AMRIT NARSHI GADA , MUMBAI V. INCOME TAX OFFICER, 21(1)(1), VASHI NAVI MUMBAI., MUMBAI

ITA 2725/MUM/2022

AI Insights

The case involves Amrit Narshi Gada, the appellant, who appealed against the order of the National Faceless Appeal Centre (NFAC) - Delhi / CIT(A) concerning the assessment year 2016-17. The primary contention was the denial of deduction claimed under section 57 of the Income Tax Act, 1961, for interest paid on loans, which the assessee argued was directly linked to earning interest income. The CIT(A) had dismissed the appeal ex-parte, assuming non-interest from the assessee, which led to the current appeal before the Tribunal. The Tribunal found that the CIT(A) had not adequately considered the assessee's submissions and had not provided a fair opportunity of hearing, thus violating the principles of natural justice.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 300189 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-12-2022
• Assessment Year: 2016-2017
• Appeal Filed On: 20-10-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 143(3); 142(1); 250; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA No. 2725/Mum/2022 (A.Y: 2016-17) Amrit Narshi Gada 202, Plot No. 82, Titan House, Chs MP Vaidya Marg, Ghatkopar (E) Mumbai – 400077. Vs. ITO – 21(1)(1) Vashi, Navi Mumbai 400020. ./ज आइआर ./PAN/GIR No. : AAEPS8566K Appellant .. Respondent Assessee by : Mr.Ashok Sutha.AR Revenue by : Ms.Richa Gulati.DR Date of Hearing 21.12.2022 Date of Pronouncement 22.12.2022 आद श / O R D E R The assessee has filed the appeal against the order passed by the National Faceless Appeal Centre (NFAC) – Delhi / CIT(A) u/s 143(3) and 250 of the Act. The assessee has raised the fallowing grounds of appeal: 1.0.The order passed by Learned Commissioner of Income (Appeals) NFAC ['the Ld CIT(A)] under section 250 of the Income tax Act, 1961 ('the Act') is invalid and void ab initio. 2.0. The Ld CIT(A) passed the order without providing of reasonable time to file the reply and is against the ITA No. 2725/Mum/2022 Amrit Narshi Gada, Mumbai. - 2 - principle of natural justice, hence, the order passed u/s 250 of the Act is invalid and void ab- initio. 3.0. The Ld CIT(A) passed the order u/s.250 on 25.05.2022 without considering adjournment request uploaded / online requested on 17.08.2022 of the Appellant seeking the time to file the details and the submission and requesting the Ld CIT(A) to fix hearing on 01.09.2022. 4.0. The Ld CIT(A) erred in issuing notice u/s.250 on 17.08.2022 asking the Appellant to file the submission by 23.08.2022 without considering the requested adjournment sought till 01.09.2022. 5.0. Without prejudice to the above, on the facts and circumstances of the case and in law, the Ld CIT(A) erred in upholding the Order of the Ld AO for not allowing deduction claimed u/s 57 of the Income tax Act, 1961 ('the Act') for interest paid of Rs.33,20,565/- to the person from whom loans were taken without considering the facts and the submission made during the course of scrutiny assessment. 6.0. Without prejudice to the above, on the facts and circumstances of the case and in law, the Ld CIT(A) erred in upholding the Order of the Ld AO for not allowing deduction claimed u/s 57 of the Act for interest paid of Rs.33,20,565/- to the person from whom loans were taken and which were having direct nexus to the loans advanced for earning interest. 7.0. Without prejudice to the above, on the facts and circumstances of the case and in law, the Ld CIT(A) erred in upholding the Order of the Ld AO for not allowing deduction claimed u/s 57 of the Act for interest paid of Rs.33,20,565/- to the person from whom loans were taken under the surmises that the Appellant had not provided nexus of the samewithout considering the details filed during the couse of scrutiny assessment, 8.0. The Appellant prays that it may be allowed to add, alter or amend the above grounds of appeal and to make detailed submissions at the time of appeal. ITA No. 2725/Mum/2022 Amrit Narshi Gada, Mumbai. - 3 - 2. The brief facts of the case are that the assessee is an individual and derives income from property and income from other sources. The assessee has filed the return of income for the A.Y 2016-17 on 29.07.2016 disclosing a total income of Rs.3,41,250/-. Subsequently the case was selected for scrutiny under CASS and notice u/s 143(2) and 142(1) of the Act served on the assessee through ITBA. Further the Assessing Officer (A.O) has issued show cause notice in respect of claim of deduction u/s 57 of the Act of Rs.33,20,656/-.In compliance, the assessee has made submissions in e-proceedings on 20.12.2018 and 25.12.2018 explaining that the assessee filed computation of income, details of loan taken and interest paid and details of loan provided and interest received and loan confirmations. Whereas the AO has dealt on the facts at Para 5 of the Assessment order and was not satisfied with the explanations as the assessee has claimed deduction of interest expenditure and failed to substantiate that the funds have been utilized wholly and exclusively for the purpose of earning interest income and denied the claim of deduction and has assessed the total income ITA No. 2725/Mum/2022 Amrit Narshi Gada, Mumbai. - 4 - of Rs.36,61,810/- and passed the order u/s 143(3) of the Act 28.12.2018. 3.Aggrieved by the order the assessee has filed an appeal before the CIT(A),whereas the CIT(A) has considered the grounds of appeal, statement of facts and findings of the AO and has issued notices of hearing and since there was no compliance by the assessee to notices. Therefore the CIT(A) considering the information on record has confirmed the action of the A.O and dismissed the appeal. Aggrieved by the order of the CIT(A), the assessee has filed an appeal before the Hon’ble Tribunal. 4.At the time of hearing, the Ld. AR submitted that the CIT(A) has erred in confirming the action of the Assessing officer. The assessee has a good case on merits and shall substantiate with the material evidence and prayed for an opportunity to explain before the lower authorities. Contra, the Ld. DR supported the order of the CIT(A). 5.Heard the rival submissions and perused the material on record. Prima-facie the CIT(A) has passed ITA No. 2725/Mum/2022 Amrit Narshi Gada, Mumbai. - 5 - the order considering the fact that there is no appearance in spite of providing adequate opportunity of hearing and the notices were issued. Therefore, the CIT(A) was of the opinion that the assessee is not interested in prosecuting the appeal and dismissed the appeal ex-parte confirming the action of the assessing officer. The Ld.CIT(A) has issued the notices of hearing referred at Para 4.3 Page 5 of the order, but there was no response and thus the Ld.CIT(A) came to a conclusion that the assessee is not interested and decided the appeal based on the information available on record. Whereas the assessee has raised grounds of appeal challenging the denial of claim of interest deduction U/sec57 of the Act in the assessing officer order u/sec143 of the Act and there could be various reasons for non appearance which cannot be overruled. Therefore, considering the principles of natural justice shall provide one more opportunity of hearing to the assessee to substantiate the case before the Assessing Officer along with evidences and information. Accordingly, set aside the order of the CIT(A) and remit the entire disputed issues to the file of the Assessing Officer to adjudicate ITA No. 2725/Mum/2022 Amrit Narshi Gada, Mumbai. - 6 - afresh on merits and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information and allow the grounds of appeal of the assessee for statistical purposes. 6.In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 22.12.2022. Sd/- (PAVAN KUMAR GADALE) JUDICIAL MEMBER Mumbai, Dated 22.12.2022 KRK, PS /Copy of the Order forwarded to : 1. / The Appellant 2. / The Respondent. 3. आ र आ / The CIT(A) 4. आ र आ ( ) / Concerned CIT 5. "#$ % & &' , आ र ) र*, हमद द / DR, ITAT, Mumbai 6. % -. / 0 / Guard file. ान ु सार/ BY ORDER, " & //True Copy// 1. ( Asst. Registrar) ITAT, Mumbai