Shri Ratnesh metal Industries Private Limited, Ahmedabad V. DCIT, Circle-3(1)(2), Ahmedabad

ITA 112/AHD/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8057 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 09-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P D SHAH
• Keywords: Opportunity of being heard; Principle of natural justice

Judgement Text

, LH LHLH LH IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD LOZJH LOZJH LOZJH LOZJH OLHE OLHE OLHE OLHE VGEN VGEN VGEN VGEN] YS[KK LNL; , ] YS[KK LNL; , ] YS[KK LNL; , ] YS[KK LNL; ,OA OAOA OA EK/ EK/EK/ EK/KQFERK KQFERK KQFERK KQFERK JKW; JKW;JKW; JKW;] U; ] U;] U; ] U;KF KFKF KF;D LNL; ;D LNL; ;D LNL; ;D LNL; DS LE{KA DS LE{KA DS LE{KA DS LE{KA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SMT MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NO.112/AHD/2018 ( / ASSESSMENT YEAR : 2014-15) RATNESH METAL INDUSTRIES PVT. LTD. MEHTA LODHA & CO., CHARTERED ACCOUNTANTS, 105, SAKAR I, ASHRAM ROAD, AHMEDABAD 380 009 / VS. DCIT, CIRCLE 3(1)(2), AMBAWADI, AHMEDABAD 380 015 ./ ./ PAN/GIR NO. : AAACR 9219 H ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI P. D. SHAH, A.R. / RESPONDENT BY : SHRI PRASOON KABRA, SR. D.R. / DATE OF HEARING 26/06/2018 !'# / DATE OF PRONOUNCEMENT 28/06/2018 $% / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE APPELLATE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-9, AHMEDABAD [CIT(A) IN SHORT] VIDE APPEAL NO.CIT(A)- 9/11004/DCIT, CIR 3(1)(2)/16-17 DATED 01.12.2017 AR ISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE INCOM E TAX ACT, 1961 (HERE-IN-AFTER REFERRED TO AS 'THE ACT') DATED 23. 12.2016 RELEVANT TO ASSESSMENT YEAR (AY) 2014-15. ITA NO.112/AHD/2018 RATNESH METAL IND. PVT. LTD. DCIT ASST.YEAR 2014-15 - 2 - 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER:- 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX(APP EALS) HAS ERRED IN LAW AND FACTS BY CONFIRMING THE DISALLOWAN CE OF INTEREST OF RS.51,81,558/-, ON ACCOUNT OF PURCHASES OF CAPIT AL ASSET AND THEREFORE THE LEARNED AO SHOULD BE DIRECTED TO ALLO W THE SAID INTEREST WHILE COMPUTING THE TOTAL INCOME. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX ( APPEALS) HAS ERRED IN LAW AND FACTS BY CONFIRMING THE DISALLOWAN CE OF INTEREST OF RS.10,65,860/- ON ACCOUNT INTEREST FREE ADVANCE AND THEREFORE THE LEARNED AO SHOULD BE DIRECTED TO ALLOW THE SAID EXPENSES WHILE COMPUTING THE TOTAL INCOME. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX ( APPEALS) HAS ERRED IN LAW AND FACTS BY CONFIRMING THE DISALLOWAN CE OF RS.74,692/-ON ACCOUNT OF INTEREST ON INTEREST FREE ADVANCE AND THEREFORE THE LEARNED AO SHOULD BE DIRECTED TO ALLO W THE SAID EXPENSES WHILE COMPUTING THE TOTAL INCOME. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX ( APPEALS) HAS ERRED IN LAW AND FACTS BY CONFIRMING THE ADDITION O F RS. 15,00,000/- AND THEREFORE THE LEARNED AO SHOULD BE DIRECTED TO DELETE THE SAID ADDITION WHILE COMPUTING THE TOTAL INCOME. 5. THAT THE APPELLANT CRAVES LIBERTY TO ADD, AME ND, ALTER AND DELETE ANY GROUNDS OF APPEAL BEFORE THE FINAL HEARING. 3. THE LD. AR BEFORE US SUBMITTED AS UNDER : 1. THAT THE LEARNED AO HAS NOT ACCEPTED THE REQ UEST FOR ADJOURNMENT ON 28/11/2017 AND PASSED THE ORDER 1/12 /2017 AND WITHOUT CONSIDERING THE FACTS OF THE CASE AND GROUN D OF APPEAL, THE ID. CIT(A) HAS BEEN DECIDED THE APPEAL AND HAS DISMISSED THE APPEAL OF THE ASSESSEE. NOW THE GROUND WISE SUBMISS ION IS AS UNDER:- 2. GROUND NO.1-3:- [A] GROUND NO. 1: AGAINST THE ADVANCE FOR CAPITAL WORK, RS.96,64,880/- ALREADY CAPITALIZED AND THEREFORE NO FURTHER AMOUNT IS REQUIRED TO DISALLOWED. ITA NO.112/AHD/2018 RATNESH METAL IND. PVT. LTD. DCIT ASST.YEAR 2014-15 - 3 - (B) GROUND NO. 1-3:- WITHOUT PREJUDICE TO ABOVE FACTS, THERE IS AMPLE INTEREST FREE FUND WITH THE COMPANY OF RS.544 5 LACS AS ON 31/3/2013 AND RS.5478 AS ON 31/3/2014, AGAINST THES E ITEMS OF ALLEGED NON BUSINESS OR CAPITAL ADVANCES. THE TOTAL ADVANCES TOWARD PURCHASE OF FIXED ASSETS, DURING THE YEAR FR OM TIME TO TIME IS ABOUT RS.1150 LACS, RS. 140 LACS AS ON 31/3 /2014 AS INTEREST FREE LOANS AND ADVANCES AND RS.9. 85 LACS NON BUSINESS ADVANCES AS ON 31/3/2014.IN THIS REGARD RELIANCE IS PLACED ON THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN T HE CASE OF C1T VS RAGHUVIR SYNTHETICS PVT LTD.(354 1TR 222)(GU J). (C) THE LD.AO HAS NOT ESTABLISHED THAT BORROWED MON EY HAS BEEN USED FOR THE NON BUSINESS PURPOSE. (D) IN VIEW OF THE SAID THE DISALLOWANCE OF INTERES T OF RS.51,18,558+ RS.10,65,860/- AND RS.74,692/- IS BAD IN LAW AND AGAINST THE FACTS AND THEREFORE THE LD.AO IS TO BE DIRECTED TO NOT TO DISALLOW ANY PART OF INTEREST EXPENSES. 3. GROUND NO.4:-THE CONFIRMATION OF THE UNSECURED LOAN (PAN AADCR 8444 F] OF THE SAID PARTY HAS BEEN RECEIVED A ND SAME MAY SENT TO AO FOR THE VERIFICATION. YOUR HONOR IS REQUESTED TO CONSIDER THE ABOVE SUBMI SSION WHILE DECIDING THE APPEAL AND OBLIGE. ON THE OTHER HAND THE LD. DR OPPOSED RESTORING THE MATTER TO THE FILE OF AO FOR FRESH ADJUDICATION. 4. HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATE RIALS AVAILABLE ON RECORD. FROM THE PRECEDING DISCUSSION, WE NOTE THAT THE LAST DATE OF HEARING OF THE APPEAL WAS FIXED ON 28.11.2016, BUT ASSESSEE FILED THE ADJOURNMENT APPLICATION. HOWEVER, THE LD. CIT(A) PA SSED EX PARTE ORDER ITA NO.112/AHD/2018 RATNESH METAL IND. PVT. LTD. DCIT ASST.YEAR 2014-15 - 4 - DATED 1.12.2017 BY OBSERVING THAT IT WAS THE LAST O PPORTUNITY FOR A HEARING PROVIDED TO THE ASSESSEE. ON PERUSAL OF APPELLATE ORDER, WE FIND THAT LD. CIT (A) AFFIRMED THE ACTION OF ASSESSING OFFICER ON EX PARTE ORDER. THE PROVISIONS OF SECTION 250(6) OF THE ACT REQUIRE THE COMMISSIONER (APPEAL) TO DISPOSE OF THE APPEAL IN WRITING WITH REASONING. BUT WE FIND FROM THE IMPUGNED ORDER OF LD. CIT(A) WHO CONFIRMED THE ORDER OF AO WITHOUT DE CIDING THE SAME ON MERIT. WE ALSO NOTE THAT THE LD. CIT (A) HAS NOT ALLOWED THE PROPER OPPORTUNITY OF BEING HEARD. THE PRINCIPLE OF AUDI ALTERAM PARTEM IS THE BASIC CONCEPT OF NATURAL JUSTICE. THE EXPRESSION AUDI ALTERAM PARTEM IMPLIES THAT A PERSON MUST BE GIVEN AN OPPORTUNITY TO DEFEND HIMSELF. THIS PRINCIPLE IS THE SINE QUA NON OF EVERY CIVILIZED SOCIETY. THE RIGHT TO NOTICE, RIGHT TO PRESENT CASE AND EVIDENCE, RIGHT T O REBUT ADVERSE EVIDENCE, RIGHT TO CROSS-EXAMINATION, RIGHT TO LEGA L REPRESENTATION, THE DISCLOSURE OF EVIDENCE TO THE PARTY, REPORT OF INQU IRY TO BE SHOWN TO THE OTHER PARTY AND REASONED DECISIONS OR SPEAKING ORDE RS. WE TOOK THIS GUIDANCE FOR THE RIGHT OF HEARING, FROM THE RATIO A S IS LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF MANEKA GANDHI V. UNION OF INDIA IN 1978 SCR (2) 621 , WHEREIN HON'BLE SUPREME COURT HAS LAID DOWN THAT RULE OF FAIR HEARING IS NECESSARY BEFORE PASSING AN Y ORDER. WE FIND THAT IT IS PRE-DECISION HEARING STANDARD OF THE NORM OF THE RULE OF AUDI ALTERAM PARTEM. WE FIND THAT IN THIS INSTANT CASE, THE ASSESSEE WAS NOT GIVEN A PROPER HEARING. THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSEE MUST BE GIVEN ONE MORE OPPORTUNITY OF HEARING AND TO REPRES ENT HIS CASE. ITA NO.112/AHD/2018 RATNESH METAL IND. PVT. LTD. DCIT ASST.YEAR 2014-15 - 5 - WE ALSO NOTE THAT THE ASSESSEE CLAIMED NOT TO HAVE FILED THE COPY OF CONFIRMATION IN RESPECT OF THE LOAN OBTAINED DURING THE YEAR BEFORE THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS. THEREFORE, IN EXERCISE OF THE POWER CONFERRED UNDER RULE 28 OF TRIBUNAL RULES, WE RESTORE THIS APPEAL TO THE FILE OF AO FOR RECONSIDERATION ALL GROUNDS OF APPEAL AFTER ALLOWING THE PROPER OPPORTU NITY OF BEING HEARD BY LAW. WE ARE SENDING THIS APPEAL TO THE AO FOR FRESH ADJUDICATION TO AVOID THE MULTIPLICITY OF THE APPEAL. NEVERTHELESS, TO ME NTION THAT THE ASSESSEE WILL COOPERATE IN THE APPEAL PROCEEDINGS AND HIS FA ILURE WILL ENTAIL CONFIRMATION OF THE IMPUGNED ADDITION MADE BY THE A O. THE ASSESSEE WILL FILE NECESSARY EVIDENCE ON WHICH HE WANTS TO R ELY UPON AT THE TIME OF THE HEARING. HENCE, THIS GROUND OF ASSESSEES APPEA L STANDS ALLOWED FOR STATISTICAL PURPOSE. 5. IN THE RESULT, FOR STATISTICAL PURPOSE, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 28/06/2018 SD/- SD/- E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LN L; L; L; L; (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 28/06/2018 PRITI YADAV, SR.PS ITA NO.112/AHD/2018 RATNESH METAL IND. PVT. LTD. DCIT ASST.YEAR 2014-15 - 6 - !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A)-9, AHMEDABAD. 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD 6. .34 5 / GUARD FILE. % & / BY ORDER, , / //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION 27/06/2018 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 27/06/2018. 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S .. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER