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Income Tax Appellate Tribunal, “A”, BENCH KOLKATA
Before: SHRI S.S.VISWANETHRA RAVI, JM & DR. A.L.SAINI, AM
आदेश / O R D E R
Per Dr. Arjun Lal Saini, AM:
The captioned appeal filed by the assessee, pertaining to the assessment year 2007-2008, is directed against the order passed by ld. Commissioner of Income Tax (Appeals)-10, Kolkata, in Appeal No.617/CIT(A)-10/Cir-12/2014-15/Kol, dated 25.02.2016, which in turn arises out of an assessment order passed by the Assessing Officer (AO) Under Section143(3) of the Income Tax Act 1961, (in short the ‘Act’), dated 31.12.2009.
Brief facts of the case qua the assessee are that the assessee filed its return of income on 17.01.2008 declaring total income of Rs.13,13,570/-. The return of income was processed u/s.143(1) on 26.03.2009 at the returned income figure. Thereafter the case was selected for scrutiny proceedings U/s 143 (3) of the Act and the AO has treated Rs. 2,19,192/- as expenditure of personal nature and therefore made the addition of Rs.2,19,192/-.
Aggrieved from the order of AO, the assessee filed appeal before the ld. CIT(A), who has confirmed the addition made by the AO observing the followings :-
“03. Ground No. 4, 6 relates to various disallowance made by AO. The issues have been dealt by the AO in assessment order as follows: "It is seen from the computation of income that the assessee has claimed an expenses of Rs.2,19,192/- against the income under the head "Income from other sources". The expenses were as under;
Bank charges Rs.1,462/- Interest paid Rs.1,96,780/- Professional Tax Rs.2,500/- Loan processing fees Rs.18,450/- Total Rs,2,19,792/- But considering the nature of income of the assessee, the above expenditures were considered as personal in nature. In view of the above the expenditure claimed of Rs.2,19,192/- is hereby disallowed and added back to the returned income of the assessee."
3. During the course of appeal, the appellant has contested all the above additions made by the AO except Rs.1,462 on account of bank charges. It is noticed that despite valid service of notice issued u/s 250 of the Income Tax Act to the appellant, there has been no attempt by the appellant to justify his case further and submit any relevant documents. It is to be noted that it is for the appellant to bolster and support the grounds taken during the appeal, and the clear onus is cast upon him to defend his / her case. The appellant has not helped his own case by failing to avail the opportunity of being heard which was afforded to him. Therefore, in the absence of anything said or evidenced contrary to the findings and additions of the AO, the action of the AO is confirmed, and the grounds taken by the appellant stand dismissed.”
4. Not being satisfied with the order of CIT(A), the assessee is in further appeal before us and has taken the following grounds of appeal :-
3 Pradeep Kumar Chopra 1. For that the Ld. CIT (A) erred in dismissing the appeal of the appellant on the alleged grounds.
2. For that the Ld. CIT (A) failed to consider the relevant records and erred in confirming the order of the A.O. who had disallowed the claim of the appellant in respect of payments towards Bank charges, interest, professional tax and loan processing fees totaling to Rs.2,19,192/-.
3. For that the appellant had claimed the aforesaid expenses as deduction against the income derived by him from various sources and that the Ld. CIT (A) ought to have allowed the claim of the appellant as the expenses claimed were incurred wholly & exclusively to earn income.
For that the Ld. CIT (A) ought not to have proceeded only on the basis of the observations of the A.O. but to have applied his mind to the facts of the case of the appellant and the law applicable and ought to have allowed the appeal of the appellant.
5. For that further grounds of appeal may kindly be allowed to be taken at the time of hearing of the appeal.
Although, in this appeal, the assessee has raised multiple grounds of appeal but at the time of hearing the main grievance of the assessee has been confined to ground No.2 only and other grounds were not pressed by the assessee.
6. Ground No.2 relates to disallowance of expenses like bank charges, interest paid, professional tax and loan processing fees etc. totalling to Rs.2,19,192/- treating these expenditure as personal in nature.
6.1. Ld. AR for the assessee has vehemently submitted before us that all the expenses disallowed by the AO and confirmed by the ld. CIT(A), are incurred by the assessee for the purpose of business to invest the money in the partnership firm. Ld. AR submitted that he has borrowed money from their friends and relatives and paid interest Rs.1,96,780/-.
The assessee has borrowed this money from his friends and relatives in invest money in partnership firm and in turn the Partnership Firm gives interest to the assessee. The assessee has lent money to his partnership firm where he is one of the partners. The assessee is getting interest from the partnership firm on the said loan. During the year under consideration, the assessee has received interest from partnership firm at Rs.5,81,620/- and he paid interest at Rs.1,96,780/-. The interest paid by him is connected with interest received from the partnership firm because the assessee has borrowed the money from his friends and relatives and in turn he has invested in the partnership firm, wherefrom he is getting interest. Therefore, it is a genuine expenditure and should be allowed.
6.2. On the other hand, ld. DR for the revenue has primarily reiterated the stand taken by the ld. AO, which we have already noted in our earlier para and is not being repeated for the sake of brevity.
6.3. Having heard the rival submissions, perused the material available on record, we are of the view that there is merit in the submissions of the assessee, as the propositions canvassed by the ld. AR for the assessee are supported by facts narrated above by him. Ld AR has produced before us the profit and loss account of assessee where interest received is credited at Rs.5,81,620/- and interest paid debited at Rs.1,96,780/-. Ld. DR for the revenue has objected that interest paid Rs.1,96,780/- had not been verified by ld. CIT(A). As the ld. DR for the revenue relied on the assessment order and during the assessment proceedings the assessee did not produce any cogent evidence to prove that interest paid at