DHARMENDER SHARMA,HYDERABAD vs. INCOME TAX OFFICER, WARD-4(4), HYDERABAD

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ITA 1537/HYD/2018Status: DisposedITAT Hyderabad22 January 2020AY 2013-145 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the ownership of the property and the nexus for interest payments needed further examination. Therefore, the case was remitted back to the CIT(A) to provide the assessee with another opportunity to present evidence.

What were the facts?

The assessee did not offer rental income in his return, claiming the property belonged to a trust. The Assessing Officer added the income, and the CIT(A) confirmed it. For interest payments, the assessee could not prove the nexus between interest earned and interest expenditure, leading to an addition.

What were the issues?

Whether the rental income should be taxed in the hands of the assessee or a trust, and whether the interest expenditure was allowable without proving a nexus with interest income.

Which sections of the Income-tax Act were involved?

Section 24(a)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD “SMC” BENCH, HYDERABAD

Before: SHRI V. DURGA RAO, HON’BLE

For Appellant: Shri Bhupesh Kumar Dand, AR
For Respondent: Shri Nilanjan Dey, Sr.DR
Hearing: 04/12/2019

Date of hearing : 04/12/2019. Date of pronouncement : 22/01/2020. O R D E R This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-1, Hyderabad, dated 16/05/2018 for the Assessment Year 2013-14.

2.

The first ground of appeal relates to rental income of Rs.2,96,250/-. In the assessment order, the Assessing Officer has noticed from 26AS statement that assessee has received rental income of Rs. 4,23,600/- from M/s. Premier Papers, however, the assessee did not admit the same in his return of income filed. When the Assessing Officer asked as to why the same is not admitted in the return, it was submitted that the property was belonging to M/s. Surajmal Nanibhai Sharma Trust and was let out to M/s. Premier Papers and while letting out, instead of giving PAN of the trust, the PAN of the assessee was given by oversight. The AR of the assessee was asked to adduce evidence regarding the admission of income in the hands of the trust. However, the AR could not produce any evidence in support of assessee’s claim. Accordingly, the Assessing Officer made the addition of Rs.2,96,5290/- after allowing deduction at 30% u/sec. 24(a) of the Act.

3. On appeal before the ld. CIT(A), the assessee has not filed any evidence, therefore ld. CIT(A) confirmed the order of the Assessing Officer.

4. Before me, ld. counsel for the assessee has submitted that M/s. Surajmal Nanibhai Sharma Trust has already offered rental income in its hands, therefore addition cannot be made in the hands of the assessee and submitted that property is belonging to the trust only and not to the assessee and requested to remit the issue back to the ld. CIT(A) for fresh adjudication.

5.

On the other hand, ld.DR relied on the orders of the authorities below.

6.

I find that whether let out property belonging to the assessee or to the M/s. Surajmal Nanibhai Sharma Trust is necessary to be examined before deciding the issue. Therefore, in my opinion, one more opportunity should be given to the assessee to substantiate his case before the ld. CIT(A). Accordingly, I set aside the order passed by the ld. CIT(A) and remit the issue back to the ld. CIT(A) to examine whether the property is belonging to the M/s. Surajmal Nanibhai Sharma Trust or to the assessee and what is the agreement between M/s. Premier Papers and M/s.Surajmal Nanibhai Sharma Trust and decide the issue denovo in accordance with law. It is also directed the assessee to submit all the relevant documents such as sale deed, agreement between M/s. Surajmal Nanibhai Sharma Trust and M/s. Premier Papers and other relevant details and appear before the ld. CIT(A) on the date is given for hearing. Thus, this ground of appeal

is allowed for statistical purpose.

7. The second ground of appeal relates to interest payment amounting to Rs. 4,51,098/-. During the course of assessment proceedings, the Assessing Officer has noticed that assessee has admitted income from other sources at Rs. 1,18,075/- after claiming deduction of interest payments amounting to Rs.4,51,098/-. The AR was asked to prove the nexus between the interest income earned and interest expenditure. The AR expressed his inability to prove the nexus. Accordingly, the Assessing Officer made the addition of Rs. 4,51,098/- to the income returned.

8. On appeal, ld. CIT(A) confirmed the order of the Assessing Officer on the ground that assessee has not filed balance sheet, bank account statement, interest given and received.

9. Before me, ld. counsel for the assessee has submitted that all the details such as balance sheet, bank account statement, details of loans and interest received and given before the lower authorities, without examining the same, simply addition is made. In view of the submissions made by the ld.AR, I find that issue has to be remitted back to the ld. CIT(A) to give one more opportunity to the assessee to substantiate his case. Accordingly, I set aside the order passed by the ld. CIT(A) and remit the issue back to the file of the ld. CIT(A) with a direction to adjudicate the issue afresh after examining the balance sheet, bank account statement, details of loans and interest paid and received. It is also directed the assessee to file all the relevant details before the ld. CIT(A) on the date is given for hearing without fail. Thus, this issue of the assessee is allowed for statistical purpose.

10.

In the result, appeal filed by the assessee is allowed for statistical purpose. Order Pronounced on this 22nd day of Jan., 2020.

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