M/S. G K SOLUTIONS PVT LTD,MUMBAI vs. ITO WARD 5(1)(1), MUMBAI

PER PAWAN SINGH, JUDICIAL MEMBER:

“1. facts and in the circumstances of the case and in law, the order passed by the National Faceless Appeal Centre (NFAC) under section 250 of the Income-tax Act, 1961 ('IT Act') is erroneous, devoid of facts and contrary to the provisions of the law and accordingly, liable to be quashed.

2. On the facts and in the circumstances of the case, the Learned NFAC passed the order without providing the adequate opportunity of being heard thereby violating principle of natural justice before passing the order.

3. On the facts and in the circumstances of the case and in law, the learned AO has erred in making an addition of interest of Rs. 13,20,000/- paid to Mrs. Kanta Achhra who took over the loan from Mr Gul Achhra.

5. Your appellant craves to leave, add, amend or delete any of the foregoing grounds of appeal before or during the course of hearing.

The ld. Authorised Representative (AR) of the assessee submits that ld. CIT(A) passed the ex-parte order for the want of reply. The ld. AR submits that non- compliance of various notices is recorded in para 5.1 of impugned order. The various notices mentioned in para 5.1 were allegedly issued during severe Covid Pandemic and only one notice was allegedly issued for fixing the date of hearing on 26.09.2024. The assessee could not make any compliance. The assessee has good case on merit. The assessing officer made addition for disallowance of deduction of interest under section 24(b). The assessee has sufficient evidence to prove the nexus of fund borrowed for the purpose of repayment of earlier loan which could not be furnished. The ld. AR of the assessee submits that assessee be given one more opportunity to contest his case before ld. CIT(A).

No such evidence was furnished either before assessing officer or before ld. CIT(A). The assessee was given ample opportunity by ld. CIT(A). Thus, the assessee has no merit in various grounds of appeal raised by them.

4. I have considered the rival submission of both the parties and perused the order of lower authorities carefully. I find that assessing officer made disallowance of interest expenses of Rs. 13,20,000/- on the ground that assessee claimed that they have availed loan for repayment of earlier loan received against property, which is not proved to the satisfaction of assessing officer. The appeal of assessee before ld. CIT(A) was dismissed for the want of submission. The ld. CIT(A) also held that assessee has not furnished any supporting documents that loan was utilized for the purpose of purchase, construction or repairing of property and / or in absence of supporting document, and that it was exclusively used for acquiring the rental property.

Before me, the ld. AR of the assessee vehemently submitted that second loan was availed for the purpose of repayment of earlier loan and as per Central Board of Direct Taxes (CBDT) Circular no. 28 dated 20.08.1969, the assessee is eligible for deduction of such interest on second loan. Considering the fact that no such evidence was furnished or considered by lower authorities, therefore, I deem it appropriate to restore the issue to the file of ld. CIT(A), with the liberty to the assessee to file such evidence before ld. CIT(A). In the result, grounds of appeal raised by assessee are allowed for statistical purpose.

Order pronounced in the open court on 15.04.2025 at the time of hearing.