GOKUL,COIMBATORE V. DCIT, NON CORP CIRCLE 4, COIMBATORE, COIMBATORE

ITA 2539/CHNY/2025

AI Insights

The case involves an appeal by the assessee, Gokul, against the order of the Learned Commissioner of Income Tax (Appeal), which confirmed the addition of Rs. 78,29,408 to the assessee's income as unreported interest income. The addition was initially made by the Assessing Officer under sections 147, 144, and 144B of the Income Tax Act, 1961, due to the assessee's non-participation in the assessment proceedings. The Tribunal noted that the notices for the assessment and appellate proceedings were not properly forwarded to the assessee, leading to his non-participation. In the interest of natural justice, the Tribunal decided to remit the matter back to the Assessing Officer for a fresh assessment after providing the assessee an opportunity to be heard.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 792231 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Appeal Filed On: 15-09-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R. ANITHA
• Assessee Lawyers: V. SRINITHI
• Keywords: Set aside; Commercial expediency; Principle of natural justice
• Section: 144

Judgement Text

" आयकर अपील य अ धकरण, ‘सी’ \u000eयायपीठ, चे\u000eनई IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI \u0015ी मनु क ुमार ग\u0019र ,\u000eया\u001aयक सद य एवं \u0015ी एस .आर.रघुनाथा, लेखा सद य क े सम# BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI S.R.RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपीलसं./ITA No.2539/CHNY/2025 \u001aनधा$रण वष$ / Assessment Year: 2017-18 Gokul, 286-B, Telugu Bharamin Street, Coimbatore – 641 001. Tamil Nadu. vs. The Deputy Commissioner of Income Tax, Non-Corp Circle-4, Coimbatore. [PAN: ACHPG-4958-J] (अपीलाथ&/Appellant) ('(यथ&/Respondent) अपीलाथ& क) ओर से/ Appellant by : Ms. V. Srinithi, Advocate for Mr. N.V. Balaji, Advocate '(यथ& क) ओर से /Respondent by : Ms. R. Anitha, Addl. CIT. सुनवाई क) तार ख/Date of Hearing : 18.11.2025 घोषणा क) तार ख /Date of Pronouncement : 01.12.2025 आदेश / O R D E R PER S.R.RAGHUNATHA, AM: This appeal by the assessee is arising out of the order dated 21.07.2025, passed by the Learned Commissioner of Income Tax (Appeal), NFAC, Delhi (in short “ld.CIT(A)”) for the assessment year (A.Y) 2017-18 against the order u/s.147 r.w.s 144 r.w.s 144B of the Income Tax Act, 1961 (hereinafter the ‘Act’) passed by the AO dated 24.03.2022. 2. Brief facts of the case are that the assessee is an individual, engaged in business of trading of camphor and other related items and has filed his return of income on 04.11.2017 for AY 2017-18, declaring total income of Rs.32,33,250/-. The assessee had shown a sum of Rs.6,03,21,730/- and Rs.1,15,67,231/- as outstanding payables on account of OD/CC and unsecured loans and claimed the interest paid on the above referred loans to the tune of Rs.44,79,682/- and Rs.7,68,871/- in his profit and loss account. Further, it is noticed that the assessee shown Rs.6,52,45,068/- as loans and Printed from counselvise.com 2 ITA No.2539/Chny/2025 advances in the asset side of the balance sheet. On perusal of the balance sheet of the assessee, the Assessing Officer found that the assessee had heavily borrowed money from banks as well as private parties at a high rate of interest during the year and earlier years for the purpose of carrying out his business, further he has advanced money to the above parties without charging any interest. Further, the Assessing Officer observed that commercial expediency was not proved in granting interest free advances to the above parties, hence this was a case of diversion of business funds without benefits to the assessee. The case was reopened u/s.147 of the Act, statutory notices were issued to the assessee. The assessee did not participate in assessment proceedings and hence the AO made an addition of Rs.78,29,408/- (12% of the loans and advances given of Rs.6.52 crores) to the total income as interest income not declared and passed an order u/s.147 r.w.s 144 r.w.s 144B of the Act dated 24.03.2022. 3. Aggrieved by the order of the AO, the assessee preferred an appeal before the ld.CIT(A), NFAC, Delhi on 27.09.2022. 4. At the outset, we observed that ld.CIT(A) has provided four opportunities for the assessee to appear for hearings as detailed in paragraph 4.1 of the ld.CIT(A) order to support the appeal of the assessee. However, the assessee chose to be silent and did not respond to any of the notices and hence, the ld. CIT(A) confirmed the order of Assessing Officer with available details by passing an order dated 19.12.2023. 5. The ld.AR submitted that notices were issued during the assessment and appellate proceedings by the AO as well as ld.CIT(A) to the Email ID of the previous auditor, who omitted to forward the same to the assessee. Hence, the appeal was not prosecuted before the ld.CIT(A) even the assessment order was passed exparte u/s.144 of the Act by the AO. Therefore, ld.AR prayed for one more opportunity to be provided to the assessee to represent his case before the AO in the interest of natural justice. Further, the ld.AR assured the bench that he will undertake to represent on behalf of the assessee before the AO, in case one more opportunity is provided. 6. Per contra, the ld.DR submitted that both the Assessing Officer and the ld.CIT(A) provided sufficient opportunity to appear before them. However, the assessee has been negligent in responding to the statutory notices and hence, prayed for confirming the order of the ld.CIT(A). Printed from counselvise.com 3 ITA No.2539/Chny/2025 7. We have heard the rival parties and perused the material available on record and gone through the orders of the lower authorities. We note that the Assessing Officer has passed an exparte order by considering the information available with the department and the same has been dismissed by the ld.CIT(A), NFAC, Delhi due to non-participation of the assessee, both before Assessing Officer as well as the first appellate authority. Since the assessee has failed to participate both before the Assessing Officer as well as the appellate authority, we levy the cost of Rs.5,000/- to be paid to State Legal Aid Authority, Hon’ble High Court of Madras and produce proof of payment of cost to the Registry within 30 days from the date of receipt of this order. 8. In view of the above and to meet the ends of justice we set aside the order of ld.CIT(A) and remit the matter back to the file of AO and direct the AO to de novo frame the assessment order in accordance to law, after providing reasonable opportunity to the assessee. Needless to say, the assessee to be diligent and file written submissions and relevant documents if advised so. 9. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 01st December, 2025 at Chennai. Sd/- Sd/- (मनु क ुमार ग\u0019र) (MANU KUMAR GIRI) \u000eया\u001aयक सद य/Judicial Member (एस. आर. रघुनाथा) (S.R.RAGHUNATHA) लेखा सद य/Accountant Member चे\u000eनई Chennai: -दनांक Dated : 01st December 2025 sp आदेश क\u0006 \u0007\bत ल प अ\u000fे षत/Copy to: 1. अपीलाथ&/Appellant 2. '(यथ&/Respondent 3.आयकर आयु.त/CIT– Chennai/Coimbatore/Madurai/Salem 4. /वभागीय '\u001aत\u001aन ध/DR 5. गाड$ फाईल/GF Printed from counselvise.com "