M/s Rajeet Sahu , Rajasthan V. The Deputy Commissioner of Income Tax Circle-2(1), Bangalore

ITA 1166/BANG/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1075 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 25-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Condonation of delay
• Section: 14A; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 1 166 / BANG/201 7 ASSESSMENT YEAR : 2 0 11 - 12 SHRI RANJEET SAHU, C/O. M/S. HOTEL RAJ MAHAL, JODHPUR ROAD, BEAWAR 305 901. RAJASTHAN. PAN: BRHPS7254P VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE 3 (2) (1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SMT. SUMAN LUNKAR, CA RESPONDENT BY : SHRI R.N. SIDDAPPAJI, ADDL. CIT (DR) DATE OF HEARING : 04 .0 3 .2019 DATE OF PRONOUNCEMENT : 15 .0 3 .2019 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AND THE SAME IS DIRECTED AGAINST THE ORDER OFLD. CIT(A)-3, BANGALORE DATED 28.02.2017FOR ASSESSMENT YEAR 2011-12. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE LEARNED ASSESSING OFFICER HAS ERRED IN PASSING THE ORDER IN THE MANNER PASSED BY HIM AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN NOT QUASHING THE ORDER AND INSTEAD ERRED IN DISMISSING THE APPEAL. 2.1 THE LEARNED ASSESSING OFFICER HAS ERRED IN DISALLOWING THE CLAIM OF DEDUCTION OF INTEREST ON ERRONEOUS APPRECIATION OF FACTS. 2.2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAVING CORRECTLY APPRECIATED THE FACTS HAS ERRED IN HOLDING THAT THE APPEAL IS NOT MAINTAINABLE FOR THE REASON THAT ON THE SAME ASPECT APPLICATION UNDER SECTION 154 OF THE I.T. ACT, WAS PENDING BEFORE THE ASSESSING OFFICER AND IN CONSEQUENTLY DISMISSING THE APPEAL. THE ACTION AND CONCLUSION OF COMMISSIONER OF INCOME TAX (APPEALS) BEING WHOLLY ITA NO.1166/BANG/2017 PAGE 2 OF 4 ERRONEOUS AND BAD IN LAW ARE TO BE QUASHED. 2.3 AFTER HAVING APPRECIATING THE FACTS OF THE APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) SHOULD HAVE ADJUDICATED THE ISSUE AND DECIDED THE MATTER INSTEAD OF DISMISSING THE APPEAL AS NOT MAINTAINABLE. 3. THE DEDUCTION OF INTEREST CLAIMED BY APPELLANT BEING CORRECT SHOULD HAVE BEEN ALLOWED AS SUCH AND THE DISALLOWANCE OF INTEREST AS MADE BEING ERRONEOUS BOTH ON FACTS AND IN LAW IS TO BE DELETED. 4. IN VIEW OF THE ABOVE AND ON OTHER GROUNDS TO BE ADDUCED AT THE TIME OF HEARING, IT IS REQUESTED THAT THE IMPUGNED ORDERS OF THE ASSESSING OFFICER AND THE COMMISSIONER OFF INCOME-TAX (APPEALS) BE QUASHED OR AT LEAST THE DISALLOWANCE OF INTEREST AS MADE BY THE ASSESSING OFFICER BE DELETED. 3. THIS APPEAL IS FILED LATE BY THE ASSESSEE BEFORE THE TRIBUNAL AND THE DELAY IS OF ONE DAY. THE ASSESSEE HAS MOVED AN APPLICATION FOR CONDONATION OF DELAY AND IN THE SAME, IT HAS BEEN STATED BY THE ASSESSEE THAT ASSESSEE HAS PERMANENTLY SHIFTED TO BEAWAR AND IS PRESENTLY STAYING THERE ONLY. IT IS FURTHER SUBMITTED THAT BECAUSE OF THIS, THE APPEAL PAPERS DRAFTED BY THE COUNSEL WERE SENT TO THE ASSESSEE BY COURIER FOR HIS SIGNATURE AND THE SIGNED APPEAL WAS RECEIVED BY THE COUNSEL THROUGH COURIER ON 25.05.2017. THE APPEAL WAS FILED ON THE SAME DATE BEFORE THE TRIBUNAL BUT THE LAST DATE BEFORE THE TRIBUNAL WAS 24.05.2017 AND THIS DELAY OF ONE DAY IS CAUSED BECAUSE OF THESE REASONS. CONSIDERING THESE REASONS, WE CONDONE THIS ONE DAY DELAY BECAUSE THE ASSESSEE HAS FILED AN AFFIDAVIT ALSO IN SUPPORT OF HIS CONTENTIONS. 4. IT IS SUBMITTED BY LD. AR OF ASSESSEE THAT GROUND NOS. 1 AND 4 ARE GENERAL. HE ALSO SUBMITTED THAT THERE IS ONLY ONE ISSUE ON MERIT WHICH IS TO BE DECIDED AS TO WHETHER THE DISALLOWANCE MADE BY AO OF RS. 1,49,929/- IN RESPECT OF ASSESSEES CLAIM FOR INTEREST EXPENDITURE IS JUSTIFIED OR NOT. HE POINTED OUT THAT AS PER THE ASSESSMENT ORDER, THE AO HAS MADE DISALLOWANCE OF INTEREST EXPENDITURE FOR THIS REASON THAT AS PER THE FINDING OF THE AO, THE ASSESSEE DID NOT RECEIVE ANY INCOME BY WAY OF INTEREST FROM THIS PARTY I.E. M/S. KRN ALLOYS (P) LTD. TO WHOM THE LOAN WAS ADVANCED OUT ITA NO.1166/BANG/2017 PAGE 3 OF 4 OF THE FUNDS BORROWED ON WHICH INTEREST PAYMENT IS MADE. HE SUBMITTED THAT AS PER PARA NO. 5.1 OF THE ORDER OF CIT(A), THIS FINDING IS GIVEN BY CIT(A) THAT THE AOS CONTENTIONS THAT THE ASSESSEE HAS NOT RECEIVED ANY INTEREST FROM M/S. KRN ALLOYSPVT LTD. IS NOT FOUND TO BE FACTUALLY CORRECT. BUT IN SPITE OF GIVING THIS FACTUAL FINDING, HE DID NOT DECIDE THE ISSUE FOR THIS REASON THAT AN APPLICATION MADE BY THE ASSESSEE BEFORE THE AO FOR RECTIFICATION U/S. 154 WAS PENDING AT THAT POINT OF TIME. HE SUBMITTED THAT THE COPY OF THE ORDER PASSED BY THE AO U/S. 154 ON 21.05.2017 IS AVAILABLE ON PAGE NO. 25 OF THE PAPER BOOK AND HE SUBMITTED THAT AS PER THIS ORDER, THE AO HELD THAT THERE IS NO ARITHMETICAL MISTAKE OR ERROR APPARENT FROM THE RECORDS. HE SUBMITTED THAT SINCE A CATEGORICAL FINDING IS GIVEN BY CIT(A) IN HIS IMPUGNED ORDER THAT THIS CONTENTION OF AO IS NOT FACTUALLY CORRECT THAT THE ASSESSEE HAS NOT RECEIVED ANY INTEREST FROM M/S. KRN ALLOYS PVT. LTD., THE ISSUE IN DISPUTE SHOULD BE DECIDED IN FAVOUR OF THE ASSESSEE. THE LD. DR OF REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. HE ALSO SUBMITTED THAT LOAN IN QUESTION BORROWED BY THE ASSESSEE ON WHICH INTEREST PAYMENT IS BEING CLAIMED BY THE ASSESSEE WAS DIRECTLY GIVEN BY THE CREDITORS TO THIS COMPANY M/S. KRN ALLOYS PVT. LTD. AND SINCE THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH DIRECT NEXUS BETWEEN THE INTEREST INCOME FROM M/S. KRN ALLOYS PVT. LTD. AND BORROWED FUNDS, INTEREST SHOULD NOT BE ALLOWED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT AS PER PARA 5.1 OF HIS ORDER, LD. CIT(A) HAS GIVEN A CATEGORICAL FINDING THAT THE CONTENTIONS OF THE AO THAT THE ASSESSEE HAS NOT RECEIVED ANY INTEREST FROM M/S. KRN ALLOYS PVT. LTD. IS NOT FOUND TO BE FACTUALLY CORRECT. THERE IS NO APPEAL FILED BY REVENUE AGAINST THIS CATEGORICAL FINDING OF CIT(A) AND HENCE, THIS FINDING OF CIT(A) HAS ATTAINED FINALITY BECAUSE BEFORE US ALSO, NO EVIDENCE IS BROUGHT ON RECORD TO SHOW THAT THIS FINDING OF CIT (A) IS INCORRECT. WE ALSO FIND THAT ONLY REASONING GIVEN BY THE AO IN THE ASSESSMENT ORDER FOR MAKING THIS DISALLOWANCE IS THIS THAT INTEREST IS PAID ON THE BORROWED FUNDS ADVANCED TO M/S. KRN ALLOYS PVT LTD. FROM WHICH THE ASSESSEE DID NOT RECEIVE ANY INCOME BY WAY OF INTEREST. AS PER THE AO, THE DEDUCTION CLAIMED OF THE SAID INTEREST PAID ON BORROWED FUNDS USED FOR INVESTMENT IS ITA NO.1166/BANG/2017 PAGE 4 OF 4 NOT ALLOWABLE U/S. 14A OF IT ACT. THE REASONING GIVEN BY THE AO DOES NOT SURVIVE IN VIEW OF THIS CATEGORICAL FINDING OF CIT(A) WHICH HAS ATTAINED FINALITY THAT THE ASSESSEE HAS RECEIVED INTEREST FROM THIS COMPANY M/S. KRN ALLOYS PVT LTD. HENCE WE DELETE THIS DISALLOWANCE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- (PAVAN KUMAR GADALE) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 15 TH MARCH, 2019. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.