Dhanya Infra Structure Pvt. Ltd., CHENNAI V. ITO Corporate Ward 1(1), CHENNAI

ITA 2586/CHNY/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4444 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 27-10-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: D ANAND
• Keywords: Opportunity of being heard; Principle of natural justice

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , . , BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NO.2586/CHNY/2017 / ASSESSMENT YEAR:2011-12 M/S. DHANYA INFRASTRUCTURE PVT. LTD., 57/2B, SAI SUBHODAYA, EAST COAST ROAD, THIRYVANMIYUR, CHENNAI 600 041. [PAN:AACCD8253B] VS. THE INCOME TAX OFFICER, CORPORATE WARD 1(1), CHENNAI 600 006. ( /APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI D. ANAND, ADVOCATE / RESPONDENT BY : DR. S. PANDIAN, JCIT / DATE OF HEARING : 03.10.2018 /DATE OF PRONOUNCEMENT : 24.10.2018 / 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) 5, CHENNAI DATED 17.08.2017 RELEVANT TO THE ASSESSMENT YEAR 2011-12. BESIDES, CHALLENGING THE CONFIRMATION OF THE DISALLOWANCE OF INTEREST CLAIMED UNDER SECTION 57 OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT], THE LD. COUNSEL FOR THE ASSESSEE ALSO CHALLENGED THE EX-PARTE ORDER PASSED BY THE LD. CIT(A). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME AT .6,68,790/-/-. THE CASE WAS SELECTED FOR SCRUTINY I.T.A. NO.2586/CHNY/17 2 AND VERIFIED THE BOOKS OF ACCOUNTS AS FURNISHED BY THE ASSESSEE AGAINST STATUTORY NOTICES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DISALLOWED THE DEDUCTION CLAIMED UNDER SECTION 57 OF THE ACT AND COMPLETED THE ASSESSMENT BY ASSESSING TOTAL INCOME OF THE ASSESSEE AT . 2,57,31,358/- 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). SINCE THERE WAS NO REPRESENTATION FROM ASSESSEES SIDE WHEN APPEAL WAS FIXED FOR HEARING OR ANY ADJOURNMENT PETITION FILED THE ASSESSEE, AFTER CONSIDERING THE FACTS OF THE CASE, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE AND DISMISSED THE APPEAL OF THE ASSESSEE. 4. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT WITH REGARD TO THE ISSUE OF ALLOWABILITY OF DEDUCTION CLAIMED UNDER SECTION 57 OF THE ACT, THE ASSESSEE HAS DETERMINED THIS INTEREST INCOME BY SETTING OFF THE INTEREST INCOME RECEIVED DURING THE YEAR AGAINST THE INTEREST PAID DURING THE YEAR AND THEREFORE, THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 57 OF THE ACT. DUE TO UNAVOIDABLE CIRCUMSTANCES, THE ASSESSEE COULD NOT PUT ITS APPEARANCE BEFORE THE LD. CIT(A) AND THUS PRAYED THAT THE ASSESSEE MAY BE GIVEN ONE MORE OPPORTUNITY OF BEING HEARD FOR FURNISHING COMPLETE DETAILS BEFORE THE LD. CIT(A) FOR ADJUDICATION ON MERITS. I.T.A. NO.2586/CHNY/17 3 5. PER CONTRA, THE LD. DR VEHEMENTLY ARGUED THAT THE ASSESSEE WAS GIVEN SUFFICIENT OPPORTUNITIES TO REPRESENT ITS CASE BEFORE THE LD. CIT(A) FROM OCTOBER 2015 TO AUGUST, 2017 AND OBJECTED FOR GIVING ANY MORE OPPORTUNITY. 6. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WHILE VERIFYING THE GENUINENESS OF THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 57 OF THE ACT, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD INCURRED INTEREST EXPENDITURE OF .2,47,28,189/- AND RECEIVED INTEREST FROM OTHER PARTIES TO THE TUNE OF .2,50,62,568/-. ON VERIFICATION OF BANK STATEMENT, THE ASSESSING OFFICER OBSERVED THAT MANY OF THE LOAN TRANSACTIONS PERTAIN TO EARLIER YEAR AND NOT RELATED TO THE CURRENT YEAR. AS IT IS ONE OF THE CONDITIONS TO BE SATISFIED FOR CLAIMING DEDUCTION UNDER SECTION 57 OF THE ACT THAT THE EXPENDITURE SHOULD BE INCURRED IN THE ACCOUNTING YEAR, AND THE SAME IS NOT SATISFIED BY THE ASSESSEE, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 57 OF THE ACT AND BROUGHT TO TAX. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). DESPITE GIVING NEARLY ELEVEN OPPORTUNITIES, NONE APPEARED ON BEHALF OF THE ASSESSEE OR ANY ADJOURNMENT PETITION FILED BEFORE THE LD. CIT(A). SINCE THE ASSESSEE COULD NOT SUBSTANTIATE THAT THE INTEREST EXPENDITURE WAS EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF EARNING THE INTEREST INCOME AND NO SPECIFIC WRITTEN SUBMISSION FILED OR PUT ITS APPEARANCE ON THE DATES OF HEARING FIXED, I.T.A. NO.2586/CHNY/17 4 THE LD. CIT(A) CONFIRMED THE DISALLOWANCE AND DISMISSED THE APPEAL FILED BY THE ASSESSEE. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE PRAYED THAT THE ASSESSEE MAY BE GIVEN ONE MORE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE FOR SUBSTANTIATING ITS CLAIM. IN VIEW OF THE ABOVE AND TO MEET THE ENDS OF NATURAL JUSTICE, WE DIRECT THE LD. CIT(A) TO GIVE ONE MORE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE FOR SUBSTANTIATING ITS CLAIM AND DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 24 TH OCTOBER, 2018 AT CHENNAI. SD/- SD/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, THE 24.10.2018 VM/- /COPY TO: 1. / APPELLANT, 2. / RESPONDENT, 3. ( ) /CIT(A), 4. /CIT, 5. /DR & 6. /GF.