GUNMALA DEVI JAIN,KOLKATA vs. D.C.I.T., CIRCLE - 29, KOLKATA

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ITA 14/KOL/2025Status: DisposedITAT Kolkata19 January 2026AY 2015-2016Bench: Shri Rajesh Kumar (Accountant Member), Shri Pradip Kumar Choubey (Judicial Member)1 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal noted that the assessee failed to establish a direct nexus between the income and expenditure to justify the deduction claimed under section 57(iii). However, the assessee's counsel offered to submit documentary evidence to establish the nexus and trail of funds.

What were the facts?

The assessee filed its return of income for AY 2015-16. The case was selected for limited scrutiny, and the assessment order was passed under section 143(3) of the Act, making an addition of Rs. 31,78,552/- under section 57(iii). The CIT(A) dismissed the assessee's appeal.

What were the issues?

Whether the disallowance of deduction claimed under Section 57(iii) for the purpose of earning income is justified, and if the assessee should be allowed to submit further documentary evidence.

Which sections of the Income-tax Act were involved?

Section 57(iii),Section 143(3),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH KOLKATA

Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey

order

: January 19, 2026 ORDER

Per Pradip Kumar Choubey, Judicial Member:

1.

This appeal filed by the assessee is directed against the order dated 30.05.2024 of the NFAC, Delhi (hereinafter referred to as the “CIT(A)”) passed u/s 250 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for the assessment year 2015–16.

2.

The appeal has been filed by the assessee with a delay of 156 days and the Assessee has filed a petition for condonation of the delay. After going over the said petition, we find sufficient reasons behind the delay which are beyond the control of the assessee and consequently, the delay in filing the appeal is hereby condoned and we proceed to dispose of the appeal on merits.

3.

Brief facts of the case are that the assessee has filed its return of income for A.Y. 2015-16 declaring a total income of Rs. 23,35,690/-. The case was selected for Limited scrutiny under CASS and the assessment Gunmala Devi Jain was competed u/s 143(3) of the Act at the income of Rs. 57,00,270/- after making addition of Rs. 31,78,552/- u/s 57 (iii) of the Act.

3. Aggrieved by the above order, the assessee filed appeal before the ld. CIT(A) wherein the ld. CIT(A) dismissed the appeal of the assessee.

4.

Aggrieved and dissatisfied, the assessee is in appeal before us challenging the very impugned order thereby submitting that the ld. CIT(A) erred in confirming the disallowance of the deduction of Rs.31,79,732/- claimed u/s 57 of the Act as the deduction was incurred for earning an income of Rs.55,56,751/- and has been added back to the total income of the assessee. The ld. AR vehemently submitted that the deduction of Rs.31,79,732/- claimed by the assessee u/s 54 is not earning for Rs.55,56,751/-. He has drawn the attention of the Tribunal regarding the provisions of section 57(iii) of the Act and submitted that the legislative intent is to disallow the expenditure which are not wholly or exclusively expended for the purpose of making or earning income and the Assessing Officer did not consider the facts and disallowed the expenditure incurred. The ld. AR further submits that the ld. CIT(A) has dismissed the appeal of the assessee by giving finding that assessee has failed to prove the nexus and trail of funds taken as loan and advancement of the same funds for the purpose of earning the income. The ld. AR submitted that the assessee is ready to submit documentary evidence which will establish the nexus and trail of funds taken as loan and advancement of the same funds for the purpose of earning the income. His prayer is that the matter be remitted back to the jurisdictional Assessing Officer to consider the same afresh with permission to the assessee to submit the documentary evidences.

5.

Contrary to that, the ld. DR supports the impugned order.

Gunmala Devi Jain 6. We have considered the submissions of the counsels of the respective parties and perused the material available on record. We find that the assessee filed return of income declaring total income of Rs.23,35,690/- and the case of the assessee was selected for limited scrutiny. We further find that the Assessing Officer in his assessment order has held that there should a direct nexus between income and expenditure which the assessee failed to establish by producing account and bank statement, hence it is established that loans were taken from various parties which were used for the deduction u/s 57(iii) of the Act as claimed. The ld. CIT(A) has also in its order has held that the assessee has failed to establish the nexus and trail of the funds taken as loan and advances of the same funds for the purpose of earning the income. Before us, the ld. AR submits that the assessee is ready to file documents before the jurisdictional Assessing Officer that will establish the nexus and trail of the funds taken as loan and advances of the same funds for the purpose of earning the income and his prayer is that the matter be remitted back for re-verification. Keeping in view the submission made by the assessee and going over the orders of the lower authorities, we remit the matter back before the jurisdictional Assessing Officer to pass a fresh order with a permission to the assessee to file documentary evidences considering the legislative intent behind the provisions of section 57(iii) of the Act. 6.1 In view of the above discussion, the appeal filed by the assessee is allowed for statistical purposes. Kolkata, the 19th January, 2026.

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