JAISWAL & SONS LIQUOR BUSINESS CONSORTIUM,GONDIA vs. ITO WARD (1), GONDIA

At the time of hearing, the Ld.AR of the assessee submitted that there is a delay in filing the appeal before the Hon’ble Tribunal and the assesse

The brief facts of the case are that the assessee is a partnership firm and is engaged in the liquor business. The assessee has filed the return of income for A.Y.2016-17 on 26/03/2017 disclosing a total income of Rs.5,22,630/-. Subsequently, the case was selected for scrutiny under CASS and notice u/sec 143(2) and U/sec 142(1) along with questionnaire was issued. In compliance, the Ld.A.R. of the assessee appeared from time to time and submitted computation of income, audit report, audited financial statement, bank statement, confirmations. The Assessing Officer on a perusal of the financial statements find in the Profit & Loss A/c that the assessee has debited Rs.3,14,708/- towards the interest paid on loan to Muthoot Finance Ltd. and the Assessing Officer observed that the assessee has not deducted TDS and issued notice u/sec142(1) of the Act. The assessee has filed the information on 05/11/2016 explaining the fact that the assessee has paid the amount towards interest component to Muthoot Finance Ltd and the Muthoot Finance has accepted the same and has offered to tax in its return of income filed. Whereas, the Assessing Officer found that the assessee has not substantiated the claim with evidence offering interest income in the return of income. Therefore, the 3 Jaiswal & Sons Liquor Business Consortium ITA no.529/NAG./2025 Assessing Officer considering the information on record has invoked the provisions of section 40(a)(ia) of the Act and made disallowance of interest payment of Rs.3,14,708/– and assessed the total income of Rs.8,37,340/- and passed the order u/sec143(3) dated 06/12/2018. Aggrieved by the order, the assessee has filed the appeal before the CIT(A).

In the appellate proceedings, the CIT(A) considered the grounds of appeal, statement of facts, submissions and findings of the Assessing Officer but has confirmed the action of the assessing officer and dismissed the assesseE appeal. The assessee being aggrieved filed appeal before the Hon’ble Tribunal.

Heard the rival submissions and perused the material on record. In respect of first disputed issue, disallowance of interest u/sec 40(a)(ia) of the Act, the assessee has filed a letter to the lender company i.e Muthoot Finance Limited to issue Form no.26A as the Assessing Officer has made a disallowance of interest payment placed at page 23 of the paper book. The Ld.AR has demonstrated the letter of Muthoot Finance Limited dated 27-12-2018 confirming the interest income of Rs.3,05,938/- received and the same was offered to tax in the F.Y. 2015–16 relevant to the A.Y. 2016–17. The Ld.ARs contentions are that the Assessing Officer has not disbelieved the interest payment and erred in invoking the provisions of sec40(a)(ia) of the Act as the recipient has accepted and offered to income tax. The Ld.D.R. accepted the fact with respect to the interest income and the letter filed by Muthoot Finance Ltd. which is not disputed but prima–facie the company should issue Form no.26A as per Income Tax Rules. Hence considering the facts, circumstances and submissions of the Ld.A.R. the disputed issue for limited issue to file of the Assesseing officer to verify the evidences and grant the relief. Further the Assessing officer is directed to examine TCS claim of the assessee supported with the Form.No.26AS and grant correct TCS credits. And the grounds of appeal of the assessee are partly allowed for stastical purposes.

In the result, appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced on 14/10/2025 as per rule 34(5) of the ITAT Rules 1963