RAGHURAJ SINGH RAJAWAT,JAIPUR vs. DCIT-ACIT CIRLE SILCHAR/DCIT CIRCLE 1 JAIPUR, SILCHAR/JAIPUR

ITA 143/GTY/2026Status: DisposedITAT Guwahati06 October 2026AY 2017-20185 pages
AI SummaryDismissed

What were the facts?

The assessee, Raghuraj Singh Rajawat, filed an appeal before the Income Tax Appellate Tribunal (ITAT) challenging the order of the National Faceless Appeal Centre (NFAC), Delhi, dated 20.03.2024. This order upheld the disallowance of Rs.31,80,846/- made by the Assessing Officer (AO) under Section 57(iii) of the Income Tax Act, 1961. The disallowance pertained to interest paid by the assessee on overdrafts taken against Fixed Deposits (FDs). The AO disallowed the interest as there was no direct nexus between the interest paid and the interest income earned. The assessee had paid interest to various banks, including UBI Jaipur, OBC Jaipur, BOB Jaipur, UCO Dudu, SBI Dudu, and SBI Jaipur. The appeal was filed with a delay of 656 days, for which the assessee provided reasons related to PAN jurisdiction issues. The Tribunal condoned the delay. The assessee was not represented during multiple hearing dates.

What did the Tribunal hold?

The Tribunal held that the assessee's appeal is dismissed. The Tribunal noted that the assessee paid interest expenditure of Rs.31,80,846/- to various banks and could not explain the purpose for which the overdraft was utilized. Although the assessee received interest of Rs.40,78,182/- on fixed deposits, the assessee failed to establish the linkage between the income earned and the interest expenditure incurred during the proceedings before the lower authorities. Consequently, the expenditure claimed by the assessee under Section 57(iii) of the Act was not allowable. The Tribunal found no infirmity in the orders of the lower authorities, the AO and the CIT(A), and considered the CIT(A)'s order to be well-reasoned. The operative direction is the dismissal of the assessee's appeal.

What were the issues?

1. Whether the disallowance of interest expenditure of Rs.31,80,846/- under Section 57(iii) of the Income Tax Act, 1961, is justified, considering the assessee paid interest on overdrafts taken against FDs, and the linkage between this expenditure and interest income earned was not established? (Question of law and fact, concerning Section 57(iii)). Assessee's contentions: The assessee argued that the interest paid was for monies used for acquiring an asset from which income derived is assessable under the head 'income from other sources'. The delay in filing the appeal was due to departmental issues with PAN jurisdiction, constituting a reasonable cause. Revenue's contentions: The Revenue contended that the assessee could not substantiate the purpose for which the interest was paid and claimed as expenditure under Section 57(iii). It was argued that the loan funds were not utilized for any other source of income and there was no direct nexus between the interest expenditure and the income earned by the assessee. The lower authorities' orders should be upheld.

Which sections of the Income-tax Act were involved?

Section 57(iii),Section 250,Section 143(3),Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, GUWAHATI BENCH, GUWAHATI

For Respondent: Shri Santosh Kumar Karnani, Addl. CIT
Hearing: 17.09.2026Pronounced: 06.10.2026

PER LAXMI PRASAD SAHU, AM: This appeal is filed by the assessee against the order passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) by the , National Faceless Appeal Centre, Delhi [hereinafter referred to as ‘the ld. CIT(A)’], dated 20.03.2024 arising out of assessment order passed by the Assessing Officer (In short, ‘the AO’) u/s 143(3) of the Act, dated 26.12.2019, wherein the AO has made addition of Rs.31,80,846/- u/s 57(iii) of the Act on the following grounds of appeal:

“1. That the ld. CIT(A) has erred in law as well in facts of the case in upholding the disallowance of interest u/s 57 of the Income Tax Act made by the AO thereby confirmed

The order continues below.

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