Rajeshkumar Raisingbhai Rajgor, Mehsana V. The ITO, Ward-2 Now Ward -1, Mehsana

ITA 204/AHD/2023

• Counselvise Citation: [2023] 101 COUNSELVISE.COM (IT) 9460 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-10-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 30-03-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 250; 143(2)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH Before: Ms. Suchitra Kamble, Judicial Member Rajeshkumar Raisingbhai, Prop. Of R.R. Petroleum, B/H, GEB Office Mehsana-3842002 PAN: AIKPR8155P (Appellant) Vs The Income Tax Officer, Ward-2, Now Ward-1 Mehsana, (Respondent) Assessee by: Shri S.N. Divatia, A.R. Shri Samir Vora, A.R. Revenue by: Ms. Saumya Pandey Jain, Sr. D.R. Date of hearing : 19-10-2023 Date of pronouncement : 20-12-2023 आदेश/ORDER This is an appeal filed against the order dated 31-01- 2023 passed by National Appeal Centre (NFAC), Delhi for assessment year 2017-18. ITA No. 204/Ahd/2023 Assessment Year 2017-18 I.T.A No. 204/Ahd/2023 A.Y. 2017-18 Page No. Rajeshkumar Raisingbhai Rajgor vs. ITO 2 2. The grounds of appeal are as under:- “1.1 The order passed u/s 250 on 31.01.2023 for A.Y.2017-18 by NFAC(CIT(A) Delhi upholding the disallowance of interest expenses of Rs. 2,08,113/-as non-business purposes is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. NFAC(CIT(A) has grievously erred in law and or on facts in not appreciating that the appellant was not allowed sufficient opportunity before upholding the impugned disallowance. The ld. NFAC(CIT(A) has failed to appreciate that the alleged notices claimed to be issued as per para-5 of the impugned order pertain to the Covid 19 Corona period when even Hon'ble Supreme Court had suo moto directed to exclude this period from 20.02.2020 to February 2022 and as regards the remaining notices, there was sufficient cause. Thus, there was gross violation of the principles of natural justice. 2.1 The Ld. NFAC. (CIT(A) has grievously erred in law and on facts in confirming the disallowance of interest expenses of Rs.2,08,113/- as non- business purposes. 2.2 That in the facts and circumstances of the case as well as in law, the Ld. NFAC CIT(A) ought not to have upheld the disallowance of interest expenses of Rs. 2,08,113/- as non-business purposes. 2.3 The Ld. NFAC.(CIT(A) has grievously erred in law and on facts in ignoring the submissions dated 24.03.2022 submitted by the appellant. It is, therefore, prayed that the disallowance of interest expenses of Rs.2,08,113/-upheld by the CIT(A) may kindly be deleted.” 3. The assessee filed return of income on 26-10-2017 declaring total income at Rs. 10,20,840/-. The case was selected for scrutiny and accordingly notice u/s. 143(2) of the Act was issued on 24-09-2018 and duly served upon the assessee. The assessee furnished the details as called before I.T.A No. 204/Ahd/2023 A.Y. 2017-18 Page No. Rajeshkumar Raisingbhai Rajgor vs. ITO 3 the Assessing Officer. The assessee is a proprietor of R.R. Petroleum during the year under consideration. The Assessing Officer observed that the assessee has given interest free advances to various persons and therefore show cause notice was issued as relates to why these 12% interest has not been charged on this amount since assessee made interest expenses for the year under consideration. The assessee filed its reply and after taking cognizance of the same, the Assessing Officer made addition of Rs. 2,08,130/- on account of interest not charges. The Assessing Officer also made disallowance on travelling expenses to the extent of Rs. 45,954/- and disallowance of petroleum expenses to the extent of Rs. 47,563/-. 4. Being aggrieved by the assessment order, the assessee filed before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The ld. A.R. submitted that the assessee has made interest expenses in respect of business purpose only as the interest free advances was given as the assessee is having interest free advances at its disposal during the relevant assessment year revenue loss. The ld. A.R. further submitted that during the year, the assessee has incurred rent expenses of Rs. 12 lakhs which is paid to six co-owners of land where I.T.A No. 204/Ahd/2023 A.Y. 2017-18 Page No. Rajeshkumar Raisingbhai Rajgor vs. ITO 4 petro pump is situated. As the co-owners are relatives of the assessee, no rent agreement was entered into which should have been considered as the assessee has given ledger account and confirmation from the parties before the revenue authorities. The ld. A.R. further submitted that the travelling expenses and the petroleum expenses was also justified through ledger account and the same was not taken into account. 6. The ld. D.R. submitted that the assessee has not placed evidence before the CIT(A) and the confirmation is also not genuine as regards the interest free advances. The ld. D.R. relied upon the assessment order and the order of the CIT(A). 7. Heard both parties and perused all the relevant materials available on record. As regards to ground no. 2.1 and 2.2, from the perusal of records, the assessee has given the details of loans and advances and the same was not taken into account either by the Assessing Officer as well as by the CIT(A). The CIT(A) has ignored the fact that this interest free advances was given for the business purposes only and it is related to the usual business of the assessee. The same was not at all considered by the CIT(A) and in fact the CIT(A) has not taken the cognizance of the same and disallowed the interest expenses. Thus, ground nos. 2.1 and 2.2 are allowed. I.T.A No. 204/Ahd/2023 A.Y. 2017-18 Page No. Rajeshkumar Raisingbhai Rajgor vs. ITO 5 As regards ground nos. 1.1 and 1.2, the same are general in nature hence not adjudicated at this juncture. Thus, appeal of the assessee is allowed. 8. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 20-12-2023 Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER Ahmedabad : Dated 20/12/2023 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप /सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद