MR. RAJIV RAMESH KOCHHAR,MUMBAI vs. ACIT CIRCLE 25(3), MUMBAI

The Learned AO erred in disallowing the expenditure claimed u/s 57 of Rs.51,05,005/- for Interest paid to Kotak Mahindra Bank Ltd., claimed against interest received from Archana Kochhar of Rss.52,38,081/-, and the said disallowance of additions was later confirmed by Hon. Commissioner of Income Tax (Appeals) in spite of detailed submission.”

Briefly stated, the assessee has e-filed his return of income on 31.10.2017 declaring total income at Rs. 79,60,420/-. Subsequently the case was selected for scrutiny under CAS on limited issue. Accordingly statutory notice under section 143(2) and 142(1) along with questionnaire were issued, which were responded by the assessee. While concluding the assessment, the ld. AO observed that there was a difference in the amount of cost of acquisition of property vs. the amount as per registered deed of the property, the difference in cost of acquisition was Rs. 2,19,378/-, which after considering the indexation has worked out to be at Rs. 3,90,507/-, for which the assessee failed to furnish any explanation or supporting evidence, therefore the amount was added back to the income of assessee. Further Mr. Rajiv Ramesh Kochhar the assessee has claimed a deduction under section 57 of the Act regarding interest paid to Kotak Mahindra Bank Ltd., however, the assessee was unable to furnish the supporting evidence to justify the interest paid on said loan, therefore the amount of Rs. 51,05,005/- was also added back to the income of assessee as unexplained expenditure.

Aggrieved with the aforesaid additions, assessee preferred an appeal before the ld. CIT(A) but remain unsuccessful to convince him about the additional expenses incurred during the purchase of property, which were also part of the cost of purchase. Further, the assessee tried to explain about the loan taken from Kotak Mahindra Bank Ltd. which in turn was given to his wife and the interest has been charged from wife and paid to bank, however assessee was unable to furnish necessary details / evidence like Bank statement etc, therefore in absence of corroborative evidence the appeal of assessee has been dismissed by the ld. CIT(A).

To challenge the aforesaid findings of ld. CIT(A), the assessee preferred the present appeal before us.

At the outset, the ld. AR of the assessee admitted that the requisite evidence cannot be furnished by the assessee before the ld. CIT(A) or the AO, however all Mr. Rajiv Ramesh Kochhar such evidences are available with him which are placed before us in the form of additional evidences and submitted that the assessee is able to substantiate all the expenses for purchase of property as well as the loan taken from the Kotak Mahindra Bank Ltd., therefore the matter may kindly be restored to the file of ld. AO, so that such evidences could be placed before him to verify and the correct figure of capital gain as well as claim of interest on loan could be arrived at by the Assessing Authority.

Per contra, the ld. Sr. DR vehemently supported the orders of revenue authorities, however agreed to the request of ld. AR to set-aside the matter to the file of ld. AO for fresh adjudication.

We have considered the rival submissions and perused the material on available record and the contentions raised by both the parties. Admittedly in the present case, the assessee had claimed certain expenses being part of the cost of purchase of property, however was unable to substantiate before the authorities below in absence of relevant documentary evidence. Also the loan taken from Kotak Mahindra Bank Ltd. by the assessee which is further extended to his wife and therefore the interest was paid by wife of assessee which in turn has been paid to Bank by the assessee, therefore it is submitted before us that the assessee had offered such interest receipts from wife as his income and claimed the expenditure Mr. Rajiv Ramesh Kochhar for interest paid to Kotak Mahindra Bank Ltd., such transaction was also not explained properly by the assessee before the ld. AO by corroborating the same with requisite evidence, therefore one more opportunity can be granted to the assessee as requested by ld. AR and fairly agreed by the revenue. In backdrop of such facts and circumstances, to meet the ends of justice, it would be appropriate to restore this matter back to the file of ld. AO for fresh adjudication of the issues which became the reason for additions in the hands of assessee.

In result, the appeal of assessee is allowed for statistical purposes, in terms of our aforesaid observations.

DR, ITAT, Mumbai 4. 5. Guard File CIT