Sri Kishan Jewellwers , Hyderabad V. Income Tax Officer, Ward-5(3), Hyderabad

ITA 1249/Hyd/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7034 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Assessment Year: 2016-2017
• Appeal Filed On: 09-08-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJEEV BENJWAL
• Section: 143(3); 143(1); 20

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B - SMC, HYDERABAD BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.12 49 /HYD/2019 ASSESSMENT YEAR: 2016 - 17 SRI KISHAN JEWELLERS, HYDERABAD. PAN: AAJFS 7127 H VS. INCOME TAX OFFICER, WARD - 5 (3), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI K.A. SAI PRASAD, CA REVENUE BY: SRI RAJEEV BENJWAL, DR DATE OF HEARING: 15/10/2019 DATE OF PRONOUNCEMENT: 15 /10/2019 ORDER THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) - 4 , HYDERABAD IN APPEAL NO. 4/ 10 366/18 - 19 / W - 5(3), HYD/CIT(A) - 4 / HYD/ 19 - 20 , DATED 2 7 /0 6 /2019 PASSED U/S. 143(3) & U/S. 250(6) OF THE ACT FOR THE A.Y. 2016 - 17. 2. THE ASSESSEE HAS RAISED FOUR GROUNDS IN ITS APPEAL HOWEVER, THE CRUXES OF THE ISSUES ARE: - (I) THE LD. CIT(A) HAS ERRED IN UPHOLDING THE DISALLOWANCE OF RS. 3,15,547/ - MADE BY THE LD A.O. ON ACCOUNT OF INTEREST PAID ON UNSECURED LOANS. 2 (II) THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 13,11,086/ - MADE BY THE LD A.O. ON ACC OUNT OF INTEREST AND REMUNERATION TO PARTNER S. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF TRADING IN GOLD AND JEWELLERY FILED ITS RETUR N OF INCOME FOR THE A.Y. 2016 - 17 ON 15/10/2016 DECLARING TOTAL INCOME OF RS. 9,37,960/ - . INITIALLY, THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT AND THEREAFTER , THE CASE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY NOTICES WERE SERVED ON THE ASSESSEE. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, ON VERIFICATION OF THE FINANCIALS OF THE ASSESSEE, THE LD. A.O. OBSERVED THAT DURING THE RELEVANT PREVIOUS YEAR THE ASSESSEE HAD ADVANCED AN AGGREGAT E AMOUNT OF RS. 65,20,468/ - TO VARIOUS PARTIES AND FURTHER THE ASSESSEE HAD PAID HUGE AMOUNT OF INTEREST VIZ., RS. 23,39,654/ - TOWARDS UNSECURED LOANS . FURTHER, THE LD. A.O. OBSERVED THAT THE ASSESSEE HAD PAID REMUNERATION AND INTEREST TO PARTNERS AMOUNTIN G TO RS. 13,11,086/ - AND INCURRED EXPENDITURE TOWARDS GENERAL EXPENSES OF RS. 1,39,583/ - . ON QUERY, THE ASSESSEE DID NOT PROVIDE SATISFACTORY EXPLANATION TO JUSTIFY ITS CLAIM. THEREFORE, THE LD. AO MADE THE FOLLOWING ADDITIONS / DISALLOWANCES : 1. PROPOR TIONATE INTEREST EXP. ATTRIBUTABLE TO INTEREST FREE ADVANCES RS. 3,15,547 2. DISALLOWANCE OF REMUNERATION AND INTEREST PAID TO PARTNERS RS. 13,11,086 3. DISALLOWANCE OF GENERAL EXPENSES @ 15% RS. 1,39,583 3 TOTAL RS. 17,66,216 4. AGGRIEVED BY THE ORDER OF THE LD. AO , THE ASSESSEE CARRIED THE MATTER ON APPEAL BEFORE THE LD. CIT(A). HOWEVER, B EFORE THE LD. CIT(A), NONE APPEARED ON BEHALF OF THE ASSESSEE TO REPRESENT ITS CASE AND THEREFORE, T HE LD. CIT(A) DISMISSED THE APPEAL BY PASSING AN EX - PARTE ORDER . AGGRIEVED BY THE ORDER OF THE LD. CIT(A), ASSESSEE IS NOW ON APPEAL BEFORE THE TRIBUNAL. 5. AT THE OUTSET, THE LD. AR SUBMITTED BEFORE ME THAT ONE MORE OPPORTUNITY MAY BE PROVIDED TO THE ASSESSEE TO PRESENT ITS CASE BEFORE THE LD. CIT (A) BECAUSE ON THE EARLIER OCCASION DUE TO UNAVOIDABLE CIRCUMSTANCES THE LD. AR COULD NOT APPEAR BEFORE THE LD. CIT (A) ON THE DATE OF HEARING. THE LD. DR ST RONGLY OPPOSED TO THE SUBMISSION OF THE LD. AR. 6. AFTER HEARING THE APPEAL, THOUGH I DO NOT FIND MUCH STRENGTH IN THE ARGUMENTS ADVANCED BY THE LD. AR HOWEVER, IN THE INTEREST OF JUSTICE, TO PROVIDE ONE MORE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD BEF ORE THE LD. CIT (A), I HEREBY REMIT THE MATTER BACK TO THE FILE OF THE LD. CIT (A) FOR DE NOVO CONSIDERATION AND TO PASS APPROPRIATE ORDER IN ACCORDANCE WITH MERIT AND LAW AFTER PROVIDING AN OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. THE ASSESSEE IS ALSO HEREBY DIRECTED TO APPEAR BEFORE THE LD. CIT(A) PROMPTLY AND CO - OPERATE IN THE PROCEEDINGS IN 4 ORDER TO EXPEDITE THE DISPOSAL OF THE APPEAL , FAILING WHICH THE LD. CIT (A) SHALL BE AT LIBERTY TO PASS APPROPRIATE ORDER IN ACCORDANCE WITH MERIT AND LAW BASED ON THE MATERIALS ON RECORD. IT IS ORDERED ACCORDINGLY. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AS INDICATED HEREINABOVE. PRONOUNCED IN THE OPEN COURT ON 15 TH OCTOBER, 2019. SD/ - ( A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER HYDERABAD, DATED: 15 TH OCTOBER , 2019 OKK COPY TO: - 1) SRI KISHAN JEWELLERS, C/O. KATRAPATI & ASSOCIATES, 1 - 1 - 298/2/B/3, 1 ST FLOOR, ASHOK NAGAR, HYDERABAD - 020. 2) INCOME TAX OFFICER, WARD - 5 (3), HYDERABAD. 3) THE CIT(A) - 4 , HYDERABAD 4) THE PR. CIT - 4 , HYDERABAD 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE