UDAI PARNAMI,JAIPUR vs. ITO WARD - 5(2), JAIPUR
Facts
The assessee, an individual, filed his return for AY 2019-20, declaring income from salary, partnership business, and other sources. The AO disallowed a significant portion of the claimed interest expenses amounting to Rs. 34,48,279, stating they were not commensurate with the interest income earned.
Held
The Tribunal noted that the assessee failed to furnish documentary evidence to justify the huge interest expenses claimed against the meager interest income. The grounds of appeal, including lack of opportunity and consequential levy of interest/penalty, were also considered.
Key Issues
Whether the disallowance of interest expenses claimed by the assessee was justified, and whether the CIT(A) order upholding part of the disallowance was correct. Also, issues regarding opportunity of being heard and consequential levies.
Sections Cited
57, 56, 143(2), 142(1), 234A, 234B, 270A, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,”SMC” JAIPUR
Before: HON’BLE SHRI SANDEEP GOSAIN, JM vk;dj vihy la-@ITA No. 1078/JP/2024
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Jh lanhi xkslkbZ] U;kf;d lnL; ds le{k BEFORE: HON’BLE SHRI SANDEEP GOSAIN, JM vk;dj vihy la-@ITA No. 1078/JP/2024 fu/kZkj.k o"kZ@Assessment Year : 2019-20. cuke Shri Udai Parnami Income Tax Officer, 314, Adarsh Nagar, Vs. Ward 5(2), Jaipur. Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@ PAN/GIR No. BIUPP 7732 F vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls@ Assessee by : None jktLo dh vksj ls@ Revenue by : Shri Gautam Singh Chaudhary, JCIT D/R lquokbZ dh rkjh[k@ Date of Hearing : 23/09/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 26/9/2024 vkns'k@ ORDER
PER: SANDEEP GOSAIN, J.M.
This appeal by the assessee is directed against the order dated 27.06.2024 of ld. CIT (Appeals), National Faceless Appeal Centre (NFAC) passed under section 250 of the Income Tax Act, 1961 for the assessment year 2019-20. The grounds raised in the appeal are reproduced as under :-
CIT (A) has erred in facts and law on upholding the disallowance made by ld. AO on account of interest expenses amounting to Rs. 34,44,000/-.
2 ITA No. 1078/JP/2024 Udai Parnami, Jaipur.
CIT (A) has erred in facts and law passing the order without giving opportunity of being heard.
Consequential levy of interest u/s 234A and 234B is bad in law.
Consequential initiation of penalty proceedings u/s 270A of Income Tax Act, 1961 is bad in law.
The appellant craves to add/alter grounds of appeal before or at lthe time of hearing.
The brief facts of the case are that the assessee is an Individual, filed his return
of income for the assessment year 2019-20 on 24.10.2019. The income declared
comprises of income from Salary of Rs. 38,60,000/-, income from partnership business
of Rs. 48,94,609/- and income from Other sources of (-) Rs. 28,98,271/-. The loss
arrived at by the assessee under the head “Income from other sources” was set off
against income earned under the head “Salaries”, and total income of Rs. 7,94,110/-
was offered to tax by the assessee after claiming deduction under chapter VIA
amounting to Rs. 1,67,620/-. The case of the assessee was selected for complete
scrutiny under CASS. Accordingly, notice under section 143(2) of the IT Act, 1961 was
issued on 31.03.2021. Further, notices under section 142(1) were issued calling for
details with respect to issues in hand to be verified. The assessee submitted relevant
details through e-proceedings. On verification of the income declared under the head
“Income from other sources”, it was noticed by the AO that the assessee had declared
interest income earned from others at Rs. 7,66,842/-. The said receipt tallied with the
interest receipts reflected in Form 26AS statement of the assessee. However, it was
3 ITA No. 1078/JP/2024 Udai Parnami, Jaipur.
noticed by the AO that the assessee had claimed expenses of Rs. 42,10,841/-
deductible under section 57 of the IT Act. As per AO, the expenses claimed under
section 57 of the IT Act were not commensurate with the income declared under the
head “ Other sources”, the assessee was required to furnish necessary documentary
evidences justifying the claim of expenses against income earned under the head
“other sources” by issue of notice under section 142(1) of the IT Act, 1961. The
assessee filed his submissions which were considered by the AO but the AO was not
satisfied. He observed that the assessee failed to furnish any documentary evidence to
justify that entire interest expenses to the extent of Rs. 42,10,841/- were incurred in
order to earn interest income of Rs. 7,62,562/-. Accordingly, the interest expenses
claimed was restricted to the extent of interest income offered under section 56 of the
IT Act, 1961. Hence, the interest expenditure claimed by the assessee amounting to
Rs.34,48,279/- (Rs. 42,10,841 – Rs. 7,62,562) was disallowed. Aggrieved by the order
of AO, the assessee preferred appeal before Ld. CIT (A). The ld. CIT (A) considering
the submissions of the assessee partly allowed the appeal of the assessee vide his
order dated 27.06.2024. The assessee being aggrieved, is in appeal before the
Tribunal.
At the very outset, when the case was called for hearing neither the assessee
nor his representative appeared. However, on perusal of case file, I noticed that an application dated 20th September, 2024 has been filed for seeking adjournment on the
ground that assessee is busy and occupied in preparing books of accounts and other
4 ITA No. 1078/JP/2024 Udai Parnami, Jaipur.
professional engagements. To my mind, this cannot be a reason for seeking
adjournment and it is dis-respect to second appellate authority. Every professional is
expected to be busy in one or the other professional work but on that ground
adjournment cannot be sought in a casual and cavalier manner. Therefore,
adjournment application in the absence of assessee or his representative stands
dismissed with cost of Rs. 1,000/- to be deposited in Prime Minister’s Relief Fund.
On the other hand, the ld. D/R present in the court is ready with the arguments,
therefore, I have decided to proceed with the hearing of the case ex parte.
After hearing ld. D/R and after going through the details filed before me in the
shape of orders passed by the revenue authorities, I found that as per the facts of the
present case, at the time of finalizing the assessment the AO after evaluating the
factual position has categorically held that the assessee has failed to justify the huge
interest expenditure of Rs. 42,10,841/- to earn an interest of Rs. 7,62,562/-.
Accordingly, the interest expenses claimed was restricted to the extent of interest
income offered under section 56 of the Income Tax Act, 1961. Although , this decision
of AO was challenged before ld. CIT (Appeals) but after evaluating the factual position
ld. CIT (Appeals) party allowed the appeal, but upheld the action of AO in disallowing
the excessive interest expenditure of Rs. 34,48,279/-. Even before me, the assessee
has failed to establish as to how the order passed by the revenue authorities are not in
accordance with law, therefore, looking to the huge amount spent by the assessee to
earn so meager income looks highly imprudent decision of any person. Hence, I am
5 ITA No. 1078/JP/2024 Udai Parnami, Jaipur.
also of the view that it is quite improbable for a person to spend so highly an amount
of Rs. 42,10,841/- to earn just Rs. 7,62,562/-. I am also of the view that it is highly in
commensurate to earn such low income as compared to the volume of money spent to
earn it. Since the assessee could not rebut or controvert the findings so recorded by ld.
CIT (Appeals), therefore, I have no other option, but to uphold the lawful findings so
recorded by Ld. CIT (Appeals). Consequently the appeal filed by the assessee stands
dismissed.
In the result, the appeal of the assessee is dismissed.
Order pronounced in the open court on 26/09/2024.
Sd/- ¼lanhi xkslkbZ½ (SANDEEP GOSAIN) U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 26/09/2024. Das/ आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू
vihykFkhZ@The Appellant- Udai Parnami, Jaipur. 1. izR;FkhZ@ The Respondent- ITO Ward 5(2) Jaipur. 2. vk;dj vk;qDr@ CIT 3. vk;dj vk;qDr@ CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्/त्ए प्ज्Aज्ए Jंपचनत. 5. xkMZ QkbZy@ Guard File {ITA No. 1078/JP/2024} 6.
vkns'kkuqlkj@ By order,
सहायक पंजीकार@Aेेज. त्महपेजतंत
6 ITA No. 1078/JP/2024 Udai Parnami, Jaipur.
