SILVASSA EXTRUSIONS P. LTD, MUMBAI v. ITO 9(3)(2), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH: MUMBAI BEFORE SHRI R.S. PADVEKAR JUDICIAL MEMBER ITA NO.6656/MUM/2010 (ASSESSMENT YEAR: 2007-08) SILVASSA EXTRUSIONS P. LTD. 96 C.P. TANK ROAD MARDIA HOUSE MUMBAI -4000 004 ASSESSEE VS ITO-9(3)(2) ROOM NO.227 AAYAKAR BHAVAN M.K. ROAD MUMBAI -400 020 .... REVENUE PAN: AAICS 5718 E ASSESSEE BY: NONE REVENUE BY: SMT MALTHI R. SRIDHARAN O R D E R THIS APPEAL IS FILED BY THE ASSESSEE CHALLENGING TH E IMPUGNED ORDER OF THE LD. CIT (A)-20 MUMBAI DATED 19.07.2010 FOR T HE A.Y. 2007-08. THE NOTICE IN THIS APPEAL WAS DULY SERVED ON THE ASSESS EE. THE ASSESSEE HAD APPLIED AN APPLICATION FOR ADJOURNMENT WHICH WAS R EJECTED AS IT WAS NOTICED THAT THE ASSESSEES APPEAL CAN BE DISPOSED OFF ON MERIT. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS:- 1. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN DISMISSING WITHOUT GIVING THE APPELLANT AN APPROPRIATE OPPORTU NITY OF BEING HEARD. ITA 6656/M/2010 SILVASSA EXTRUSIONS P. LTD. 2 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE L EARNED COMMISSIONER OF INCOME TAX ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST OF ` 1 33 707/- WITHOUT APPRECIATING THE FACT THAT THE LOAN FUNDS ARE USED FOR BUSINESS OF THE APPELLANT. 2. I HAVE HEARD THE LD. D.R. THE ASSESSEE IS AN IN VESTMENT COMPANY. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y . 2007-08 DECLARING THE TOTAL INCOME AT ` 1 38 150/- WHICH WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT. I T WAS NOTICED BY THE A.O. THAT THE ASSESSEE HAS DEBITED THE AMOUNT OF ` 1 33 707/- TOWARDS THE INTEREST EXPENDITURE TOWARDS PROFIT & LOSS ACCO UNT AND CLAIMED THE DEDUCTION. THE A.O. HAS NOTED THAT THE ASSESSEE HA S USED THE BORROWED FUNDS FOR GIVING THE SAME AS AN INTEREST-FREE LOANS / ADVANCES. AS NOTED BY THE A.O. EXPLANATION WAS CALLED FROM THE ASSESSE E WHY THE SAID INTEREST SHOULD NOT BE DISALLOWED. BUT THE ASSESSE E DID NOT FURNISH ANY REPLY. THE A.O. MADE THE DISALLOWANCE OF INTEREST EXPENDITURE OF ` 1 33 707/- AND MADE ADDITION TO THE TOTAL INCOME. IN APPEAL BEFORE THE LD. CIT (A) THE ADDITION WAS CONFIRMED. ON THE PE RUSAL OF THE ORDER OF THE CIT (A) IT IS SEEN THAT THE APPEAL WAS DISPOSE D OFF EX-PARTE . THE LD. CIT (A) HAS NOTED THAT THE APPEAL WAS FIXED ON 3.6. 2010 SERVING NOTICE THROUGH SPEED POST / AD BUT NONE APPEARED. NOTHING IS THERE ON RECORD TO SHOW THAT NOTICE WAS DULY SERVED ON THE ASSESSEE . IN MY OPINION THE LD. CIT (A) DISPOSED OFF THE APPEAL FILED BY THE AS SESSEE IN UNDUE HASTE. I THEREFORE CONSIDER IT FIT TO RESTORE THE MATTER TO THE FILE OF THE LD. CIT (A) TO DECIDE THE SAME ON MERIT AFTER GIVING OPPORT UNITY TO THE ASSESSEE TO REPRESENT THE CASE. THE LD. CIT (A) IS DIRECTED TO ENSURE PROPER SERVICE OF THE NOTICE TO THE ASSESSEE. ITA 6656/M/2010 SILVASSA EXTRUSIONS P. LTD. 3 3. IN THE RESULT ASSESSEES APPEAL IS ALLOWED FOR THE STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 9 TH FEBRUARY 2011. SD/- ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI DATE: 9TH FEBRUARY 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) 20 MUMBAI. 4) THE CIT 9 MUMBAI. 5) THE D.R. SMC BENCH MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T. MUMBAI *CHAVAN ITA 6656/M/2010 SILVASSA EXTRUSIONS P. LTD. 4 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 09.02.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 09.02.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER