COMPREHENSIVE INVESTMENT AND FINANCE CO. P. LTD.,CHENNAI V. DCIT, CORPORATE CIRCLE-1(1), CHENNAI

ITA 337/CHNY/2025

AI Insights

The case involves M/s. Comprehensive Investment and Finance Company P Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, for the assessment year 2017-18. The primary issues in the appeal were the legality of the jurisdiction assumed under section 147 of the Income Tax Act and the disallowance of Rs.71,71,064 under Rule 8D read with section 14A of the Act. The assessee contested the reopening of the assessment and the subsequent disallowance of expenses related to exempt income. The CIT(A) had upheld the Assessing Officer's decision without the participation of the assessee, leading to the current appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 313091 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KEERTHI NARAYANAN
• Assessee Lawyers: N. ARJUN RAJ; CONFIRMING
• Keywords: Set aside; Opportunity of being heard; Reopening of assessment; Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

"आयकर अपीलीय अिधकरण, ‘ए’ Ɋायपीठ, चेɄई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI ŵी एबी टी वकŎ, Ɋाियक सद˟ एवं ŵी एस. आर. रघुनाथा, लेखा सद˟ क े समƗ BEFORE SHRI ABY T VARKEY, JUDICIAL MEMBER AND SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.: 337/Chny/2025 िनधाŊरण वषŊ / Assessment Year: 2017-18 M/s. Comprehensive Investment and Finance Company P Ltd., No.65, Mercury Apartments, First Floor, Pantheon Road, Egmore, Chennai – 600 008. vs. Deputy Commissioner of Income Tax, Corporate Circle 1(1), No.121, Nungambakkam High Road, Chennai – 600 034. [PAN: AAACC-1401-A] (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से/Appellant by : Shri. N. Arjun Raj, Advocate ŮȑथŎ की ओर से/Respondent by : Shri. Keerthi Narayanan, JCIT सुनवाई की तारीख/Date of Hearing : 22.04.2025 घोषणा की तारीख/Date of Pronouncement : 28.04.2025 आदेश /O R D E R PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER: This appeal by the assessee is filed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2017-18, dated 23.01.2025. 2. The assessee has raised the following grounds of appeal: (a) The assessee challenged the assumption of jurisdiction u/s.147 of the Act stating that it is without sanction of law and hence it is bad in law. (b) The ld.CIT(A) erred in sustaining the disallowance of Rs.71,71,064/- in terms of Rule 8D r.w.s 14A of the Act without assigning proper reasons and justification. :-2-: ITA. No:337/Chny/2025 3. The brief facts are that the assessee company is engaged in the business of other financial intermediation and filed its return of income u/s.139(1) of the Income Tax Act, 1961 (hereinafter the ‘Act’) for the assessment year 2017-18 on 14.09.2017 admitting total income of Rs.35,64,060/-. The assessee’s case was selected for scrutiny and assessment was completed u/s.143(3) of the Act on 29.11.2019 by accepting the returned income of the assessee. Subsequently, it was noticed that the assessee has claimed exempt income of dividend to the tune of Rs.4,53,39,483/- and by considering average investments, 14A disallowance works out to Rs.71,71,064/- and hence reopened the assessment by issuing statutory notices. Further, the AO, NFAC passed an order u/s.147 of the Act dated 30.03.2022 by disallowing expenditure u/s.14A of the Act by applying Rule 8D to the tune of Rs.71,71,064/-. 4. Aggrieved, assessee preferred an appeal before the Ld.CIT(A). The Ld.CIT(A) dismissed the appeal of assessee by upholding the order of AO and sustained the additions since the assessee did not participate in the assessment proceedings by passing an order dated 23.01.2025. Aggrieved by the impugned order of the Ld.CIT(A), the assessee is in appeal before us. 5. The Ld.AR for the assessee submitted that the ld.CIT(A) has passed the impugned order without participation of the assessee and also not considered the submissions made along with the appeal papers. Further, the ld.AR brought to the notice of the bench that the assessee had filed writ petition praying for early disposal of appeal for the assessment year 2017-18 by the NFAC before the Hon’ble High Court of Madras and the same has been allowed on 22.01.2025 vide W.P.No.1684 of 2025 by directing the appellate authority to dispose of the appeal within a period of :-3-: ITA. No:337/Chny/2025 four months. Further, the ld.AR drew our attention and stated that the ld.CIT(A) has passed an order on 23.01.2025 without participation of the assessee by confirming the order of AO. Therefore, the ld.AR prayed for setting aside the order of ld.CIT(A) and remand the issue back to the file of AO. 6. Per contra, the ld.DR supported the order of lower authorities. 7. We have heard both the parties, perused materials available on record, and gone through orders of the authorities below. Admittedly, the assessee is engaged in the business of other financial intermediations and had filed return of income for the impugned assessment year 2017-18, which has been accepted as such in the scrutiny assessment completed on 29.11.2019. However, the case was reopened as the assessee’s income has escaped assessment u/s.14A of the Act and passed an order by making disallowance of Rs.71,71,064/- by applying Rule 8D of Income Tax Rules, 1962. The same has been confirmed by the ld.CIT(A) without the participation of the assessee in the appellate proceedings. We note that the ld.AR has submitted that the reopening of assessment carried out by the AO is bad in law as it was done without jurisdiction. Further, we also find that the assessee had filed writ petition and obtained the directions in the order dated 22.01.2025 from the Hon’ble High Court of Madras to dispose of the appeal by the NFAC within four months, provided the petitioner extend co-operation by not seeking any adjournment. However, the ld.CIT(A) has disposed of the appeal on 23.01.2025 without the participation of the assessee in the appellate proceedings by confirming the order of the AO. 8. In light of the foregoing, the impugned order passed by the ld. CIT(A), NFAC is hereby set aside. The matter is remanded to the ld. CIT(A) for de novo :-4-: ITA. No:337/Chny/2025 adjudication, with liberty granted to the assessee to raise, inter alia, the legal issue pertaining to the reopening of the assessment. The ld. CIT(A) is further directed to dispose of the appeal within a period of four months from the date of this order, after affording the assessee a reasonable opportunity of being heard, including the facility of Video Conferencing. The assessee is also directed to submit a written submission along with all relevant supporting documents before the ld. CIT(A) at the earliest opportunity. 9. In the result, the appeal filed by the assessee is allowed for the statistical purposes. Order pronounced in the open court on 28th April, 2025 at Chennai. Sd/- Sd/- (एबी टी वकŎ ) (ABY T VARKEY) Ɋाियक सद˟/Judicial Member (एस. आर. रघुनाथा) (S. R. RAGHUNATHA) लेखासद˟/Accountant Member चेɄई/Chennai, िदनांक/Dated, the 28th April, 2025 sp आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3.आयकर आयुƅ/CIT– Chennai/Coimbatore/Madurai/Salem 4. िवभागीय Ůितिनिध/DR 5. गाडŊ फाईल/GF "