SUREKH HANSRAJ SHAH, MUMBAI V. ACIT- 16(2), MUMBAI

ITA 3225/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4303 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 15-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Opportunity of being heard; Earning of tax free income; Set aside
• Section: 14A; 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER ITA NO. 3225 / MUM . /2018 ( ASSESSMENT YEAR : 20 11 12 ) SUREKH HANSRAJ SHAH 23, MOTILAL KANJI BUILDING NAVROJI STREET, THAKURWDWAR MUMBAI 400 007 PAN ARTPS0346P . APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 1 6 ( 2 ), MUMBAI . RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI VIVEK ANAND OJHA DATE OF HEARING 05 . 03 .201 9 DATE OF ORDER 13.03. 2 0 19 O R D E R A FORESAID APPEAL HA S BEEN FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 12 TH MARCH 2018 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) 30 , MUMBAI , FOR THE ASSESSMENT YEAR 20 11 1 2 . 2 . IN THE PRESENT APPEAL, THE ASSESSEE HAS CHALLENGED COUPLE OF ADDITIONS MADE BY THE ASSESSING OFFICER BY DISALLOWING EXPENDITURE UNDER SECTION 37(1) AND SECTION 14A OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ). 2 SUREKH HANSRAJ SHAH 3 . BRIEF FACTS ARE, THE ASSESSEE IS AN INDI VIDUAL. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED HIS RETURN OF INCOME ON 27 TH SEPTEMBER 2011, DECLARING TOTAL INCOME OF ` 41,42,513. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICING THAT THE ASSESSEE HAS CLAIMED DEDUCTION ON ACCOUNT OF PROFESSIONAL FEES PAID OF ` 8,273, CALLED UPON FOR NECESSARY DETAILS. ON PERUSING THE DETAILS, HE FOUND THAT THE ASSES SEE HAS ONLY INCOME FROM PARTNERSHIP FIRM AND HAS DERIVED NO OTHER BUSINESS INCOME. THEREFORE, OBSERVING THAT THE EXPENDITURE INCURRED IS NOT DIRECTLY RELATED TO THE BUSINESS ACTIVITY, HE DISALLOWED AN AMOUNT OF ` 8,273 UNDER SECTION 37 OF THE ACT. FURTHER , HE FOUND THAT THE ASSESSEE HAS CLAIMED DEDUCTION OF INTEREST EXPENDITURE AMOUNTING TO ` 31,02,917. FURTHER, HE FOUND THAT THE ASSESSEE HAS EARNED EXEMPT INCOME BY WAY OF SHARES IN PROFIT OF THE PARTNERSHIP FIRM AMOUNTING TO ` 2,94,746. HE, THEREFORE, CAL LED UPON THE ASSESSEE TO EXPLAIN WHY THE PROPORTIONATE AMOUNT FROM THE INTEREST EXPENDITURE SHOULD NOT BE DISALLOWED FOR EARNING EXEMPT INCOME. THOUGH, THE ASSESSEE OBJECTED TO THE PROPOSED DISALLOWANCE, HOWEVER, THE ASSESSING OFFICER DISALLOWED AN AMOUNT OF ` 2,01,767, OUT OF THE INTEREST EXPENDITURE UNDER SECTION 14A OF THE ACT. BEING AGGRIEVED WITH THE AFORESAID DISALLOWANCE, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 3 SUREKH HANSRAJ SHAH 4 . AS OBSERVED BY THE LEARNED COMMISSIONER (APPEALS), IN SPITE OF SEVERAL OPPORTUNITIES BEING GRANTED TO THE ASSESSEE, NO ONE APPEARED TO REPRESENT THE CASE ON BEHALF OF THE ASSESSEE. THEREFORE, ALLEGING THAT THE ASSESSEE COULD NOT SUBSTANTIATE ITS CLAIM OF EXPENDITURE THE LEARNED COMMISSIONER (APPEALS) UPHELD THE ADD ITIONS MADE BY THE ASSESSING OFFICER. 5 . WHEN THE APPEAL WAS CALLED FOR HEARING, NEITHER ANYONE APPEARED ON BEHALF OF THE ASSESSEE NOR DID THE ASSESSEE FILE ANY APPLICATION SEEKIN G ADJOURNMENT. FURTHER, HEARING NOTICE ISSUED BY THE REGISTRY THROUGH REGISTERE D POST HAS RETURNED BACK UN SERVED BY THE POSTAL AUTHORITIES. IN VIEW OF THE AFORESAID, I PROCEED TO DISPOSE OF THE PRESENT APPEAL EX PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE. 6 . HEARD THE LEARNED DEPARTMENTAL REPRESENTATI VE AND PERUSED MATERIAL ON RECORD. AS COULD BE SEEN, THE ASSESSING OFFICER MADE THE DISPUTED ADDITION S SINCE THE ASSESSEE COULD NOT PROPERLY JUSTIFY HIS CLAIM. AS OBSERVED BY LEARNEWD COMMISSIONER (APPEALS), IN THE APPEAL PROCEEDINGS THE ASSESSEE DID NOT A PPEAR EVEN AFTER REASONABLE OPPORTUNITY OF BEING HEARD, HENCE, HE PROCEEDED TO DISPOSE OF THE APPEAL EX PARTE AND SUSTAINED THE ADDITIONS MADE BY THE ASSESSING OFFICER. BEFORE THE TRIBUNAL ASSESSEE HAS RAISED A GROUND STATING THAT 4 SUREKH HANSRAJ SHAH AFTER ALLOWING ASSESSEES REQUEST FOR ADJOURNMENT ON THE LAST DATE OF HEARING LEARNED COMMISSIONER (APPEALS) HAS PASSED THE ORDER EX PARTE. THE REFORE, WITHOUT DELVING DEEP INTO THE CONTROVERSY DUE TO WHOS FAULT APPEAL WAS DECIDED EX PARTE, I AM OF THE VIEW, INTEREST OF JUSTICE WOULD BE BEST SERVED IF ONE MORE OPPORTUNITY IS GRANTED TO THE ASSESSEE TO REPRESENT HIS CASE BEFORE LEARNED COMMISSIONE R (APPEALS). ACCORDINGLY I SET ASIDE THE IMPUGNED ORDER OF LEARNED COMMISSIONER (APPEALS) AND RESTORE THE ISSUES RELATING TO THE DISPUTED ADDITIONS TO THE FILE OF LEARNED COMMISSIONER (APPEALS) FOR DE NOVO ADJUDICATION AFTER DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ASSESSEE IS ALSO DIRECTED TO COOPERATE IN FINALIZATION OF THE APPEAL PROCEEDING. GROUNDS RAISED ARE ALLOWED FOR STATISTICAL PURPOSES. 7 . IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 13.03.2019 SD/ SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 13.03.2019 5 SUREKH HANSRAJ SHAH COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI