TMI Blog2019 (7) TMI 926X X X X Extracts X X X X X X X X Extracts X X X X ..... and we accept the contention of the learned DR. Therefore, we condone the delay of 1159 days in filing of the appeal before the ITAT. Arms Length rate of interest - Investments in debentures - rate of interest of 15.75% paid by the assessee in respect of debentures of its associate concern M/s Watermarke Residency Private Ltd - AO reduced it to 11.20% and balance taxed as income - CIT upheld rate @15.75% also admitted certain additional evidence - HELD THAT:- We find that the assessee had filed additional details before the CIT (A) but the CIT(A) has not called for any remand report from the AO but has accepted the assessee s contention. Though the powers of the CIT (A) are co-terminous with the AO, the CIT (A) has failed to verify the details himself, nor has he called for a remand report, particularly when the AO in the assessment order had clearly brought out that he is not considering the additional information filed by the assessee because it was filed after passing of the draft assessment order. This acceptance of additional evidence without giving the AO an opportunity to verify the same clearly in violation of Rule 46A of the I.T. Rules. Further, it is the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cers of the I.T. Department directly. It was submitted that the appeal was filed after a delay of 1154 days and prayed for condonation of appeal. 3. The learned Counsel for the assessee objected to this condonation of delay when the matter was heard on 20.11.2018 and the learned Counsel for the assessee took serious objections to the condonation of delay. He submitted that the application filed by the Revenue was incomplete as it does not give any details, such as the person responsible for the misplacement of the file, action taken by the Department against such person and as to when the file was misplaced etc., He submitted that the trigger point for filing of this appeal by the Revenue with a delay of 1159 days was the proceedings in the assessee s case for the A.Y 2014-15 and not the reasons stated by the Department in the application filed for condonation of delay. The learned DR at that point of time sought time to file the chronological events regarding the delay of 1159 days and on 26.12.2017 he filed detailed explanation for filing the appeal with a delay. The learned Counsel for the assessee wanted to go through and sought time and accordingly the matter w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also holding of different charges by the Dy.CIT (IT) during the relevant period, as a reasonable cause for misplacement of the files and retracing after a period of two years necessitating the filing of the appeal with a delay of 1159 days. We find that the fact of the case before the Hon'ble Supreme Court in the case of Union of India vs. Vidarbha Veneer Industries (Supra) are slightly different as in that case, the petitioners could not give a satisfactory explanation for misplacement of the files and it was in those circumstances, that the Hon'ble Supreme Court held that the Department has failed to find out and how the file got misplaced and to fix the responsibility on someone and who should be accountable, while in the case before us, the cadre restructuring, the crossmovement of files from one location to another are the reason given for the delay. Being a huge Department, all the standard procedures have been laid down and all the officers are required to follow the same and maintain the files accordingly. The learned CIT (DR) had submitted that this is a single case which had got misplaced and that the Department has taken due care in all the cases to file the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the assessee s request cannot be accepted for the reason that no new evidence can be considered at the stage after the draft assessment order is passed and the assessee did not prefer to file an appeal/or objections to the DRP. Therefore, final assessment order was passed. The assessee filed an appeal before the CIT (A) by filing additional evidence before him. The CIT (A) accepted the assessee s contention and directed the AO to compute interest @ 15.75% as the Arms Length rate of interest. Thereafter, the CIT (A) directed the AO to tax the interest @10% as per the provisions of Article 11(2) of Indo-Cyprus DTAA, without including the surcharge or education cess. Aggrieved, the Revenue is in appeal before us by raising the following grounds of appeal: 1. The order of the Ld. CIT(A) is erroneous on facts and in law. 2. The Ld. CIT(A) erred in holding that the rate of interest of 15.75% paid by the assessee in respect of debentures of its associate concern M/s Watermarke Residency Private Ltd, represents arms length rate of interest and there is not justification for applying the provisions of Article 11 (7) of the India Cyprus O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... called for any remand report from the AO but has accepted the assessee s contention. Though the powers of the CIT (A) are co-terminous with the AO, the CIT (A) has failed to verify the details himself, nor has he called for a remand report, particularly when the AO in the assessment order had clearly brought out that he is not considering the additional information filed by the assessee because it was filed after passing of the draft assessment order. This acceptance of additional evidence without giving the AO an opportunity to verify the same clearly in violation of Rule 46A of the I.T. Rules. Further, it is the case of the assessee that the investments in debentures were made in rupees and therefore, the SBI PLR rate should be adopted. We find that all these contentions need consideration by the AO/TPO along with the additional evidence filed before the CIT (A). Therefore, we deem it fit and proper to remand the issue to the file of the AO/TPO for denovo consideration in accordance with law. Needless to mention that the assessee shall be given a fair opportunity of hearing. 11. In the result, Revenue s appeal is allowed. 12. With regard to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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