Arumugam Murukiah, CHENNAI V. ACIT, CHENNAI

ITA 1733/CHNY/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2647 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 11-01-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 29-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A B KOLI IRS
• Assessee Lawyers: V S JAYAKUMAR
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . ! , '!# BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO.1733/MDS/2015 ' $ %$ / ASSESSMENT YEAR : 2007-2008 SHRI. ARUMUGAM MURUKIAH, PROP: BROADLINE COMPUTER SYSTEMS, 5-B2, JP TOWER, NUNGAMBAKKAM HIGH ROAD, CHENNAI 600 034. [PAN AAJPM 4893N] ( / APPELLANT) VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE XV, CHENNAI. ( /RESPONDENT) &' ( ) / APPELLANT BY : SHRI. V.S. JAYAKUMAR, ADV *+&' ( ) /RESPONDENT BY : SHRI. A.B. KOLI, IRS, JCIT. ( , / DATE OF HEARING : 11-01-2016 -.% ( , / DATE OF PRONOUNCEMENT : 14-01-2016 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-4, CHENNA I IN ITA ITA NO.1733/MDS/2015. :- 2 -: NO.206/2013-14, DATED 30.03.2015 FOR THE ASSESSMENT YEAR 2007- 2008 PASSED U/S.143(3) R.W.S 147 AND 250 OF THE INC OME TAX ACT, 1961. 2. THE ASSESSEE HAS FILED APPEAL ON THE GROUNDS OF R EOPENING OF ASSESSMENT, AND INTEREST DISALLOWANCE AND ALSO N O OPPORTUNITY OF HEARING. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND IN THE BUSINESS OF COMPUTER SALES, S ERVICING AND CONSULTANCY AND FILED RETURN OF INCOME ON 31.10.20 07 ADMITTING TOTAL INCOME OF :1,23,77,940/- AND THE RETURN WAS PROCES SED U/S.143(1) OF THE ACT AND THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT ORDER DATED 21.12.2 009. THE ASSESSING OFFICER SUBSEQUENTLY ISSUED NOTICE U/S.14 8 OF THE ACT ON 31.03.2012. IN RESPONSE TO NOTICE OF SEC.148 THE AS SESSEE FILED LETTER DATED 04.08.2012 STATING THE ORIGINAL RETURN FILED MAY BE TREATED AS RETURN FILED IN RESPONSE TO THE NOTICE. 4. IN THE ASSESSMENT PROCEEDINGS, ON PERUSAL OF THE BA LANCE SHEET THE ASSESSING OFFICER FOUND :1,43,67,129/- A LOANS AND ADVANCE AND INTEREST OF :3,93,752/- WAS DEBITED IN THE PROF IT AND LOSS ACCOUNT. ITA NO.1733/MDS/2015. :- 3 -: THE ASSESSING OFFICER BELIEVED THAT THE ASSESSEE HA S NOT OFFERED ANY INTEREST INCOME ON SUCH ADVANCE. A SHOW CAUSE NOT ICE WAS ISSUED TO THE ASSESSEE AND IN RESPONSE TO SHOW CAUSE NOTICE T HE ASSESSEE REPLIED THAT THE LOAN AND ADVANCE MENTIONED IN THE BALANCE SHEET COMPRISES OF ADVANCE TAX, TDS DEDUCTED, INVESTMENT IN SISTER CONCERN ADVANCE FOR PURCHASE AND STAFF ADVANC. ON THE BASI S OF THE SUBMISSION OF THE ASSESSEE THE ASSESSING OFFICER RE LIED ON THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF K. SAMASUNDARAM BROTHERS VS. CIT 238 ITR 939 UNDER THE PRESUMPTION THAT THE ASSESSEE HAD TO FIRST UTILIZE THE FUND FOR REPAYMENT OF LOAN AND BA LANCE OF EXCESS FUNDS SHOULD BE GIVEN FOR INTEREST FREE LOAN. WITH THIS FINDING, THE LD.AO DISALLOWED INTEREST AMOUNT OF :3,93,752/- AND PASSE D ORDER 143(3) R.W.S 147 OF THE ACT DATED 21.03.2013. AGGRIEVED B Y THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE FILED AN APPEAL BEF ORE THE COMMISSIONER OF INCOME TAX (APPEALS). 5. IN APPELLATE PROCEEDINGS, THE LD. AUTHORISED REPRES ENTATIVE EXPLAINED THE CIRCUMSTANCES AND BIFURCATION OF LO ANS AND ADVANCE PROVIDED AND INTEREST COMPONENT CONSISTS OF INTERES T ON BUILDING LOAN AND VEHICLE LOAN BUT THE ASSESSING OFFICER HAS FINA LIZED REASSESSMENT ORDER BY MAKING DISALLOWANCE ON THE SUSPICION AND S URMISES THAT THE ITA NO.1733/MDS/2015. :- 4 -: ASSESSEE HAS GIVEN INTEREST FREE LOANS TO HIS SISTE R CONCERN. AT THE TIME OF HEARING, THE LD. COMMISSIONER OF INCOME TA X (APPEALS) FOUND THAT INSPITE OF SENDING NOTICES NONE APPEARED ON TH E DATE OF HEARING NEITHER ANY MATERIAL WAS FILED TO SUPPORT THE GROUN DS NOR WRITTEN SUBMISSION WERE FILED. THEREFORE, ON THE GROUND OF NON APPEARANCE AT THE TIME OF HEARING TOOK ADVERSE OPINION THAT THE ASSESSEE IS HAVING CALLOUS AND INDIFFERENT ATTITUDE AND NOT INTERESTE D IN PROSECUTING THE APPEAL AND RELIED ON THE DECISION OF APEX COURT IN THE CASE OF CIT VS. B.N. BHATTACHARJEE AND ANOTHER 118 ITR 461 AND OTHER JUDICIAL HIGH COURTS DECISION FOR NON PROSECUTION OF THE APPEAL. THE LD.CIT(A) IS OF THE OPINION THAT THE ASSESSING OFFICER HAS DEALT T HE ISSUE IN DETAIL WITH THE AVAILABLE MATERIAL AND UPHELD THE ORDER OF THE ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOM E TAX (APPEALS), THE ASSESSEE ASSAILED AN APPEAL BEFORE THE TRIBUNAL . 6. BEFORE THE TRIBUNAL, THE LD.AR ARGUED GROUNDS AND REITERATED HIS SUBMISSIONS MADE BEFORE THE LOWER AU THORITIES. THE COMMISSIONER OF INCOME TAX (APPEALS) WITHOUT GOING INTO THE MERITS OF THE CASE AND MATERIAL ON RECORD FILED BEFORE TH E ASSESSING OFFICER OVERLOOKED THE SUBMISSIONS BY THE ASSESSEE AND NOT PROVIDED ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE BE FORE PASSING THE ITA NO.1733/MDS/2015. :- 5 -: ORDER AND GAVE A CATEGORICAL FINDING THAT THE ASSES SEE HAS NOT ATTENDED APPELLATE PROCEEDINGS. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT AN ADJOURNMENT PETITION WAS FILED AN D ANOTHER LETTER DATED 05.06.2015 WAS FILED IN THE APPELLATE PROCEED INGS BUT INSPITE OF SUBMISSIONS ON RECORD, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS DISMISSED THE APPEAL FOR NON-APPEARANCE AND PL EADED FOR ALLOWING THE APPEAL ON MERITS. 7. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE RE LIED ON THE FINDINGS OF THE LOWER AUTHORITIES AND VEHEMENTL Y OBJECTED TO THE SUBMISSIONS. 8. WE AFTER HEARING THE RIVAL SUBMISSIONS OF BOTH THE PARTIES, PERUSED THE MATERIAL ON RECORD AND ALSO JUDICIAL DE CISIONS CITED THE ASSESSEE IN THE ASSESSMENT PROCEEDINGS U/S.143(3) R .W.S 147 OF THE ACT HAS FILED MATERIAL INFORMATION WHICH THE ASSESS ING OFFICER HAS OVERLOOKED THE VITAL DOCUMENTS FURTHER THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) AND ALSO FILED SUBMISSION 05.06.2015, WHICH LD. COMMISSIONER OF IN COME TAX (APPEALS) HAS IGNORED. THEREFORE, WE ARE OF THE OP INION THAT ONE MORE OPPORTUNITY BE GIVEN ON THE PRINCIPLES OF NATU RAL JUSTICE AS THE ITA NO.1733/MDS/2015. :- 6 -: COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ORDER OF THE ASSESSING OFFICER WITHOUT GOING INTO THE MERITS OF THE CASE. CONSIDERING THE FACTS AND CIRCUMSTANCES, WE SET ASI DE THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND REMIT THE DISPUTED ISSUE BACK TO THE FILE OF THE COMMISSIONER OF INCOME TAX (APPEALS) FOR HEARING AND THE LD.CIT(A) SHOULD PROVIDE ADEQUATE OPPORTUNITY OF BEING TO THE ASSESSEE AND DISPOSE OFF THE APPEAL O N MERITS. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.1733/MDS/2015 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THURSDAY THE 14TH DAY OF JANU ARY, 2016, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ! ) (G. PAVAN KUMAR) /JUDICIAL MEMBER / CHENNAI / / DATED:14.01.2016. KV 0 ( *',23 43%, / COPY TO: 1 . &' / APPELLANT 4. 5, / CIT 2. *+&' / RESPONDENT 5. 367 *',' / DR 3. 5, () / CIT(A) 6. 7:$ ; / GF ITA NO.1733/MDS/2015. :- 7 -: 0 ( *',23 43%, / COPY TO: 1 . &' / APPELLANT 3. 5, () / CIT(A) 5. 367 *',' / DR 2. *+&' / RESPONDENT 4. 5, / CIT 6. 7:$ ; / GF