2023 (5) TMI 946 - AT - Income Tax

Appeal allowed due to lack of natural justice - CIT(A) directed to reconsider.

KBA Infrastructure Pvt. Ltd. Versus Deputy Commissioner of Income-tax, Ward-10 (1) (2), Mumbai

KBA Infrastructure Pvt. Ltd. Versus Deputy Commissioner of Income-tax, Ward-10 (1) (2), Mumbai - TMI Issues involved:The appeal challenges the order passed by the Ld. Commissioner of Income Tax (Appeals)-17, Mumbai for the Assessment Year 2012-13, regarding dismissal of the appeal against the Assessment Order under Section 143(3) of the Income Tax Act, 1961.Natural Justice Issue:The Appellant contended that the Ld. CIT(A) erred in not granting proper opportunity of being heard, breaching principles of natural justice, and passing the order without application of mind to the facts and submissions. The Appellant also raised concerns about the confirmation of additions made by the Assessing Officer based on surmises and conjecture, without relevant considerations.Addition of Unsecured Loans Issue:The Ld. CIT(A) confirmed the addition of Rs. 2,13,00,000 under Section 68 of the Act for alleged accommodation entry of unsecured bogus loan. The Appellant argued that no such addition was warranted and if required, the computation was arbitrary and excessive.Interest Expenditure Disallowance Issue:The Ld. CIT(A) confirmed the addition of Rs. 1,47,575 for disallowance of interest expenditure related to alleged bogus unsecured loans. The Appellant disputed the necessity of this addition based on the facts and law.Commission Expenditure Issue:The Ld. CIT(A) upheld the addition of Rs. 3,19,500 for alleged commission expenditure incurred for obtaining accommodation entry of unsecured loans. The Appellant contended that no such addition was justified in the circumstances.Judgment Details:The Appellant, a private limited company, challenged the assessment order for the Assessment Year 2012-13, which included additions for accommodation entry of unsecured loans, disallowance of interest expenditure, and commission expenditure. The CIT(A) dismissed the appeal after considering additional evidence and a remand report.Upon hearing arguments, the Appellant claimed the order lacked sufficient opportunity for the Appellant to be heard, violating natural justice principles. The Departmental Representative provided communication indicating the consideration of the remand report by the CIT(A), refuting the Appellant's claims.After evaluating the submissions, the Tribunal found ambiguity regarding the furnishing of the remand report to the Appellant. To address the Appellant's grievance of natural justice violation, the order was set aside with directions for the CIT(A) to reconsider the issues after giving the Appellant a reasonable opportunity to be heard. The appeal was allowed for statistical purposes, leaving all rights and contentions open.In conclusion, the appeal was allowed for statistical purposes, emphasizing the importance of providing a fair opportunity for the Appellant to present their case.