and balance of excess funds should be given for interest free loan. With this finding, the ld.AO disallowed interest amount of �3,93,752/- and passed order 143(3) r.w.s 147 of the Act dated 21.03.2013. Aggrieved by the order of the Assessing Officer, the assessee filed an appeal before the Commissioner of Income Tax (Appeals).

In appellate proceedings, the ld. Authorised Representative 5. explained the circumstances and bifurcation of loans and advance provided and interest component consists of interest on building loan and vehicle loan but the Assessing Officer has finalized reassessment order by making disallowance on the suspicion and surmises that the ITA No.1733/Mds/2015. :- 4 -: assessee has given interest free loans to his sister concern. At the time of hearing, the ld. Commissioner of Income Tax (Appeals) found that inspite of sending notices none appeared on the date of hearing neither any material was filed to support the grounds nor written submission were filed. Therefore, on the ground of non appearance at the time of hearing took adverse opinion that the assessee is having callous and indifferent attitude and not interested in prosecuting the appeal and relied on the decision of Apex Court in the case of CIT vs. B.N. Bhattacharjee and another 118 ITR 461 and other judicial High Courts decision for non prosecution of the appeal. The ld.CIT(A) is of the opinion that the Assessing Officer has dealt the issue in detail with the available material and upheld the order of the Assessing Officer.

Aggrieved by the order of the Commissioner of Income Tax (Appeals), the assessee assailed an appeal before the Tribunal.

Before the Tribunal, the ld.AR argued grounds and 6. reiterated his submissions made before the lower authorities. The Commissioner of Income Tax (Appeals) without going into the merits of the case and material on record filed before the Assessing Officer overlooked the submissions by the assessee and not provided adequate opportunity of hearing to the assessee before passing the ITA No.1733/Mds/2015. :- 5 -: order and gave a categorical finding that the assessee has not attended appellate proceedings. The ld. Authorised Representative submitted that an adjournment petition was filed and another letter dated 05.06.2015 was filed in the appellate proceedings but inspite of submissions on record, the Commissioner of Income Tax (Appeals) has dismissed the appeal for non-appearance and pleaded for allowing the appeal on merits.

Per contra, the ld. Departmental Representative relied on 7.

the findings of the lower authorities and vehemently objected to the submissions.

We after hearing the rival submissions of both the parties, 8. perused the material on record and also judicial decisions cited the assessee in the assessment proceedings u/s.143(3) r.w.s 147 of the Act has filed material information which the Assessing Officer has overlooked the vital documents further the assessee filed appeal before the Commissioner of Income Tax (Appeals) and also filed submission 05.06.2015, which ld. Commissioner of Income Tax (Appeals) has ignored. Therefore, we are of the opinion that one more opportunity be given on the principles of natural justice as the ITA No.1733/Mds/2015. :- 6 -:

Commissioner of Income Tax (Appeals) confirmed the order of the Assessing Officer without going into the merits of the case. Considering the facts and circumstances, we set aside the order of the Commissioner of Income Tax (Appeals) and remit the disputed issue back to the file of the Commissioner of Income Tax (Appeals) for hearing and the ld.CIT(A) should provide adequate opportunity of being to the assessee and dispose off the appeal on merits.

In the result, the appeal of the assessee in ITA 9. No.1733/Mds/2015 is partly allowed for statistical purposes. Order pronounced on Thursday the 14th day of January, 2016, at Chennai.