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Income Tax Appellate Tribunal, JAIPUR BENCHES,”B” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 743/JPR/2025
vkns'k@ORDER PER: DR. S. SEETHALAKSHMI, J.M.
This is an appeal filed by the assessee against the order of ld. Addl/JCIT(A)- 3, Kolkata dated 22.03.2024 passed under section 250 of the I.T. Act, 1961, for the assessment year 2017-18. 2. The assessee has raised the following grounds of appeal :-
1. The ld. CIT (A) has erred on facts and in law in confirming the addition of Rs. 14,71,207/- (22,01,721 – 7,30,514), being excess of interest paid over interest received in proprietary concern M/s. K.P. Finance ignoring the fact that in the return of income assessee has claimed the interest expenses only to the extent of interest received and has declared income of Rs. 1,00,438/- under the head income from other sources. 2. The appellant craves to alter, amend and modify any ground of appeal
3. Necessary cost be awarded to the assessee.”
3. We find that the appeal filed by the assessee is delayed by 339 days. The assessee has filed an application submitting therein the reasons for delay in filing the appeal and prayed for condonation of delay. In support of the application, the assessee has also filed an Affidavit dated 3rd May, 2025 for condonation of delay, which is being reproduced hereunder :-
“AFFIDAVIT I, Krishna Kumar Poddar s/o of Mohan Lal Poddar, aged 77 years resident of D-118, Mithila Yashoda Path, Shyam Nagar, Jaipur-302019, do hereby solemnly affirm & declare on oath as under :-
1. 1. That my income tax assessment for AY 2017-18 was framed by ACIT, Circle-2, Jaipur vide Order dt. 30.11.2019 where addition of Rs. 14,71,207/- was made out of interest expenses.
2. That I had appointed CA Raju Gupta of M/s. Gupta Dhami & Co., Jaipur for filing my return and for assessment related work. CA Raju Gupta has mentioned her mobile no. And e-mail id gr2c_gupta@yahoo.com in my e-filing portal. Thus all the communications were received by her. CA Raju Gupta expired on 12.09.2023.
3. That against the assessment order, I had filed an appeal before Ld. CIT (A) on 28.12.2019. In Form No. 35 at Column No. 17- Address to which notices may be sent to the appellant, the mobile no. And e-mail address was given of CA Raju Gupta which was 9414051798 and guptadhami@gmail.com.
4. That the notice dt. 25.01.2021 issued by ld. CIT (A) at e-mail id gr2c_gupta@yahoo.com was replied on 16.04.2021. However, the notice dt. 05.10.2023 were issued at e-mail id lovenish.agarwal92@gmail.com. These notices never came to my knowledge. The ld. CIT (A) passed the order on 22.03.2024 confirming the addition. This order also did not come to my notice since CA Raju Gupta expired on 12.09.2023.
5. That after the death of CA Raju Gupta, I had appointed CA Satyanarayan Prajapat for filing the return who updated my mobile no. And e-mail id in my e-filing portal on 09.09.2024.
6. That when I received the penalty order dt. 28.03.2025 passed by AO u/s 270A of IT Act, I forwarded the same to CA Satyanarayan Prajapat who after browsing my e- portal informed me of passing the appellate order on 22.03.2024.
That when I approached CA P.C. Parwal of M/s.Kalani & Co., Jaipur for filing the appeal, he suggested me to file the appeal before Hon’ble ITAT along with a request to condone the delay in filing the appeal. Accordingly the appeal is now filed by me.
That the facts stated in Para 1 to 7 abopve are true and correct to the best of my knowledge and belief. SO, HELP ME GOD. Sd/- Deponent ( Krishna Kumar Poddar ) VERIFICATION I, Krishna Kumar Poddar, do hereby declare that what is stated above is true and correct to the best of my knowledge and belief. Verified today the 3rd day of May, 2025. Sd/- (Krishna Kumar Poddar)
Considering the reasons mentioned in the said application accompanied by Affidavit of the assessee, we feel that the reasons mentioned in the Affidavit constitute sufficient cause for not filing the appeal within the time before us. Therefore, taking a lenient view and considering the principles laid down in the case of Collector, Land Acquisition vs. Mst. Katiji, 1987 AIR 1353 (SC), we condone the delay of 339 days in filing the appeal before us.
5. The brief facts of the case are that the assessee is an Individual and derives salary income from M/s. K.P. Automotive Pvt. Ltd. Apart from salary income he has income from house property, income from business, capital gain and income from other sources. Return of income was filed by the assessee on 30.11.2017 declaring total income of Rs. 84,56,190/- for the year under consideration. The case of the assessee was selected for scrutiny under CASS. Notice under section 143(2) was issued on 18.08.2018. Notice under section 142(1) of the I.T. Act, 1961 along with questionnaire was issued on 19.09.2019 asking the assessee to furnish certain information / details. In response thereof, the assessee filed requisite details/information through e-file portal. During the course of assessment proceedings the AO noticed that in the year under consideration the assessee has shown payment of interest of Rs. 22,01,721/- to various parties against total interest income of Rs. 7,30,514/- in his proprietorship concern namely M/s. K.P. Finance and declared loss of (-) Rs. 17,31,096/- from the said concern. The AO also mentioned that no business activities of any kind were carried by this concern during the year under consideration and the assessee has also claimed various expenses in the P & L Account furnished in respect to his proprietorship concern. On being asked to furnish details of interest paid and interest received during the year under consideration with rate of interest, the assessee filed the details of interest received and interest paid to various persons for the year under consideration. The assessee further stated that the loans and advances given out of loans taken from banks and the claim of interest is justifiable. The AO considered the reply of the assessee but could not found it acceptable. Consequently, the AO framed the assessment at a total income of Rs. 99,27,400/- by making an addition of Rs. 14,71,207/- on account of disallowance of excess interest paid. On being aggrieved by the order of assessment, the assessee preferred appeal before the ld. CIT (A), who dismissed the appeal of the assessee by observing that the assessee has failed to prove nexus regarding interest payment on the loan taken and interest income. Aggrieved by the order of ld. CIT (A), the assessee has come in appeal before us on the grounds reproduced herein above.
Before us, the ld. AR of the assessee submitted his ground-wise written submissions, which are being reproduced hereunder :-
“ Only Ground : The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs.14,71,207/- (22,01,721 - 7,30,514), being excess of interest paid over interest received in proprietary concern M/s K.P. Finance ignoring the fact that in the return of income assessee has claimed the interest expenses only to the extent of interest received and has declared income of Rs.1,00,438/- under the head income from other sources.
Facts& Submission: -
The assessee is a salaried employee getting salary from K.P. Automotive Pvt. Ltd. Apart from salary income he has income from house property, income from business, capital gain and income from other sources. Return was filed by the assessee on 30.11.2017 declaring total income of Rs.84,56,190/-(PB 1-4).
In the return, assessee declared income under the head income from other sources, saving bank interest, FDR interest and other interest. The saving bank interest and other interest declared is Rs.1,00,438/- and other interest declared is nil which comprises of interest receipt of Rs.28,43,433/- against which deduction of interest paid on loans of same amount is claimed as under: - Interest from K.P. Automotive and Shrerit Auto Pvt. Ltd. Rs.21,12,919/- Interest of M/s K.P. Finance Rs. 7,30,514/- Total : Rs.28,43,433/- Less: Interest paid to bank Rs.22,30,527/- but restricted to Rs.21,12,919/- Interest of K.P. Finance Rs.22,01,721/- but restricted to Rs. 7,30,514/- Total : Rs.28,43,433/-
The AO observed that in the proprietary concern M/s K.P. Finance, assessee has declared interest income of Rs.7,30,514/-, interest payment of Rs.22,01,721/- and declared loss of Rs.17,31,096/- from the said concern. In this concern no business activity has been carried out. The capital of the assessee as on 01.04.2016 was Rs.3.54 crores and the assets and investments as on 31.03.2017 was more than 5.10 crores. Further assessee has debit balance of Rs.1,54,26,894/- in its proprietary concern. Assessee failed to prove nexus regarding interest payment on the loan taken against the interest received. Accordingly the AO disallowed interest paid of Rs.14,71,207/- (22,01,721-7,30,514) and made addition for the same.
4. The Ld. CIT(A) NFAC observed that assessee failed to prove commercial expediency for the loan taken and the interest paid thereon. Interest payment had not been made towards earning of interest income and assessee failed to prove the nexus regarding interest payment on the loan taken. Accordingly addition of Rs.14,71,207/- made by AO is confirmed.
It is submitted that both the lower authorities have not properly appreciated the facts of the case. From the Profit & loss A/c of M/s K.P. Finance(PB 8),it can be noted that interest income is declared at Rs.7,30,514/- against which the interest payment claimed is of Rs.22,01,721/-. However in the statement of total income assessee claimed interest paid of Rs.7,30.514/- only. Thus the assessee himself has disallowed the interest payment to the extent of Rs.14,71,207/-. Therefore, again making addition of the same amount has resulted into double addition. Hence, the AO be directed to delete the addition of Rs.14,71,207/- made by him.
In view of above the disallowance confirmed by Ld. CIT(A) NFAC be directed to be deleted.”
6.1 In support of the assessee’s case, the ld. AR of the assessee has filed the Paper Book index as under : PAPER BOOK S. No. Particulars Page No. Filed before AO/CIT(A) 1 Copy of computation of income 1-4 AO 2 Copy of statement of affairs as on 31.03.2016 & 5-6 AO 31.03.2017 3 Copy of balance sheet and profit and loss account as 7-8 AO on 31.03.2017 of K.P. Finance
7. On the other hand, the ld. DR relied on the orders of the lower authorities. The ld. D/R submitted that the order of the ld. CIT (A) be sustained.
8. We have heard the rival submissions, perused the material available on record and gone through the orders of the lower authorities. From the paper book filed by the assessee, we noted that assessee in computation of total income has declared interest received in proprietary concern M/s K.P. Finance at Rs.7,30,514/- . Against this, in the profit and loss account of K.P. Finance, interest paid is claimed at Rs.22,01,721/- but in the computation of total income assessee claimed interest of Rs.7,30,514/-. Thus the assessee himself disallowed the claim of interest paid to the extent of Rs.14,71,207/- (22,01,721-7,30,514). Therefore, the addition of Rs.14,71,207/- made by AO is incorrect and has resulted into double addition. Hence, the AO is directed to delete the addition of Rs.14,71,207/- made by him. Ground of the assessee is allowed.
In the result, appeal of the assessee is allowed. Order pronounced in the open court on 03/11/2025.
Sd/- Sd/- ¼ jkBkSM+ deys'k t;UrHkkbZ ½ ¼MkWa-,l-lhrky{eh½ (RATHOD KAMLESH JAYANTBHAI) (Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 03/11/2025 *Santosh आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू The Appellant- Sh. Krishna Kumar Poddar, Jaipur. 1. 2. izR;FkhZ@ The Respondent- ACIT, Circle-2, Jaipur. 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr@ The ld CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 6. xkMZQkbZy@ Guard File By order,
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