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Facts
The appeal was filed by the assessee against the order of the CIT(A) which confirmed the disallowance of a deduction claimed under section 57 of the Income Tax Act. The assessee's appeal was filed with a delay of 450 days, which was condoned by the Tribunal upon payment of costs.
Held
The Tribunal found that the assessee failed to provide sufficient evidence linking the borrowings and interest received to establish the nexus with M/s. Veesens Energy Pvt. Ltd. for the purpose of deduction. Consequently, the issue was remanded to the Assessing Officer for fresh verification.
Key Issues
Whether the CIT(A) was justified in confirming the disallowance of deduction claimed under Section 57 of the Income Tax Act due to lack of evidence to establish the link between borrowings and interest receipt.
Sections Cited
57
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Before: Shri M. Balaganesh & Shri S.S. Viswanethra Ravi
Year: 2016-17 Venkatachalam Ramakrishnan, Vs. The Assistant Commissioner of C-104, Bhel Nagar, Thuvakudi, Income Tax, Trichy 620 014. Circle 3(1), Trichy. [PAN:ADAPR1611D] (अपीलाथ�/Appellant) (��थ�/Respondent) अपीलाथ� की ओर से / Appellant by : Shri N. Arjun Raj, Advocate ��थ� की ओर से/Respondent by : Shri C.P. Solomon, JCIT सुनवाई की तारीख/ Date of hearing : 23.10.2025 घोषणा की तारीख /Date of Pronouncement : 28.10.2025 आदेश /O R D E R
PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order dated 07.02.2024 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi for the assessment year 2016-17.
We find that this appeal is filed with a delay of 450 days. The assessee filed an affidavit for condonation of delay stating the reasons. Upon hearing both the parties and on examination of the said affidavit, in the interest of justice, we condone the delay of 450 days by imposing cost of Rs.50,000/- payable in favour of the State Legal Aid Authority, Hon’ble Madras High Court within 30 days from the date of receipt of this order and admitted the appeal for adjudication.
The assessee raised 8 grounds of appeal amongst which, the only issue emanates for our consideration as to whether the ld. CIT(A) is justified in confirming the disallowance of claim of deduction under section 57 of the Income Tax Act, 1961 [“Act” in short] in the facts and circumstances of the case.
4. At the outset, it is noted that the Assessing Officer called for details of nature of transactions and source for payments through credit card, cash flow statements, income and expenditure statements, computation of income for FY 2014-15 and 2015-16 and balance sheet as on 31.03.2015 and 31.03.2016. Further, the details of income from other sources and deduction details, receipts from M/s. Veesens Energy Systems Pvt. Ltd. and Form 26AS for the year under consideration, the source of cash deposits, bank details, which is evident from page 2 of the assessment order. According to the Assessing Officer, the assessee submitted only statement of income for the year ended 31.03.2015 and 31.03.2016 and no further details furnished in response to the above details as sought for by the Assessing Officer, which is evident from para 3 of the assessment order. Accordingly, it is noted that the Assessing Officer proceeded to add an amount of Rs. 28,27,615/- by denying deduction under section 57 of the Act in the absence of any evidence. Further, before the ld. CIT(A), the assessee filed written submissions, which are reproduced in para 4.1 and 4.2 of the impugned order. Considering the above, the ld. CIT(A) held no evidence were furnished to establish the link between the borrowings and interest receipt as to find out whether such borrowings made by the assessee were ultimately transferred to M/s. Veesens Energy Pvt. Ltd. and whether such company were paid interest to the assessee on such transfer of amount, which is clear from para 7.2 of the impugned order. Before us, the ld. AR filed paper books containing pages 1 to 35 and paper book II containing 8 pages, wherein, no details regarding the findings of the ld. CIT(A), vide para 7.2 of the impugned order, filed except the returns of income for AY 2012-13, 2013-14 and 2017-18, where, we find no details to establish link between the borrowings and interest received. Further, we find the details of interest paid during the year under consideration at page 32 of the paper book, in our opinion, is not sufficient to decide the issue in question before us. Specifically, this Bench asked the ld. AR to furnish the details of borrowings and interest establishing the nexus and the ld. AR undertaken to file the same, but, however, no such details were filed before us. Since no details were filed before this Tribunal, the ld. CIT(A) and the Assessing Officer, in the interest of justice, we remand the issue to the file of the Assessing Officer for fresh consideration for verification of details as observed by the ld. CIT(A) in para 7.2 of the impugned order. The Assessing Officer, firstly, satisfy the payment of cost as imposed by this Tribunal while condoning the delay and, shall confine verification with reference to para 7.2 of the ld. CIT(A) and pass order in accordance with law. Thus, the grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on 28th October, 2025 at Chennai.