UDAI PARNAMI,JAIPUR vs. ITO WARD - 5(2), JAIPUR

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 :-

4. Consequential initiation of penalty proceedings u/s 270A of Income Tax Act, 1961 is bad in law.

5. The appellant craves to add/alter grounds of appeal before or at lthe time of hearing.

2. 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 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.