LATE MAHESHKUMAR R. JOSHI,MUMBAI vs. INCOME TAX OFFICER (2)(2), KALYAN

The dispute in the present appeal is confined to the addition of an amount of ` 5,40,265, towards interest expenditure.

Brief facts are, the assessee is an individual. For the assessment year under dispute, the assessee filed his return of income on 8th January 2013, declaring total income of ` 4,99,994. In the course of assessment proceedings, the Assessing Officer noticed that after claiming deduction of ` 6,08,542, under section 57 of the Act against the interest income of ` 6,11,826, the assessee has shown net income of ` 3,284, under the head income from other sources. Therefore, the Assessing Officer called upon the assessee to furnish evidence regarding the deduction claimed under section 57 of the Act. As observed by the Assessing Officer, in response to the query raised, the assessee filed letter dated 9th January 2015, along with an affidavit pointing out certain errors in the return of income filed. It was stated by the assessee that the actual deduction claimed towards interest expenditure under section 57 of the Act is ` 68,277. Alleging that the assessee could not furnish evidence in support of the deduction claimed under section 57 of the Act, except, to the extent of ` 68,277, the Assessing Officer restricted the deduction under section 57 of the Act to ` 68,277, while disallowing the balance amount of ` 5,40,265.

The assessee challenged the aforesaid addition before learned Commissioner (Appeals) without any result.

The learned Authorised Representative submitted, in the return of income filed for the impugned assessment year, the assessee has made certain mistakes which came to his notice in the course of assessment proceedings. He submitted, as against actual salary of ` 3,55,000 received by the assessee, in the return of income salary income was wrongly shown at ` 4,20,000. Further, he submitted, apart from the bank interest and interest on income tax refund, the assessee has received interest from Tinco Chemicals amounting to ` 68,277. Whereas, in the return of income such interest income was wrongly shown at ` 6,08,544. He submitted, in the return of income assessee has also wrongly shown the interest paid at ` 6,08,542, as against the actual interest payment of ` 68,277. The learned Authorised Representative submitted, though in course of assessment proceedings the assessee rectified the mistake committed in the return of income by filing a revised computation of income along with an affidavit, however, the Assessing Officer rejected them only on the ground that the assessee did not rectify such mistake through a revised return of income. He submitted, before learned Commissioner (Appeals), though, the assessee had raised specific grounds seeking relief on account of excess income shown towards salary and interest, however, learned Commissioner (Appeals) entertained assessee’s claim only with regard to the salary income while ignoring the ground 4 Late Maheshkumar R. Joshi raised for interest income. He submitted, though the assessee moved an application under section 154 of the Act enclosing all the documentary evidences, learned Commissioner (Appeals) rejected such application without affording an opportunity of being heard to the assessee and completely ignoring the documentary evidences filed before him. Thus, he submitted, the Assessing Officer may be directed to assessee the correct interest income as per the revised computation of income filed by the assessee.

The learned Departmental Representative submitted, the Assessing Officer could not have taken note of the mistakes committed in the return of income as the assessee did not file any revised return of income. However, he submitted, the assessee’s claim regarding actual interest income can be verified by the Assessing Officer.

We have considered rival submissions and perused material on record. It is evident from the facts and material on record, in course of assessment proceedings the assessee has filed a revised computation of income along with an affidavit pointing out the mistakes committed in the return of income as regards the quantum of salary income and interest income. However, the Assessing Officer has refused to take cognizance of the revised computation of income since the assessee has not filed any revised return of income. As could be seen, the 5 Late Maheshkumar R. Joshi assessee has raised specific grounds, being grounds no.3 and 4, before learned Commissioner (Appeals) seeking relief with regard to the mistake committed in showing the salary income and interest income in the return of income. It is observed, while learned Commissioner (Appeals) has accepted assessee’s claim with regard to salary income, he has failed to adjudicate the ground raised by the assessee with regard to interest income fully and has dealt with the issue partially by considering the alternative submissions made by the assessee. Though, the assessee filed an application under section 154 of the Act before learned Commissioner (Appeals), however, as it appears, the said application was rejected by learned Commissioner (Appeals) in a mechanical manner without affording an opportunity of being heard to the assessee and without verifying the evidences furnished by the assessee. Be that as it may, it is the specific contention of the assessee from the assessment stage itself that the actual interest received by him from Tinco Chemicals is ` 68,277, and not ` 6,08,542, as reflected in the return of income. In our view, since the aforesaid claim of the assessee has not been properly verified either by the Assessing Officer or learned Commissioner (Appeals) it requires to be restored to the Assessing Officer for verifying assessee’s claim about the actual amount of interest received from Tinco Chemicals. The Assessing Officer is directed to verify the revised

In the result, appeal is allowed for statistical purposes. Order pronounced in the open Court on 20.03.2019