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Facts
The assessee claimed an interest expense of Rs. 10,12,400/- against interest income. The AO disallowed this expense for lack of documentation. The CIT(A) upheld the disallowance, and the assessee appealed.
Held
The Tribunal found that the assessee had submitted confirmation from the payee, Mr. Vivek Jindal, who confirmed receipt of Rs. 10,12,400/-. The Tribunal noted that similar claims were allowed in earlier years and directed the deletion of the disallowance.
Key Issues
Whether the disallowance of interest expense was justified without proper opportunity and sufficient documentation, especially when similar claims were allowed in prior years.
Sections Cited
148, 143(2), 142(1), 147, 143(3)
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आयकर अपीलीय अिधकरण,च"डीगढ़ "यायपीठ “एस.एम.सी” , च"डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCHES, “SMC” CHANDIGARH HEARING THROUGH: VIRTUAL MODE "ी िव"म "सह यादव, लेखा सद"य BEFORE: SHRI. VIKRAM SINGH YADAV, AM आयकर अपील सं./ िनधा"रण वष" / Assessment Year : 2012-13 Madan Jindal बनाम The DCIT C/o A Goel & Associates Circle, Sirhind 50 SCF, Leela Bhawan, Patiala, Patiala Punjab-147001 "थायी लेखा सं./PAN NO: AAMPJ2919F अपीलाथ"/Appellant ""यथ"/Respondent िनधा"रती क" ओर से/Assessee by : Shri Ashok Goel, C.A राज"व क" ओर से/ Revenue by : Dr. Ranjeet Kaur, Sr. DR सुनवाई क" तारीख/Date of Hearing : 08/01/2025 उदघोषणा क" तारीख/Date of Pronouncement : 20/01/2025 आदेश/Order
PER VIKRAM SINGH YADAV, AM
This is an appeal filed by the Assessee against the order of the Ld. CIT, ADDL/JCIT(A)-8, Delhi dt. 28/06/2024 pertaining to Assessment Year 2012-13 wherein the Assessee has taken the following grounds of appeal:
1. “In Law, on the facts and in the circumstances of the case, the Ld. CIT(A) is not justified confirming the addition of Rs. 10,12,400/- on account of interest claimed.
The learned CIT(A) has erred in deciding the appeal without giving any opportunity as per CBDT Notification No. 139/2021/F. No. 370142/66/2021-TPL notified the Faceless Appeal Scheme, 2021 (hereinafter referred to as 'new scheme') applicable w.e.f. 28 December 2021 which is in supersession of the old scheme, Which is against natural justice as no notice was given after Dec 2020.When appeal decided in June 2024. 3. The learned CIT(A) has erred in law and in the facts confirming the issue of notice u/s 148 and recording of reason, when the AO was having no jurisdiction over the assessee. 4. The learned CIT(A) has erred in law in the facts confirming the issue of notice u/s 148 when reason recorded were on incorrect facts and not as per law. 5. The learned CIT(A) has erred in law in the facts upholding the addition Rs 10,12,400/- made on account of interest which is against natural justice as only four days were allowed to file submission for information relating to 7 years old.
6. The learned CIT(A) has erred in law in the facts upholding the addition Rs 10,12,400/- made on account of interest when, no addition have been made on the ground for which the case was reopened u/s 148. Hence no other addition can be made.
7. The learned CIT(A) has erred in law in the facts upholding the addition Rs 10,12,400/- made on account of interest when the claim of the same is genuine and has been allowed in scrutiny assessment also in other years. 8. That the appellant craves leave to add delete or modify any ground of appeal and to add any new ground of appeal. Before the same is heard or disposed off.”
2. Briefly the facts of the case are that basis information in possession of the AO that the assessee has carried out certain transaction in immovable property amounting to Rs. 57,73,000/- and in absence of any plausible explanation submitted by the Assessee, reasons were recorded whereby the AO held that he has sufficient reasons to believe that nature and source of financial transaction crystallizing his income by way of capital income on sale of immovable property remain unexplained and as such represents assessee’s income which has escaped assessment and notice under section 148 dt. 29/03/2019 was issued by ITO, Ward Nabha. Thereafter, case of the assessee was transferred to DCIT, Mandi Gobindgarh and in response to the initial notice dt. 29/03/2019, the assessee filed its return of income on 21/10/2019 thereafter notice under section 143(2) and 142(1) were issued calling for necessary information/ documentation from the assessee. During the course of assessment proceeding, the AO noted from the computation of income furnished by the assessee that he has claimed expenditure of Rs. 10,12,400/- as interest paid under the head “income from other sources” and vide notice dt. 28/11/2019 necessary information, details alongwith documentary evidence like interest certificate etc. regarding interest paid was called for. In response, the assessee submitted that the documentary evidence for interest received and interest paid relates to very old transactions and sought 10 days time to respond to the notice so issued. Thereafter, another notice was issued on 06/12/2019 and in absence of any explanation submitted by the assessee/ documentary evidence furnished by the assessee, the AO finalized the assessment under section 147 r.w.s 143(3) vide order dt. 09/12/2019 at an assessed income of Rs. 44,13,820/- by making an addition of Rs. 10,12,400/- on account of interest payment claimed by the assessee.
Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A) who has since sustained the said findings and against which, the assessee is in appeal before us.
During the course of hearing, the Ld. AR taken us through the return of income furnished by the assessee wherein the assessee has shown interest income of Rs. 2,689,960/- under the head “income from other sources” against which he has claimed interest expenses of Rs. 10,12,400/- and net interest income of Rs. 1,677,560/- have been offered in the return of income under the head “income from other sources”. It was submitted that where the interest income has been brought to tax by the AO and in such circumstances, the interest paid which has direct nexus with the earning of the interest income has been disallowed merely for the reason that the assessee could not produce the certificate / confirmation from the person to whom the assessee has paid the interest. It was submitted that the AO did not provide sufficient opportunity to the assessee and has hurriedly decided the matter by providing a very short period to respond and being an old matter, the assessee could not respond with the necessary certificate / confirmation from the person to whom he has paid the interest. It was submitted that the assessee has since obtained the confirmation and which has been placed as part of the assessee’s paper book wherein Mr. Vivek Jindal has confirmed that the assessee has paid an amount of Rs. 10,12,400/- to him for the financial year relevant to impugned assessment year. It was further submitted that the similar claim has been made and allowed in the earlier years and therefore following the principles of consistency, the assessee be allowed the necessary relief.
Per contra, the Ld. DR has relied on the findings of the lower authorities. It was submitted that during the course of assessment proceedings, the assessee has failed to furnish the necessary evidence in support of interest payment which has resulted in the subject disallowance and which has rightly been confirmed by the Ld. CIT(A).
Have heard the rival contentions and purused the material available on record. In the return of income, under the head “income from other sources”, the assessee has offered interest income after claiming deduction for the interest expense. There is no dispute which has been raised in terms of establishing the nexus between the interest income and interest expense and the former has been brought to tax and the latter has been disallowed for want of supporting documentation which the assessee couldn’t submit earlier due to paucity of time and has now been placed on record and on perusal thereof, I find that the Mr. Vivek Jindal has confirmed that the assessee has paid an amount of Rs. 10,12,400/- to him for the financial year relevant to impugned assessment year. In light of same, the assessee has duly demonstrated the incurrence of the interest expenditure and there is thus no basis to disallow the same and the disallowance so made is hereby directed to be deleted.
In light of aforesaid, other grounds of appeal
have become academic and the same are dismissed as infructious.
8. In the result, the appeal of the assessee is partly allowed.