NISHIT DHIRAJLAL DOSHI,AHMEDABAD vs. D.C.I.T. CIRCLE 2(1)(1), AHMEDABAD

The assessee has raised the following grounds of appeal: 1. Disallowance of claim of interest expenses of Rs.16,70,385/- u/s.57 of the Act.

The facts of the case are that the assessee filed the return of income for the Assessment Year under consideration on 30.10.2014, declaring a total income of Rs.83,07,980/-. The return was selected for scrutiny and the assessment under section 143(3) of the Income-tax Act, 1961 was completed on 05.12.2016, accepting the returned income. Subsequently, the Principal Commissioner of Income Tax invoked the provisions of section 263 of the Act and, vide order dated 08.03.2019, set aside the assessment on the limited issue of examining the allowability of deduction of Rs.16,70,385/- claimed by the assessee under section 57 of the Act. Pursuant to the directions issued under section 263, the Assessing Officer initiated fresh assessment proceedings and called upon the assessee to substantiate the claim of deduction. During the course of the reassessment proceedings, the assessee submitted that the loan in respect of which interest expenditure was claimed had been obtained against the mortgage of a residential property for the purpose of advancing loans and earning interest income. It was further explained that the description of the loan as "Housing Loan" was merely an accounting nomenclature and had led to the misunderstanding. The assessee also submitted that the borrowed funds had been advanced to Fivebro International Private Limited, the interest income there from had been duly offered to tax, and, therefore, the corresponding interest expenditure was allowable under section 57 of the Act. The assessee supported the claim with

Aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). However, the Ld. CIT(A), dismissed the appeal of the assessee, since the assessee remained non compliant to the notices issued and failed to submit substantial documents.

Heard the argument of both the parties and perused the material available on record.

On perusal of the records, it is observed that the assessee was afforded several opportunities of hearing on 30.01.2021, 12.12.2024, 22.01.2025 and 06.03.2025 to furnish details, clarifications and explanations to substantiate his claim. However, despite being granted multiple opportunities, the assessee remained non compliant and failed to furnish the requisite details or explanations before the Ld. CIT(A). Consequently, the Ld. CIT(A), based on the material available on record, upheld the action of the Assessing Officer and dismissed the appeal of the assessee, without adjudicating the issues on merits. Before us, Ld. Counsel for the assessee prayed that, given an opportunity, due compliances will be made and all the

In the result, the appeal of the assessee is allowed for statistical purposes.