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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, JM & SHRI MANOJ KUMAR AGGARWAL, AM
Per Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by revenue for Assessment Year [AY] 2006-07 contest the order of the Ld. Commissioner of Income-Tax (Appeal)-20 [CIT(A)], Mumbai, Appeal No.CIT(A)-20/9(3)(3)/IT-238/2010-11 dated 02/01/2013 qua certain relief provided to the assessee. The assessee, in his cross objections, has agitated the additions as sustained by Ld. first appellate authority and also contested the confirmation of penalty u/s 271(1)(c) by way of a separate appeal. 2. Facts in brief are that the assessee being resident individual has been assessed by Ld. Income Tax Officer-9(3)(3), Mumbai [AO] u/s 143(3) on 20/12/2010 wherein the income of the assessee has been assessed at Rs.54.16 Lacs after certain additions as against returned income of Rs.10 Lacs filed by the assessee on 31/07/2016. The assessee has suffered following quantum additions:- No. Nature Amount (Rs.) 1. Addition on account of House Property Income 61,890/- 2. Addition on account of Interest & Bank Charges 6,04,069/- 3. Addition on account of deemed dividend 37,50,000/- The Ld. CIT(A), after due consideration, has deleted the additions listed at Serial Numbers 1 & 3, against which the revenue is in further appeal before us vide whereas the assessee by way of cross-objection CO No.117/Mum/2014 has contested the interest addition as sustained by Ld. CIT(A). 3. At the outset, it has been noticed that the tax effect of the quantum additions as contested by the revenue is less than threshold limit of 2304/Mum/2013 CO.No.117/Mum/2014 Vinod K. Shah Assessment Year: 2006-07 Rs.20 Lacs and the same is covered by recently issued low tax effect Circular No.03/2018 dated 11/07/2018 issued by Central Board of Direct Taxes [CBDT]. The Ld. DR, Shri.Rajeev Gubgotra, has controverted the same by submitting that necessary instructions / certificate, in this regard, would be required from higher authorities.
We have gone through the circular and find that the tax effect of quantum in dispute is below prescribed limit of Rs.20 Lacs and the assessee stood benefitted by the above circular issued by CBDT wherein the minimum monetary limit for filing the appeals before various appellate authorities have been fixed as under:- S. No. Appeals/ SLPs in Income-tax matters Monetary Limit (Rs.) 1 Before Appellate Tribunal 20.00,000 2 Before High Court 50.00,000 3 Before Supreme Court 1,00.00,000 The aforesaid limits, as per para 13 of the circular applies to pending appeals also. In view of the admitted position, we dismiss the revenue’s appeal.
So far as the contentions raised by Ld. DR is concerned, we find that aforesaid circular does not envisage obtaining of any certificate from any authorities, in any manner. Nevertheless, the revenue is free to move appropriate application to recall this order, if at a later stage, it is found that the matter is covered by any exceptions provided in the aforesaid circular or in case the tax effect of the quantum additions as agitated by revenue exceeds the prescribed monetary limit.
2304/Mum/2013 CO.No.117/Mum/2014 Vinod K. Shah Assessment Year: 2006-07 6.1 Facts qua interest additions are that during impugned AY, the assessee earned interest income of Rs.1.32 Lacs from certain loans & savings bank account and reflected the same as Income from other sources. Against the same, it claimed interest paid to Banks, LIC and Bank Charges aggregating to Rs.6.04 Lacs and accordingly, computed negative figure of Rs.4.71 Lacs as income from other sources. The Ld. AO, after perusal of Balance Sheet, came to conclusion that the assessee failed to establish the nexus between loans raised and interest paid and therefore, by disallowing interest expenditure, made an addition of Rs.6.04 Lacs in the hands of the assessee. The same, upon confirmation by Ld. CIT(A), is being agitated before us to the extent of Rs.5.85 Lacs by way of cross-objections. 6.2 The Ld. Auhtorized Representative, on the strength of assessee’s Balance Sheet, contested the additions which has been controverted by Ld. DR. 6.3 We have carefully heard the submission and perused material on record including documents placed in the paper-book. Upon due consideration, we find that the onus to prove the nexus between income earned and expenditure made there-against, in terms of Section 57, squarely lied on the assessee, which has not been conclusively established. The assessee has paid interest to loans obtained from banks / financial institutions. It is categorical finding of the lower authorities that the loans have been obtained against shares and the same have been invested in Shares & Bonds and this fact could not be rebutted by any cogent material on record. Similarly, the nexus between 2304/Mum/2013 CO.No.117/Mum/2014 Vinod K. Shah Assessment Year: 2006-07 loan obtained from LIC and loans which earned interest income could not be demonstrated. This being the case, we have no hesitation in confirming the stand of lower authorities. The cross-objection stands dismissed. 7.1 Against quantum additions of Rs.6.04 Lacs, the assessee has been saddled with penalty for furnishing inaccurate particulars of income u/s 271(1)(c) for Rs.1,59,300/- vide order dated 27/03/2014, which upon confirmation by Ld. CIT(A), is being agitated before us in ITA No.2191/Mum/2016. 7.2 Upon due consideration of factual matrix, we find that the assessee made a claim which has not been accepted by lower authorities for want of conclusive evidence of proving the nexus between funds borrowed by the assessee and funds advanced by the assessee. However, the same, in our opinion, did not lead to concealment of income or furnishing of inaccurate particulars of income so as to warrant imposition of penalty u/s 271(1)(c). Therefore, by deleting the same, we allow the assessee’s appeal.
Resultantly, Revenue’s Appeal as well as assessee’s cross-objection CO. No. 117/Mum/2014 stands dismissed whereas assessee’s appeal ITA No. 2191/Mum/2016 stands allowed.
Order pronounced in the open court on 03rd October, 2018.