K Nallaswamy, Erode V. ITO, Ward-1(3), Erode

ITA 337/CHNY/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7359 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 25-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN
• Assessee Lawyers: S SRIDHAR
• Keywords: Principle of natural justice
• Section: 14A

Judgement Text

, . . , IN THE INCOME TAX APPELLATE TRIBUNAL , SMC B BENCH, CHENNAI . . . , . , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.337/CHNY/2018 ( / ASSESSMENT YEAR: 2013-14) SHRI K. NALLASAMY, 70, PAPPATHU KADU II STREET, VEERAPPAN CHATHIRAM, ERODE 638 004. VS THE INCOME TAX OFFICER, WARD 1(3), ERODE. PAN:ACYPN1745M ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE / RESPONDENT BY : SHRI B. SAGADEVAN, JCIT /DATE OF HEARING : 12.07.2018 /DATE OF PRONOUNCEMENT : 17.07.2018 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-3, COIMBATORE, DATED 06.10.2017 IN APPEAL NO.323/15-16 FOR THE ASSESSMENT YEAR 2013-14 PASSED U/S.250(6) R.W.S.144 OF THE ACT. 2. THE APPEAL WAS FILED BY THE ASSESSEE WITH A DELAY OF 30 DAYS. THE LD. AR SUBMITTED THAT THE ASSESSEE COULD NOT HANDOVER 2 ITA NO.337/CHNY/2018 THE APPELLATE ORDER TO HIS AUDITOR FOR FILING THE APPEAL IN TIME DUE TO HIS FAMILY PROBLEMS RELATED TO THE DIVORCE OF HIS DAUGHTER. THEREFORE THE LD. AR PLEADED THAT THE DELAY IN FILING THE APPEAL MAY BE CONDONED. THE LD. DR STRONGLY OBJECTED TO THE SUBMISSION OF THE LD. AR. AFTER HEARING BOTH SIDES, WE ARE OF THE CONSIDERED VIEW THAT THE DELAY OF 30 DAYS IN FILING THE APPEAL REQUIRES TO BE CONDONED BECAUSE OF THE GENUINE HARDSHIPS FACED BY THE ASSESSEE. THEREFORE WE HEREBY CONDONE THE DELAY AND PROCEED TO HEAR THE APPEAL ON MERITS. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN HIS APPEAL:- 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 3, COIMBATORE DATED 06.10.2017 IN I.T.A.NO.323/15-16 FOR THE ABOVE MENTIONED ASSESSMENT YEAR IS CONTRARY TO LAW, FACTS, AND IN THE CIRCUMSTANCES OF THE CASE. 2. THE CIT (APPEALS) ERRED IN SUSTAINING THE DISALLOWANCE OF INTEREST PAYMENTS ESTIMATED AT RS.14,89,734/- OUT OF THE TOTAL CLAIM OF RS.29,79,468/- IN THE COMPUTATION OF TAXABLE TOTAL INCOME WITHOUT ASSIGNING PROPER REASONS AND JUSTIFICATION. 3. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE EXPARTE ORDER OF ASSESSMENT AND THE EXPARTE APPELLATE ORDER PASSED BY HIM WAS BAD IN LAW AND OUGHT TO HAVE APPRECIATED THAT ANY ORDER PASSED IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE WOULD BE NULLITY IN LAW. 4. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE INTEREST PAYMENTS TO HOB FINANCIAL SERVICES AGGREGATING TO RS.26,94,567/-, TO MLS RELIGERE FINVEST LIMITED AGGREGATING TO RS.2,04,983/- AND TO M/S HOFC BANK 3 ITA NO.337/CHNY/2018 AGGREGATING TO RS.79,918/- WERE BACKED BY THE CONFIRMATION AS WELL AS ACCOUNTS STATEMENTS AND OUGHT TO HAVE APPRECIATED THAT THE FAILURE TO CROSS VERIFY WITH THE FINANCIAL INSTITUTIONS WOULD VITIATE THE ESTIMATED DISALLOWANCE OF INTEREST EXPENSES RESULTING IN ENHANCEMENT OF THE TAXABLE TOTAL INCOME. 5. THE CIT (APPEALS) WENT WRONG IN RECORDING THE FINDINGS IN THIS REGARD IN PARA 5 OF THE IMPUGNED ORDER WITHOUT ASSIGNING PROPER REASONS AND JUSTIFICATION. 6. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE PROVISIONS OF SECTION 14A OF THE ACT ON THE FACTS OF THE CASE HAD NO APPLICATION AND OUGHT TO HAVE APPRECIATED THAT THE INTEREST PAYMENTS WERE DIRECTLY RELATABLE TO THE EARNING OF THE INCOME WHICH INCOME WAS REPORTED FOR TAXATION FULLY. 7. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THERE WAS NO PROPER OPPORTUNITY GIVEN BEFORE PASSING OF THE IMPUGNED ORDER AND ANY ORDER PASSED IN VIOLATION OF THE PRINCIPLES NATURAL JUSTICE WOULD BE NULLITY IN LAW. 8. THE APPELLANT CRAVES LEAVE TO FILE ADDITIONAL GROUNDS/ARGUMENTS AT THE TIME OF HEARING. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL, FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2013- 14 ON 05.12.2014 ADMITTING TOTAL INCOME OF RS.3,94,370/-. INITIALLY THE RETURN WAS PROCESSED U/S.143(1) OF THE ACT. SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S.143(2) OF THE ACT WAS ISSUED TO THE ASSESSEE ON 31.08.2015. FINALLY ASSESSMENT ORDER WAS PASSED EX-PARTE U/S.144 OF THE ACT ON 07.01.2016 WHEREIN THE LD.AO DISALLOWED THE CLAIM OF INTEREST PAYMENT AMOUNTING TO RS.14,89,730/- OUT OF THE TOTAL CLAIM OF RS.29,79,468/- FOR WANT OF PROPER EXPLANATION. ON APPEAL, NEITHER THE ASSESSEE NOR HIS 4 ITA NO.337/CHNY/2018 COUNSEL DID NOT APPEAR BEFORE THE LD.CIT(A) ON THE DATE OF HEARING, THEREFORE THE LD.CIT(A) ALSO PASSED AN EX-PARTE ORDER CONFIRMING THE ORDER OF THE LD.AO. 5. AT THE OUTSET THE LD.AR SUBMITTED BEFORE US THAT DURING THE TIME OF ASSESSMENT PROCEEDINGS AND FIRST APPELLATE PROCEEDINGS, THE ASSESSEE WAS ENGULFED WITH FAMILY PROBLEMS RELATING TO THE DIVORCE PROCEEDINGS OF HIS DAUGHTER AND THEREFORE COULD NOT PURSUE THE MATTER BEFORE BOTH THE LD.REVENUE AUTHORITIES. SINCE THE ASSESSEE DID NOT EXPLAIN THE NATURE AND GENUINENESS OF THE INTEREST EXPENDITURE INCURRED BY HIM, THE LD.REVENUE AUTHORITIES HAD DISALLOWED THE EXPENDITURE. IT WAS THEREFORE PLEADED THAT ONE MORE OPPORTUNITY MAY BE PROVIDED BEFORE THE LD.AO, SO THAT HE CAN PROPERLY REPRESENT HIS CASE BEFORE HIM. THE LD.DR STRONGLY OBJECTED TO THE SUBMISSION OF THE LD.AR AND PLEADED FOR CONFIRMING THE ORDERS OF THE LD.REVENUE AUTHORITIES. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIAL ON RECORD. FROM THE FACTS OF THE CASE, IT APPEARS THAT GENUINELY THE ASSESSEE WAS DISTURBED WITH HIS FAMILYS STATE OF AFFAIRS BEING THE ESTRANGED MARITAL LIFE OF HIS DAUGHTER WHICH FINALLY 5 ITA NO.337/CHNY/2018 LET TO DIVORCE. IN THIS SITUATION, IT IS OBVIOUS THAT THE ASSESSEE WAS UNABLE TO SERIOUSLY PARTICIPATE IN THE PROCEEDINGS BEFORE THE LD.REVENUE AUTHORITIES. THEREFORE IN THE INTEREST OF JUSTICE, WE HEREBY REMIT THE MATTER BACK TO THE FILE OF LD.AO FOR DE-NOVA CONSIDERATION. 7. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 17 TH JULY, 2018 AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER /CHENNAI, /DATED 17 TH JULY, 2018 RSR /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. /GF