Loading judgment…
Facts
The assessee, an individual and a director/partner in firms, filed his return for AY 2017-18. During scrutiny, the AO disallowed Rs. 7,73,280/- of interest expense claimed under Section 57, adding it back to his income, and imposed a penalty of Rs. 1,11,746/- under Section 270A for under-reported income. The assessee appealed to the CIT(A) against both the quantum addition and the penalty, but with substantial delays of 1800 days and 977 days respectively. The CIT(A) refused to condone the delays, finding no sufficient evidence for the reasons cited (ill-health, non-usage of email, travel, lack of knowledge, Covid-19), and dismissed both appeals.
Held
The Income Tax Appellate Tribunal (ITAT) upheld the decision of the CIT(A), concluding that the assessee failed to provide sufficient and reasonable cause, along with documentary evidence, for the considerable delay in filing the appeals before the CIT(A). Consequently, the ITAT found no infirmity in the CIT(A)'s orders and dismissed both the quantum and penalty appeals filed by the assessee.
Key Issues
Whether the CIT(A) was justified in not condoning the significant delay in filing appeals; and whether the disallowance of interest expenditure under Section 57 and the penalty imposed under Section 270A were valid.
Sections Cited
143(2), 142(1), 129, 57, 143(3), 270A, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, VISAKHAPATNAM “DIVISION” BENCH, VISAKHAPATNAM
Before: SHRI RAVISH SOOD, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
आदेश /O R D E R
PER SHRI S BALAKRISHNAN, ACCOUNTANT MEMBER: 1. These appeals are filed by the assessee againstdifferent orders of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal centre, I.T.A.Nos.394 & 395/VIZ/2025 Jain Babulal Champatlal Delhi [hereinafter in short “Ld.CIT(A)”] vide respective DIN & Order No. as stated below: - ITA No. (A.Y.) DIN & Order No. Dated ITBA/NFAC/S/250/2025-26/1075642024(1) 16.04.2025 (A.Y. 2017-18)
ITBA/NFAC/S/250/2025-26/1075642089(1) 16.04.2025 (A.Y. 2017-18) Since the appeals are belonging to same assessee, therefore, both these appeals are clubbed and heard together and a consolidated order being passed.
Brief facts of the case are, assessee is an individual, a director of M/s.Fuso Glass India Pvt. Ltd and a partner in M/s. Suraj Constructions, filed his return of income for the A.Y. 2017-18 on 22.10.2017 admitting a total income of Rs.22,43,340/- and agricultural income of Rs.57,900/-. Subsequently, the case was selected for limited scrutiny under CASS. Accordingly, statutory notices under section 143(2) and 142(1) of the Act were issued and served on the assessee. Thereafter, notice under section 142(1) r.w.s. 129 of the Act dated 12.09.2019 was issued as there is change of incumbent officer and various notices under section 142(1) were issued by way of e-mail in ITBA module, calling for certain information from the assessee. In response, assessee furnished the information as called for. During the course of scrutiny proceedings, Ld. AO noticed that assessee has claimed deduction under section 57 of the Act to the interest payments made by the assessee. Ld. AO observed that assessee has admitted income from other sources at Rs.35,28,219/- and Page. No 2 I.T.A.Nos.394 & 395/VIZ/2025 Jain Babulal Champatlal claimed deduction under section 57 of the Act, at Rs.28,75,925/- and after deduction the income from other sources was returned at Rs.6,70,294/-. After considering the details furnished by the assessee, Ld. AO completed the assessment under section 143(3) of the Act on 20.12.2019 and determined that interest payment to the tune of Rs.7,73,280/- cannot be allowed under section 57 of the Act, accordingly, disallowed the same and added back to the total income of the assessee. While passing the assessment order, the Ld. AO also initiated the penalty proceedings under section 270A of the Act and simultaneously imposed the penalty of Rs.1,11,746/- being 50% of the amount of tax payable on under-reported income and passed the order dated 23.03.2022.
3. On being aggrieved by the orders of the Ld. AO, the assessee preferred two appeals i.e., one appeal against the quantum addition and the other appeal against the levy of penalty, before the Ld. CIT(A) with a delay of 1800 days and 977 days respectively. Before the Ld. CIT(A), the assessee submitted that the delay in filing both the appeals is due to the non-usage of the email ID, frequent travel due to business commitments, lack of knowledge of the assessment proceedings, health issues and the impact of the COVID-19. However, in the absence of any cogent evidence to substantiate that the assessee suffered from ill-health due to which the appeals were filed belatedly, the Ld. CIT(A), did not condone the delay and dismissed the appeals of the assessee.
Page. No 3 I.T.A.Nos.394 & 395/VIZ/2025 Jain Babulal Champatlal 4. On being aggrieved by the orders of the Ld. CIT(A), the assessee filed the present appeals before us by raising the following grounds of appeal: -
1. Both in law and in Facts of the case, the order made by the Ld.Commissioner of Income Tax (Appeals), NFAC, is bad in law, arbitrary, contrary to the provisions of law and against the principles of natural justice.
2. The Ld. CIT(A), NFAC is not justified in dismissing the appeal for statistical purposes without taking into consideration the affidavit filed by the appellant requesting to condone the delay in filing the appeal which is due to the circumstances beyond his control.
3. The Ld. CIT(A), NFAC erred in law in dismissing the appeal stating that the appeal is not required to be adjudicated on merits.
4. The Ld. CIT(A), NFAC has not followed the Principles of Natural Justice as the appeal is disposed off by not admitting it on the ground that the same is not filed in time even without giving the opportunity of being heard.
5. The Ld. CIT(A), NFAC failed to take into consideration that the levy of penalty of Rs. 1,11,746/- u/s 270A is wrong as there is no underreporting of income of Rs. 7,23,280/- since the said amount was reported as interest payment in the books of account.
6. The Ld. CIT(A) ought to have taken into consideration that the disallowance of interest payment u/s 57 the Income Tax Act, 1961 does not amount to under reporting as per the provisions of Act.
7. The Assessing Officer, NFAC is wrong in levying penalty since the department did not have any material to establish that there is under reporting of income on the part of the assessee.
8. The levy of penalty under section 270A is against the provisions of law when under reporting is not evident on record and the department could not establish under which limb there is under reporting of income.
9. The appellant craves leave to add, to alter, modify, amend, substitute, delete and/or rescind all or any of the grounds of appeal on or before the final- hearing, if necessity so arises. The appellant prays the Hon'ble ITAT for appropriate relief based on the said grounds of appeal and the facts and the circumstances of the cases and also to adjudicate the grounds of appeal on merits.”
Page. No 4 I.T.A.Nos.394 & 395/VIZ/2025 Jain Babulal Champatlal Grounds raised in 1. Both in law and in Facts of the case, the order made by the Ld.Commissioner of Income Tax (Appeals), NFAC, is bad in law, arbitrary, contrary to the provisions of law and against the principles of natural justice.
2. The Ld. CIT(A), NFAC is not justified in dismissing the appeal for statistical purposes without taking into consideration the affidavit filed by the appellant requesting to condone the delay in filing the appeal which is due to the circumstances beyond his control.
The Ld. CIT(A), NFAC erred in law in dismissing the appeal stating that the appeal is not required to be adjudicated on merits.
The Ld. CIT (A) is wrong in not admitting the appeal due to delay in filing after issuing a notice U/S 250 of the Act vide DIN ITBA/NFAC/F/APL_1/2025-26/1075397647(1) asking the assessee to furnish ground wise written submissions.
The Ld. CIT(A), NFAC has not followed the Principles of Natural Justice as the appeal is disposed off by not admitting it before the expiry of time to furnish the written reply by the appellant in response to notice U/S 250 of the Act on the ground that the same is not filed in time.
The Ld, CIT(A), NFAC ought to have taken into consideration that A.O is wrong in disallowing the interest paid to the tune of Rs.7,23,280/- as there was no cogent material or record or any other evidence with the department to establish that funds borrowed have been used for any purpose other than to earn interest income.
7. The Ld. CIT(A), NFAC failed to take into consideration that the expenditure (interest paid) is a permissible deduction u/s 57(iii) since the expenditure was incurred legitimately and bona fide for making or earning the income.
Additions made on mere presumptions and surmises are against the provisions of law.
The appellant craves leave to add to alter, amend, modify, substitute, delete and/or rescind all or any of the grounds of appeal on or before the final hearing, if the necessity so arises. The appellant prays the Hon'ble ITAT for appropriate relief based on the said grounds of appeal and the facts and the circumstances of the cases and also to adjudicate the grounds of appeal on merits.”
Page. No 5 I.T.A.Nos.394 & 395/VIZ/2025 Jain Babulal Champatlal 5. At the outset, the Ld. Authorised Representative [hereinafter “Ld.AR”] submitted that due to ill-health of the assessee and the reasons mentioned in the condonation petition before the Ld. CIT(A), the appeals were filed belatedly before the Ld. CIT(A). Therefore, he pleaded that the delay in filing the appeals before the Ld. CIT(A) may be condoned and the matter may be remitted back to the file of the Ld.CIT(A).
On the other hand, Ld. Departmental Representative (hereinafter 6. in short “Ld. DR”) vehemently opposed to the submissions of the Ld.AR and submitted that the onus is on the assessee to prove the sufficient and reasonable cause for belated filing of the appeals along with documentary evidence. In the absence of any cogent proof / evidence, the Ld. CIT(A) did not condone the delay and therefore the decision of the Ld. CIT(A) in dismissing the appeals need no interference.
We have heard both the sides and perused the material available on record as well as the orders of the Ld. Revenue Authorities. It is a fact that the assessee has filed both the appeal belatedly beyond the prescribed time limit. There is a delay of 1800 days in quantum appeal and 977 days in penalty appeal before the Ld. CIT(A). The following Page. No 6 I.T.A.Nos.394 & 395/VIZ/2025 Jain Babulal Champatlal are the reasons adduced by the assessee for the delay in filing the appeal before the Ld.CIT(A). i. Non usage of the e-mail ID. ii. Frequent travels due to business commitment. iii. Lack of knowledge of the assessment proceedings. iv. Impact of Covid-19 pandemic and health issues.
In the instant case, the Ld.AO passed the order dated 20.12.2019 8. u/s. 143(3) of the Act. It is the submission of the assessee before the Ld. CIT(A) due to the above listed reasons, the appeals could not be filed within the time. However, no such evidence / medical certificate regarding the ill-health condition of the assessee was produced before the Ld. CIT(A) or even before us. Neither date of limitation is covered under the COVID period. Further, frequent travels due to business commitment and lack of knowledge of assessment proceedings could not be considered as sufficient cause for condoning the delay in filing the appeal before the Ld.CIT(A) Hence, under these circumstances of the case, we find that no sufficient or reasonable cause has been adduced along with the evidence by the assessee and hence we have no hesitation to come to a conclusion that there is no infirmity in the orders of the Ld. CIT(A) in both the appeals under Page. No 7 I.T.A.Nos.394 & 395/VIZ/2025 Jain Babulal Champatlal consideration. Accordingly, the grounds raised by the assessee in both the appeals are dismissed.
In the result, both the appeals filed by the assessee are 9. dismissed.
Order pronounced in the open court on 07th November, 2025.
Sd/- Sd/- (रिीश सूद) (एस बालाकृष्णन) (RAVISH SOOD) (S. BALAKRISHNAN) न्याधयक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER Dated: 07.11.2025 Giridhar, Sr.PS आदेश की प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/ The Assessee : Jain Babulal Champatlal 40-1-155, LGF Ripples Mall, M.G. Road Vijayawada-520010 Andhra Pradesh 2. रधजस्व/ The Revenue : Income Tax Officer – Ward – 2(1) CR Building, 1st Floor Annex MG Road, Vijayawada – 520002 Andhra Pradesh 3. The Principal Commissioner of Income Tax 4. नवभधगीयप्रनतनिनर्, आयकरअपीलीयअनर्करण, नवशधखधपटणम /DR,ITAT, Visakhapatnam 5. The Commissioner of Income Tax 6. गधर्ाफ़धईल / Guard file आदेशधिुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam
Page. No 8