SHOBHA SUNDAR BABU ,BANGALORE vs. INCOME TAX OFFICER, WARD-4(3)(2), BANGALORE

The Ld. AO erred in disallowing deduction u/ s. 24(b) amounting to Rs. 53,09,817/- and the Ld.CIT(A) erred in confirming the same. 5. The lower authorities ought to have appreciated that deduction u/s. 24(b) is available on accrual basis and that the matter is pending before the Debt Recovery Tribunal. 6. The lower authorities failed to appreciate that the matter was sub judice and there was sufficient and reasonable cause which prevented the Appellant from obtaining relevant documents owing to circumstances on account of Covid-19 which prevailed at the time of framing the assessment.” 3. Brief facts of the case are that the assessee filed his return of income for the assessment year 2018-19 on 24.7.2018 declaring total income of Rs. NIL. Subsequently, the case of the assessee was selected for complete scrutiny under E-assessment scheme-2019 through CASS on the issue of “income from house property”. Consequently, notices u/s 143(2) as well as 142(1) of the Act was issued and the assessee had made part submissions. On perusal of the ITR filed by the assessee, the AO found that the assessee has claimed interest expense of Rs.53,09,817/-under head House property situated at No.113, Krishna Industrial Area, 7th Mile, Hosur Road, Bangalore. The assessee during the course of assessment proceedings submitted a copy of the order of Debt Recovery Tribunal only. The AO was of the opinion that the assessee failed to provide any details like Date, amount of loan taken and whether the borrowed capital was used for acquiring, constructing, repairing, renewing or reconstructing the property? Further, the AO was of the opinion that no deduction u/s 24(b) of the Act can be availed if the assessee failed to furnish such certificate as prescribed in proviso to section 24(b) of the Act. Since the assessee had submitted only the copy of Debt Recovery Tribunal’s order and did not furnish the certificate from the person to whom any interest is payable on the capital borrowed and hence Shobha Sundar Babu, Bangalore

Aggrieved by the assessment completed u/s 143(3) of the Act dated 27.3.2021, the assessee preferred an appeal before the ld. CIT(A)/NFAC.

The ld. CIT(A)/NFAC dismissed the appeal of the assessee as in spite of providing 6 nos. of opportunities, the assessee neither responded to any of the notices nor filed any detailed submission to substantiate her claim and accordingly the ld. CIT(A)/NFAC left with no option but to upheld the AO’s decision due to lack of further evidence supporting the assessee’s contention.

Again aggrieved by the order of ld. CIT(A)/NFAC, the assessee has filed present appeal before this Tribunal. The assessee has also filed a paper book comprising 51 pages containing therein the petition for admission of additional evidences, sanction letters issued by ING Vysya Bank, Assignment agreement between ING Vysya Bank Ltd and M/s Phoenix ARC Pvt. Ltd., Statement of dues on loans availed by the assessee issued by M/s. Phoenix ARC Pvt. Ltd., table summarizing the interest dues claimed by M/s. Phoenix ARC Pvt. Ltd. for F.Y 2017-18 along with statement of total income of the assessee for the assessment year 2018-19. 7. Before us, the ld. A.R. of the assessee vehemently submitted that the assessee by way of additional evidences has submitted the Shobha Sundar Babu, Bangalore

The ld. D.R. on the other hand has no objection if these additional evidences produced for the first time are remitted to the file of AO for examination and reconsideration.

We have heard the rival submissions and perused the materials available on record. It is an undisputed fact that the case of the assessee was selected on the issue of “income from house property”. It is also an undisputed fact that the assessee had claimed deduction of Rs.53,09,817/- u/s 24(b) of the Act. It is also an undisputed fact that during the course of assessment proceedings the assessee could not produced the certificate from the person to whom any interest is payable on the capital borrowed. Now before us, the assessee by way of additional evidences produced sanction letters issued by ING Vysya Bank, Assignment agreement between ING Vysya Bank Ltd and M/s Phoenix ARC Pvt. Ltd., Statement of dues on loans availed by the assessee issued by M/s. Phoenix ARC Pvt. Ltd., table summarizing the interest dues claimed by M/s. Phoenix ARC Pvt. Ltd. for F.Y 2017-18 along with Shobha Sundar Babu, Bangalore

In the result, appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 16th Sept, 2025 (Waseem Ahmed) Accountant Member (Keshav Dubey) Judicial Member

The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file