Lodha Estates, CHENNAI V. ITO Non Corp. Ward 11(5), CHENNAI

ITA 2308/CHNY/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5926 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 06-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B. SAGADEVAN
• Keywords: Opportunity of being heard; Earning of tax free income; Set aside
• Section: 143(3)

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NO.2308/CHNY/2018 / ASSESSMENT YEAR: 2015-16 M/S. LODHA ESTATES, C/O VICTOR GRACE & CO., SPENCER PLAZA, O-704, 769, ANNA SALAI, CHENNAI 02. [PAN: AAEFL5274H] VS. THE INCOME TAX OFFICER, NON CORPORATE WARD 11(5), CHENNAI. ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI M. ABHISHEK, CA / RESPONDENT BY : SHRI B. SAGADEVAN, JCIT / DATE OF HEARING : 08.01.2019 /DATE OF PRONOUNCEMENT : 21.01.2019 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 13, CHENNAI, DATED 31.05.2018 RELEVANT TO THE ASSESSMENT YEAR 2015-16. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF REAL ESTATE. THE RETURNED OF INCOME FILED ON 30.09.2015 ADMITTING INCOME AS NIL AND A BUSINESS LOSS OF .23,70,679/- WAS SELECTED FOR SCRUTINY THROUGH CASS FOR THE REASON OF MISMATCH IN AMOUNT PAID TO RELATED PERSONS UNDER SECTION 40A(2)(B) OF THE INCOME TAX ACT, 1961 [ACT I.T.A. NO. 2308/CHNY/18 2 IN SHORT] REPORTED IN AUDIT REPORT & ITR AND LARGE INTEREST EXPENSES RELATABLE TO EXEMPT INCOME. AFTER CONSIDERING THE DETAILS FURNISHED BY THE ASSESSEE AND SUBMISSIONS THEREON, THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED BY ASSESSING TOTAL LOSS OF THE ASSESSEE AT .9,15,344/- AFTER DISALLOWING THE INTEREST EXPENSES TO THE LOAN CREDITORS. 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE MATERIALS AVAILABLE ON RECORD, THE LD. CIT(A) DISMISSED THE APPEAL BY PASSING EX-PARTE ORDER. 4. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. BESIDES RAISING VARIOUS GROUNDS IN THE GROUNDS OF APPEAL, THE ASSESSEE HAS RAISED A SPECIFIC GROUND THAT BY REJECTING THE ADJOURNMENT PETITION, SINCE THE ASSESSEE WAS OUT OF COUNTRY, THE LD. CIT(A) PASSED THE EX-PARTE ORDER WITHOUT GIVING PROPER OPPORTUNITY AND THUS, THE LD. COUNSEL FOR THE ASSESSEE PRAYED THAT THE ASSESSEE MAY BE GIVEN ONE MORE OPPORTUNITY OF BEING HEARD TO PRESENT ITS CASE BEFORE THE LD. CIT(A). ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDER PASSED BY THE AUTHORITIES BELOW. 5. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE AVAILED LOAN OF .2,53,85,000/- FROM VARIOUS SOURCES AND HAVE PAID INTEREST OF .37,59,487/-. THE ASSESSEE MADE INVESTMENTS IN MUTUAL FUNDS TO THE I.T.A. NO. 2308/CHNY/18 3 TUNE OF .1,55,00,000/-. ACCORDINGLY, THE ASSESSING OFFICER WORKED OUT THE INTEREST PAID BY THE ASSESSEE TO THE EXTENT OF .14,55,335/- FOR THE BORROWED FUNDS, WHICH WAS NOT UTILIZED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSES AND DISALLOWED THE SAME. ON APPEAL, THE LD. CIT(A) POSTED THE APPEAL FOR HEARING ON 16.04.2018 AND ON DATED 29.05.2018. THE ASSESSEE SOUGHT FOR ADJOURNMENT SINCE ITS PARTNERS WERE OUT OF THE COUNTRY FROM 21.05.2018 TO10.06.2018. HOWEVER, THE LD. CIT(A) REJECTED THE ADJOURNMENT PETITION AND DISPOSED THE MATTER EX-PARTE WITHOUT GIVING AN OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS CASE BEFORE THE LD. CIT(A). IN VIEW OF THE ABOVE, WE SET ASIDE THE APPELLATE ORDER AND REMIT THE MATTER BACK TO THE FILE OF THE LD. CIT(A) TO ADJUDICATE THE ISSUE AFRESH AFTER GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 21 ST JANUARY, 2019 IN CHENNAI. SD/- SD/- (A.MOHAN ALANKAMONY) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, 21.01.2019 VM/- /COPY TO: 1. / APPELLANT, 2. / RESPONDENT, 3. ( ) /CIT(A), 4. /CIT, 5. /DR & 6. /GF.