Bhagwan Das Darak, Hyderabad, Hyderabad V. ITO, Ward-5(3), Hyderabad, Hyderabad

ITA 231/HYD/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3137 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 06-05-2021
• Assessment Year: 2009-2010
• Appeal Filed On: 13-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: TEJ PRAKASH TOSHNIWAL
• Keywords: Set aside
• Section: 143(3); 263; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER ITA NO. 231/HYD/2017 AY: 2009 - 10 BHAGWAN DAS DARAK, HYDERABAD. PAN: ABAPD 1762 H VS. INCOME TAX OFFICER, WARD - 5(3), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI TEJ PRAKASH TOSHNIWAL REVENUE BY: SHRI ROHIT MUJUMDAR, DR DATE OF HEARING: 6/5/2021 DATE OF PRONOUNCEMENT: 8 / 6 /2021 ORDER PER A. MOHAN ALANKAMONY, AM.: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT (A) - 4, HYDERABAD IN APPEAL NO. 0589/14 - 15/ITO, WD - 5(3)/CIT (A) - 4/HYD/16 - 17, DATED 21/11/2016 PASSED U/S. 144 R.W.S 263 AND U/S. 250(6) OF THE ACT FOR THE AY 2009 - 10. 2. THE ASSESSEE HAS RAISED THREE GROUNDS IN HIS APPAL AND THEY ARE EXTRACTED HEREIN BELOW FOR REFERENCE: - 1. THE REVISION ORDER PASSED U/S. 263 BY THE INCHARGE CIT - IV, HYDERABAD DIRECTING THE INCOME TAX OFFICER TO DISALLOW THE SAID SUM OF RS. 15, 35,821/ - AS NOT ELIGIBLE FOR DEDUCTION AND THUS DIRECTING THE OFFICER TO REVISE THE ASSESSMENT ORDER IS QUITE ILLEGAL, CONTRARY TO LAW AND LIABLE TO BE SET ASIDE. THE C IT MISCONSTRUED 2 THE CONTENTIONS RAISED BY THE PETITIONER, WHO BORROWED THE FINANCE FROM VARIOUS BANKS AND FINANCIAL INSTITUTIONS INCLUDING THE CHIT FUND FOR THE PURPOSE OF CARRYING OUT THE PROPRIETARY BUSINESS WHICH IS UNDER THE NAME OF M/S. PREMIER FABS A ND IN THE PARTNERSHIP FIRM M/S. PREMIER AGENCIES AND THUS INCURRED INTEREST TOWARDS THE SAID BORROWINGS WAS ENTITLED TO CLAIM DEDUCTION UNDER THE INCOME FROM M/S. PREMIER FABS. THE ABOVE SAID EXPENDITURE INCURRED TOWARDS THE BORROWING OF THE FUNDS WAS UTI LISED IN THE BUSINESS CARRIED UNDER THE INDIVIDUAL CAPACITY AND IN PARTNERSHIP FIRM IS ENTITLED TO CLAIM DEDUCTION FROM OUT OF THE INCOME EARNED FROM OUT OF THE PROPRIETARY BUSINESS. 2. THE DEDUCTION CLAIMED UNDER WRONG HEAD DUE TO ERROR IN UNDERSTANDING T HE HEADS OF INCOME AND SHOULD HAVE BEEN GIVEN THE DEDUCTION TOWARDS THE INTEREST PAID TO THE BANKS, CHIT FUND COMPANY AND PRIVATE FINANCIAL INSTITUTIONS FROM OUT OF THE INCOME EARNED FROM PROPRIETORSHIP BUSINESS WHERE THE PETITIONER HA VE CARRIED THE BUSINE SS UNDER INDIVIDUAL CAPACITY AND UTILIZED THE ABOVE SAID FUNDS IN THE ABOVE SAID BUSINESS. THUS, THE PETITIONER IS ENTITLED TO CLAIM DEDUCTION OF RS. 15,35,821/ - . FURTHER THE INCOME TAX OFFICER, HAVE DISALLOWED VARIOUS SUM OF RS. 1,11, 993/ - ALLEGING THAT THE ABOVE SAID SUMS DO FALL UNDER SECTION 57 OF THE INCOME TAX ACT. THE INCOME TAX OFFICER AND THE HONBLE COMMISSIONER IS LOOKING SO TECHNICAL AND INTERPRETING THE INCOME TAX ACT PROVISIONS WITHOUT APPRECIATING THAT I AM NOT SO CONVERSANT AS THE DEPARTM ENTAL OFFICERS ARE CONVERSANT. 3. THE EX - PARTE ASSESSMENT ORDER PASSED COULD NOT BE ATTENDED BY THE PETITIONER DUE TO HEALTH PROBLEM OF WIFE AD WHO WAS UNDERGOING TREATMENT, EXPIRED ON 24/01/ 2015. THE DISALLOWANCE OF RS. 15,35,821/ - IS RELATING TO THE LOANS BORROWED AND UTILISED IN CARRYING OUT THE PROPRIETARY BUSINESS AND CLAIMED IN THE INDIVIDUAL ACCOUNT INSTEAD OF IN THE PROPRIETORSHIP FIRMS ACCOUNT. THAT THE PETITIONER CRAVES LEAVE OF T HE HONBLE TRIBUNAL TO PERMIT THE PETITIONER TO ADD, ALTER OR AMEND THE GROUNDS OF APPEAL DURING PENDENCY OF THE SAME. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED HIS RETURN OF INCOME FOR THE AY 2009 - 10 DECLARING TOTAL INCOME OF RS. 21,67, 983/ - . THE ASSESSEES CASE WAS TAKEN UP FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT ON 9/5/2011. SUBSEQUENTLY, THE LD. CIT - IV, HYDERABAD INVO KING THE PROVISIONS OF SECTION 263 OF THE ACT , PASSED ORDER ON 31/1/2014 AND SET - ASIDE THE ORDER OF THE LD. AO WITH DIRECTION TO RE - DO THE ASSESSMENT. THEREAFTER, 3 BEFORE THE LD. AO THE ASSESSEE DID NOT APPEAR DURING THE CONSEQUENTIAL PROCEEDINGS AND THE LD. AO COMPLETED THE ASSESSMENT EX - PARTE U/S. 144 R.W.S 263 OF THE ACT . ON APPEAL, THE LD. CIT (A) DISMISSED THE ASSESSEES APPEAL BY HOLDING THAT IN VIEW OF THE ORDER OF THE TRIBUNAL IN ITA NO. 1602/HYD/2014, THE LD. CIT (A) WAS CONSTRAINED TO EXERCISE HIS APPELLATE POWERS ON THE ISSUE WHICH WAS THE SUBJECT MATTER OF CONSIDERATION BY THE CIT (A) U/S. 263 OF THE ACT. AGGRIEVED BY THE ORDERS OF THE LD. REVENUE AUTHORITIES, THE ASSESSEE IS IN APPEAL BEFORE US. 4. AT THE OUTSET, THE LD. AR SUBMIT TED THAT DURING THE SECOND ROUND OF PROCEEDINGS CO NDUCTED BY THE LD. AO CONSEQUENT TO THE DIRECTIONS ISSUED BY THE LD. CIT - IV, HYDERABAD IN HIS ORDER PASSED U/S.263 OF THE ACT THE ASSESSEE COULD NOT APPEAR DUE TO SEVERE ILL - HEALTH OF THE ASSESSEES WIFE WHO EXPIRED ON 24/01/2015. THE LD.AR FURTHER SUBMITTED THAT , THE ASSESSEE IS HAVING A GOOD CASE ON MERITS AND HE SHALL BE ABLE TO ESTABLISH THE SAME BEFORE THE REVENUE IF PROVIDED WITH ONE MORE OPPORTUNITY. IT WAS THEREFORE PLEADED THAT THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE LD A.O .. LD. DR, ON THE OTHER HAND, VEHEMENTLY OPPOSED TO THE SUBMISSIONS OF THE LD. AR AND ARGUED THAT SUFFICIENT OPPORTUNITIES HAD BEEN PROVIDED TO THE ASSESSEE HOWEVER, ON THE GIVEN DATES OF HEARING, NEITH ER THE ASSESSEE NOR HIS REPRESENTATIVE APPEARED BEFORE THE LD. A.O. EVEN BEFORE THE LD. CIT(A), THE ASSESSEE DID NOT FURNISH THE DETAILS AS REQUIRED BY THE LD. REVENUE AUTHORITIES. 4 THEREFORE THE LD. REVENUE AUTHORITIES HAD NO OTHER OPTION BUT TO PASS ORDER S BASED ON THE MATERIALS AVAILABLE ON RECORD. HENCE, IT WAS PLEADED THAT THE ORDERS PASSED BY THE LD. REVENUE AUTHORITIES DO NOT CALL FOR ANY INTERFERENCE. 5 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. ON EXAMININ G THE FACTS OF THE CASE, WE FIND MERIT IN THE SUBMISSIONS OF THE LD. AR . AS SUBMITTED BY THE LD. AR BEFORE, I T APPEARS FROM THE RECORD THAT DURING THE RELEVANT PERIOD WHEN THE LD. AO HAD TAKEN UP THE SECOND ROUND OF PROCEEDINGS BASED ON THE ORDERS OF THE LD. CIT - IV, HYDERABAD PASSED U/S. 263 OF THE ACT, THE ASSESSEE WAS NOT IN A POSITION TO APPEAR BEFORE THE LD. REVENUE AUTHORITIES BECAUSE OF HIS SEVER ILL - HEALTH AND DE MISE OF HIS WIFE . MOREOVER, CONSIDERING THE ISSUES INVOLVED IN THE APPEAL AS WEL L AS THE PRAYER OF THE LD. AR, IN THE INTEREST OF JUSTICE, WE HEREBY REMIT THE ENTIRE MATTER BACK TO THE FILE OF LD. A.O. IN ORDER TO CONSIDER THE APPEAL AFRESH ON MERITS BY PROVIDING ONE MORE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. AT THE SAME BREATH, WE ALSO HEREBY CAUTION THE ASSESSEE TO PROMPTLY CO - OPERATE BEFORE THE LD. REVENUE AUTHORITIES IN THEIR PROCEEDINGS FAILING WHICH THE LD. REVENUE AUTHORITIES SHALL BE AT LIBERTY TO PASS APPROPRIATE ORDER IN ACCORDANCE WITH LAW AND MERITS BASED ON THE MATER IALS ON THE RECORD. IT IS ORDERED ACCORDINGLY. 5 6 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AS INDICATED HEREINABOVE. PRONOUNCED IN THE OPEN COURT ON 08 TH JUNE , 2021. S D/ - SD/ - (S.S. GODARA) ( A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 08 TH JUNE , 2021. OKK COPY TO: - 1. BHAGWAN DAS DARAK, C/O. TEJPRAKASH TOSHNIWAL, ADVOCATE, 4 - 1 - 6/B/4, RAMKOTE, HYDERABAD 500 0 95. 2. INCOME TAX OFFICER, WARD - 5(3), HYDERABAD. 3. THE CIT (A) - 4, HYDERABAD. 4. THE PRINCIPAL COMMISSIONER OF INCOME TAX - 4, HYDERABAD. 5. THE DR, ITAT, HYDERABAD. 6. GUARD FILE.