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Facts
The assessee appealed against an order concerning the assessment year 2015-16. The appeal involved additions made by the Assessing Officer (AO) concerning interest income and disallowance of expenses. The assessee claimed to have offered interest income in a subsequent year and challenged the AO's addition based on a variation.
Held
The tribunal condoned the delay in filing the appeal. Regarding the interest income addition, the tribunal allowed the assessee's claim, subject to verification by the AO. For the disallowance of expenses, the tribunal reduced the addition from 10% to 5% in the interest of substantial justice.
Key Issues
Whether the AO was justified in making an addition for interest income when the assessee claimed it was offered in a subsequent year and whether the disallowance of expenses should be reduced.
Sections Cited
250, 46A
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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY
Per : Narender Kumar Choudhry, Judicial Member:
This appeal has been preferred by the Assessee against the order dated 23.12.2024, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2015-16.
At the outset, the reasons stated by the Assessee for condonation of delay of 28 days in filing of this appeal as bonafide, genuine and unintentional, as not refuted by the Ld. DR, the delay is condoned.
Coming to the merits of the case, this Court observe that the Assessee has claimed that he has offered interest income of Rs.15,82,652/- including the amount of Rs.8,11,420/- in the assessment year 2016-17 and filed the details before the Assessing Officer (in short “the AO”) in support of his claim, however, the AO still made the addition of Rs.8,11,420/- mainly on the reasons that during the scrutiny proceeding, the Assessee has filed his return of income offering an amount of Rs.9,825/- for taxation and therefore there is variation of Rs.8,11,420/- which remained undisclosed as other source of income.
Admittedly, the AO failed to examine such contention raised by the Assessee, as the Assessee claimed that he is following cash accounting system and therefore offered the interest income on receiving, which in the instant case was received in A.Y. 2016-17 and therefore offered in the said A.Y.
The Ld. DR did not refute the specific claim raised by the Assessee.
Therefore, considering the peculiar facts and circumstances in totality, this Court is inclined to allow the claim raised by the Assessee by deleting the addition of Rs. 8,11,420/-, however, subject to verification by the AO to the limited extent and on establishing by the Assessee the particular amount in a particular year and/or bifurcation of the interest amount of Rs. 15,82,612/- as offered in A.Y. 2016-17 whether includes the amount of Rs.8,11,420/-. This Court clarifies that the onus would be on the Assessee.
Further, coming to the second addition of Rs.6,51,963/- on account of disallowance at the rate of 10% of the expenses.
The Ld. AR drew the attention of this Court to the page No.17, wherein the AO specifically mentioned the fact that the Assessee has filed 3 vouchers for Rs.10,000/-, 20,000/- and one purchase of elevator. The Assessee has submitted that though 90% of the vouchers/documents pertaining to the expenses claimed were filed before the AO, somehow some of documents remained to be filed and therefore the Assessee, praying to this Hon’ble Court for admission of additional evidence, as requested by filing a petition for admission of additional evidence u/r 46A of the Income Tax Rules,1962 (in short ‘the rules’)dated 09.06.2025.
Considering the peculiar facts and circumstances, this Court though is inclined not to entertain the claim of the Assessee at this particular stage, as the AO specifically mentioned the aforesaid fact of not filing the document and even otherwise Ld. commissioner has affirmed the aforesaid findings and the Assessee has not controverted the said finding, however in the interest of justice, is of the considered view that it would be appropriate if the addition based on the some of the documents, can be reduced to 5% to suffice the purpose of substantial justice. Thus, the above addition @10% is reduced to 5%.
This Court clarifies that decision in this particular case in the peculiar facts and circumstances, would not be any impediment for adjudication of the other proceedings under the Act.
In the result, the appeal of the Assessee is partly allowed in the aforesaid terms.
Order pronounced in the open court on 11.06.2025.