M/s Khanna Exim Pvt.Ltd., Ludhiana V. ITO-Ward-1(4), Ludhiana

ITA 282/CHANDI/2020

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M/s Khanna Exim Pvt. Ltd. appealed against the order of the Commissioner of Income Tax (Appeals)-1, Ludhiana, which confirmed the assessment made by the Income Tax Officer for the assessment year 2014-15. The primary contention was regarding the disallowance of a claimed loss due to the belated filing of the return and the additions made on account of unexplained share application money, unsecured loans, and disallowance of notional interest under section 36(i)(iii) of the Income Tax Act, 1961. The Tribunal found merit in the assessee's request to reconsider the grounds that were not previously addressed by the CIT(A), particularly focusing on the legal standing of the revised return and its implications on the assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128417 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 13-03-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 28-06-2020
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Principle of natural justice; Notional interest; Set aside
• Section: 143(2)

Judgement Text

आयकर अपीलȣय अͬधकरण,चÖडीगढ़ Ûयायपीठ,चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, “A”, CHANDIGARH BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER & SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER आयकरअपीलसं./ITA No. 282/CHD/2020 Ǔनधा[रणवष[ / Assessment Year :2014-15 M/s Khanna Exim Pvt. Ltd., 265-B, FF, B-Block, Rajguru Nagar बनाम The ITO, Ward 1(4), Ludhiana èथायीलेखासं./PAN NO: AACCK7316G अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent Ǔनधा[ǐरतीकȧओरसे/Assessee by : Sh. Aman Parti, Advocate राजèवकȧओरसे/ Revenue by : Smt. Tarundeep Kaur, Sr. DR स ु नवाईकȧतारȣख/Date of Hearing : 14.03.2023 उदघोषणाकȧतारȣख/Date of Pronouncement : 06.06.2023 आदेश/Order Per Sudhanshu Srivastava, Judicial Member: This appeal has been preferred by the assessee against the order dated 20.07.2018 passed by the Ld. Commissioner of Income Tax (Appeals)-1, Ludhiana [herein referred to as ‘CIT(A)’] for assessment year 2014-15. 2.0 The brief facts of the case are the assessee filed its return of income for the year under consideration belatedly on 01.12.2014 declaring a loss of Rs.96,42,635/- which included depreciation amounting to Rs.25,88,467/-. Thereafter, the assessee filed a revised return declaring a loss of Rs.89,09,328/- including the revised amount of depreciation at Rs.25,74,982/-. Subsequently, the assessee’s case was selected for scrutiny and the assessment was completed at a taxable income of Rs.71,07,710/- after disallowing the ITA No. 282-Chd-2020 (AY 2014-15) - M/s Khanna Exim Pvt. Ltd., Rajguru Nagar assessee’s claim of loss as the return was not filed within the due date. Apart from this, an addition of Rs.15,08,000/- was made on account of unexplained share application money received. Further another addition of Rs.48,94,950/- on account of unsecured loans and a further addition of Rs.7,04,760/- on account of disallowance u/s.36(i)(iii) of the Income Tax Act, 1961 (hereinafter called ‘the Act’) were also made. 3.0 Aggrieved, he assessee approached the ld. First Appellate Authority, who dismissed the assessee’s appeal. 4.0 Now, the assessee has approached this Tribunal, challenging the order of the ld. First Appellate Authority by raising the following grounds of appeal: “1. That the order of the Commissioner of Income Tax(A)-1, Ludhiana is against law and facts on record. 2. That the CIT(A) erred on facts and in law in confirming the order of the Assessing Officer which is illegal, bad in law, void-ab-initio since assessment was framed consequent to the notice issued u/s 143(2) which was issued on the basis of and after examination of the revised retum which is non-est as per law. 3. That Ld. CIT (A)-1, Ludhiana erred on facts and in law in upholding the order of the Ld Assessing Officer reducing the net loss of Rs 96,42.635/- declared by appellant in its return to NIL 4. That the order of the Ld. CIT (A)-1, Ludhiana is erroneous, illegal and arbitrary having been passed in haste, without examining and applying mind to the information on record and without giving any effective ITA No. 282-Chd-2020 (AY 2014-15) - M/s Khanna Exim Pvt. Ltd., Rajguru Nagar opportunity to appellant and thus is incomplete violation of principles of natural justice. 5. That Ld. CTT (A)-1, Ludhiana has erred on facts and in law in upholding the addition of Rs 15,08,000/- made by Ld Assessing Officer in respect of the share application money received during the year. 6. That LA CIT (A)-1, Ludhiana has erred in law and on the facts of the case in upholding the addition made by Assessing Officer of Rs 48,94,950/- in respect of unsecured loan amount received during the year. 7. That Ld CIT (A)-1, Ludhiana has erred on facts and in law in upholding the disallowance of notional interest made by the Assessing Officer u/s 36(iii) amounting to Rs 7,04,760/-. 8. The appellant craves leave to add, amend or delete any of the ground of appeal or legal claim arising out of this appeal before the final disposal of the same.” 5.0 The ld. Authorized Representative, at the outset, submitted that the appeal of the assessee was time barred by 79 days and he drew our attention to the delay condonation application filed by the assessee in this regard. He also drew our attention to the affidavit filed by the assessee supporting the contents of the delay condonation application. Although, the ld. Sr. DR, strongly opposed the assessee’s prayer for condonation of delay, for the reasons cited in the delay condonation application, which includes fire in the business premises of the assessee, subsequent bankruptcy of the Directors of the assessee’s firm and, thereafter, imposition of lockdown, we are of the considered view that the assessee has a strong case for condonation of delay. In our view, no assessee would get benefit from unnecessarily ITA No. 282-Chd-2020 (AY 2014-15) - M/s Khanna Exim Pvt. Ltd., Rajguru Nagar delaying the filing of appeal so as to be put at a disadvantage. Accordingly, we condone the delay and admit the appeal for regular hearing. 6.0 At the outset, the ld. AR submitted that the assessee was pressing only Ground Nos. 2 and 3 in the appeal memo. He also fairly accepted that these grounds were not before the ld. CIT(A). The ld. AR prayed that these two grounds go to the very root of the matter in the present appeal and that if these two grounds are not adjudicated, gross injustice would be caused to the assessee as the assessee was undergoing severe financial hardship, and, therefore, these grounds need to be adjudicated. 7.0 The ld. Sr. DR opposed the prayer of the ld. AR. 8.0 Having heard both the parties and having gone through the records, we deem it appropriate to admit Ground Nos. 2 and 3 for being heard by the ld. First Appellate Authority and we set aside these grounds to the file of the ld. First Appellate Authority for the purpose of being adjudicated on merits, in accordance with law, after giving proper opportunity to the assessee to present its case. 9.0 In the result, appeal filed by the assessee stands allowed for statistical purposes. (Order pronounced in the open Court on 06/06/2023) Sd/- Sd/- (VIKRAM SINGH YADAV) (SUDHANSHU SRIVASTAVA) Accountant Member Judicial Member Dated : 06.06.2023 Aks/- ITA No. 282-Chd-2020 (AY 2014-15) - M/s Khanna Exim Pvt. Ltd., Rajguru Nagar आदेशकȧĤǓतͧलͪपअĒेͪषत/ Copy of the order forwarded to : 1. अपीलाथȸ/ The Appellant 2. Ĥ×यथȸ/ The Respondent 3. आयकरआय ु Èत/ CIT 4. ͪवभागीयĤǓतǓनͬध, आयकरअपीलȣयआͬधकरण, चÖडीगढ़/ DR, ITAT, CHANDIGARH 5. गाड[फाईल/ Guard File सहायकपंजीकार/ Assistant Registrar