RISHI SURESH BHASIN,MUMBAI vs. DCIT 20(2), MUMBAI

This appeal, filed by the assessee, being 13th June, 2016 passed by the learned Commissioner of Income Tax (Appeals)- 36, Mumbai (hereinafter called “the CIT(A)”), for the assessment year 2011-12, the appellate proceedings before the learned CIT(A) arising from the assessment order dated 8th January, 2014 passed by learned Assessing Officer (Hereinafter called “ the AO” ) u/s 143(3) of the Income-tax Act,1961 (Hereinafter called “the Act”).

The grounds of appeal raised by the assessee in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called “the Tribunal”) read as under:-

Aggrieved by the assessment order dated 08-01-2014 passed by the A.O. u/s 143(3) of 1961 Act, the assessee carried matter in appeal before the ld. CIT(A) by filing first appeal. The ld. CIT(A), however, rejected the claim of the assessee relying on the decision of Hon’ble Supreme Court in the case of CIT v. V.P. Gopinathan reported in 248 ITR 449(SC) and observed that the assessee had stated that the OD from Dena Bank was taken to meet urgent need of funds from Dena Bank and the assessee derives income only from other sources and has no business. Thus, the ld. CIT(A) came to the conclusion that the interest paid on loan taken against the FD could not be said to have been incurred wholly and exclusively for the purpose of earning interest income from the said FDs to be allowed as expenses u/s 57(iii) of the Act, vide appellate order dated 13.06.2016 passed by learned CIT(A).

Aggrieved by the appellate order dated 13.06.2016 passed by the ld. CIT(A), the assessee filed an appeal before the tribunal.

The ld. Counsel for the assessee filed detailed paper book which contains 23 pages. The paper book is certified by Mr. Mukesh B. Advani on behalf of M B Advani & Co, Chartered Accountants. It is stated in the Index to paper book that documents contained at S. No. 1 and 2 which are placed at pages 1 to 4 of the said paper book filed with the tribunal were submitted before the A.O. and the ld. CIT(A) , while pages from page 5 to 23 placed in paper book filed with the tribunal are in the nature of additional evidences which were not filed before the lower authorities and are filed for the first time before the tribunal. The ld. Counsel has made strenuous arguments in detail on merits to justify that there is a direct nexus between the loan by way of OD obtained from Dena Bank on which interest of Rs.3,42,543/- was paid by the assessee and the loan granted to M/s Ram Fashion Exports Pvt. Ltd. by the assessee from where assessee has earned interest income of Rs. 9,92,350/- which was offered for taxation by the assessee in the return of income filed ITA 5514/Mum/2016 5 with the Revenue. The ld. Counsel drew our attention to the ledger account of M/s Ram Fashion Exports Pvt. Ltd. a, bank statements and other documents to prove that the entire amount of Rs. 50 lacs OD availed from Dena Bank by the assessee was directly disbursed by the assessee to the said Ram Fashion Exports Private Limited carrying interest @ 12% p.a. on which interest of Rs. 9,92,350/- was earned by the assessee during previous year relevant to the impugned assessment year which has been brought to tax in return of income filed with the Revenue. It is submitted that the AO erred in holding that properties were purchased by the assessee out of the OD availed from Dena Bank rather it was submitted that gifts were received from father of the assessee through banking channels to invest in properties , which gifts was accepted by the Revenue and the authorities below erred in concluding that properties were purchased out of OD availed from Dena Bank. Our attention was drawn to paper book filed with the tribunal to prove the said contention by the assessee. Thus , it is contended that interest paid on OD account from Dena Bank should be allowed as deduction from interest earned from Ram Fashion Exports Private Limited. Our attention was drawn to various documents filed in paper book filed with the tribunal which are mainly additional evidences filed before the tribunal for the first time.

The ld. D.R. submitted that the assessee has filed additional evidences from pages 5 to 23 in the paper book filed with the tribunal, which were not filed before the authorities below and hence these additional evidences cannot be relied upon by tribunal to adjudicate this appeal. There is no application filed by the assessee for admission of these additional evidences which should be discarded at threshold. The learned DR relied upon the orders of the authorities below.

We have heard rival contentions and also perused material available on record. We have observed that the assessee had paid an interest amount of ITA 5514/Mum/2016 6 Rs. 3,42,543/- to the Dena Bank on OD account. It is submitted by the assessee that the assessee had disbursed loans to M/s Ram Fashion Exports Pvt. Ltd. out of the proceed of OD loan availed by the assessee from Dena Bank, against which interest was earned to the tune of Rs. 9,92,350/- from loans advanced by the assessee to Ram Fashion Exports Private Limited. The authorities below did not accepted the contention of the assessee that there is nexus between OD availed by assessee from Dena Bank and interest-bearing loans advanced by the assessee to said Ram Fashion Exports Private Limited. The assessee has now produced documentary evidences vide paper book filed with the tribunal to establish that there was direct nexus between the OD availed by the assessee from Dena Bank and loans advanced to said concern Ram Fashion Exports Private Limited, which are in the form of additional evidences filed for the first time before the tribunal which were not placed before the authorities below by the assessee. We have also observed that the A.O. has not appreciated the contentions of the assessee and the evidences so placed by the assessee before the AO vide Balance Sheet , capital account filed by the assessee before the AO . Under these circumstances and keeping in view factual matrix of the matter as discussed above, the interest of justice will be best sub-served if the issues in the instant are set aside and restored back to the file of the A.O. for de-novo determination of the issue on merits in accordance with law. We are directing admission of the additional evidences filed by the assessee in the interest of justice, which additional evidences are placed in paper book page 5-23 filed with the tribunal. The assessee is directed to appear before A.O. and produce all the additional evidences and explanations in support of his contentions in his defense. The A.O. shall grant opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law before de-novo determination of the issue on merits. We would like to clarify that we have not commented on merits of the issues in the instant appeal and the AO shall be free to ITA 5514/Mum/2016 7 adjudicate the issues on merits after considering and evaluating the evidences and explanations of the assessee on merits. We order accordingly

In the result, appeal filed by the assessee in 2011-12 is allowed for statistical purpose.