2023 (2) TMI 957 - AT - Income Tax

Disallowance of interest expenditure - assessee failed to justify the commercial expediency of the loan given to the various parties on interest free basis - HELD THAT - When an appeal is filed before the Tribunal by the assessee himself against the order of lower authorities it is expected that assessee may put forth some documentary evidences in support of his contention to decide the appeal as it is the duty of the assessee to lead evidence in support of its claim and for adjudicating authority to decide upon the sustainability of the claim on the basis of the evidence led by the parties before it. Before us there has been no appearance from the side of the assessee on the various dates though the notices were issued through RPAD. Before us no material has been placed by the assessee to controvert the findings of the lower authorities nor has assessee pointed to any fallacy in the findings of lower authorities. Decided against assessee.

Summary

Issues:
- Validity of assessment order
- Justification of interest expenditure disallowance

Validity of Assessment Order:
The appeal was directed against the order of the Ld. CIT(A) relating to the A.Y. 2015-16. The assessee, a company engaged in buying and selling shares, filed its return of income for the year, declaring total income. The case underwent scrutiny, and the assessment was framed under section 143(3), determining the total income. The assessee appealed the AO's order before the Ld. CIT(A), who dismissed the appeal. The assessee then approached the Tribunal, raising various grounds challenging the legality, jurisdiction, and fairness of the orders passed by the authorities. The Tribunal noted that despite multiple hearing dates, the assessee or their representative did not appear or file any adjournment application. Consequently, the Tribunal proceeded to dispose of the appeal based on the material available on record and the arguments presented by the Revenue.

Justification of Interest Expenditure Disallowance:
During the assessment proceedings, the AO observed that the assessee had paid substantial interest on loans and advances taken, claiming it as interest expenditure. The AO requested details regarding the interest expenses, loans, advances, and their purposes. It was found that the assessee had failed to justify the commercial expediency of interest-free loans given to various parties, leading to a diversion of funds for non-business purposes. The AO disallowed a specific amount of interest expenditure as not being for business purposes. The assessee contested this disallowance before the CIT(A) along with challenging the assessment's validity. The CIT(A) upheld the AO's addition of interest expenditure, stating that the funds were diverted for non-business purposes without any proof of commercial expediency. The CIT(A) also upheld the assessment's validity. The assessee then appealed to the Tribunal, but as there was no representation or evidence provided by the assessee, the Tribunal upheld the CIT(A)'s order, dismissing the appeal.

In conclusion, the Tribunal dismissed the appeal of the assessee, emphasizing the importance of the assessee's active participation in presenting evidence and arguments to support their case. The Tribunal upheld the orders of the lower authorities regarding the validity of the assessment and the disallowance of interest expenditure, as the assessee failed to provide any contrary material or challenge the findings effectively.