RITIKA GUPTA, 3/273, VIDHYADHAR NAGAR, JAIPUR,JAIPUR vs. ITO WARD-4(2), JAIPUR, WARD-4(2), JAIPUR
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Income Tax Appellate Tribunal, JAIPUR BENCHES,”SMC” JAIPUR
Before: HON’BLE SHRI SANDEEP GOSAINvk;dj vihy la-@ITA No. 551/JP/2019
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, JUDICIAL MEMBER vk;dj vihy la-@ITA No. 551/JP/2019 fu/kZkj.k o"kZ@Assessment Year : 2012-13. cuke Smt. Ritika Gupta, Income Tax Officer, Vs. 3/273, Vidhyadhar Nagar, Ward 4(2), Jaipur. Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No. ARVPG 6149 E vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Ms. Shivangi Samdhani, CA jktLo dh vksj ls@ Revenue by : Smt. Monisha Choudhary, Addl. CIT
lquokbZ dh rkjh[k@ Date of Hearing : 08/02/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 20/02/2023
vkns'k@ ORDER
PER: SANDEEP GOSAIN, J.M.
This appeal by the assessee is directed against the order dated 27.04.2017 of ld. CIT (A)-2, Jaipur for the assessment year 2012-13. The assessee has raised the following grounds of appeal :- 1. In the facts and circumstances of the case and in law, ld. CIT (A) has erred in confirming the action of the ld. AO in making disallowance of interest expense of Rs. 5,10,513/-. The action of the ld. CIT (A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said disallowance of Rs. 5,10,513/-. 2. The assessee craves her rights to add, amend or alter any of the grounds on or before the hearing.
2 ITA No. 551/JP/2019 Smt. Titika Gupta, Jaipur.
The appeal filed by the assessee is delayed by 2 (Two) days. The assessee
has submitted an application requesting condonation of delay. The assessee
explained that the delay caused due to non receipt of the Order of the ld. CIT (A)
dated 27.04.2017 which was remained undelivered. On enquiry from the appellate
authority, the assessee came to know about passing of the impugned order and
immediately thereafter she obtained certified true copy of the order from the Office
of ld. CIT (A)-II, Jaipur on 15.02.2019. Earlier, Shri Suresh Khandelwal, Advocate
was engaged to deal with the assessee’s taxation matters, later on the assessee
engaged M/s. R. Sogani & Co., Chartered Accountant for handling her taxation
matters and this took a couple of days in transferring the case file of the assessee to
the present Chartered Accountant and preparation of filing the appeal before the
Tribunal. As per provisions of section 253(3) of the IT Act, 1961, the appeal was
due to be filed in the Office of the Tribunal on or before 16.04.2019 but the appeal
was filed on 19.04.2019 with a delay of 2 days. The assessee, thus, submitted that
there was no willful delay in filing of the appeal before the Tribunal but the delay
caused due to situation beyond the control of the assessee. She therefore,
requested to condone the delay of 2 days. On the other hand, the ld. D/R has no
objection if the delay is condoned.
On going through the explanation of the assessee, I am satisfied that the
assessee has a reasonable cause for filing the appeal delayed by 2 days. I,
therefore, condone the delay of 2 days in filing the appeal before the Tribunal.
3 ITA No. 551/JP/2019 Smt. Titika Gupta, Jaipur.
The brief facts of the case are that the assessee was engaged in the business
of wholesale trading of sugar, boora, patasha, mishri and makahana in the name
and style of M/s. Geet Enterprises. The assessee filed her return of income declaring
income of Rs. 4,54,178/- on 18.09.2012 under section 139(1) of the IT Act, which
was processed under section 143(1) of the IT Act, 1961 at the returned income.
The case of the assessee was selected for scrutiny and hence notice under section
143(2) of the IT Act, 1961 was issued on 23.089.2013 by the ITO. Thereafter, on
change of incumbent, fresh notice under section 142(1) along with questionnaire
was issued by the AO fixing date of hearing on 24.11.2014. In response to the
notice, Shri Suresh Khandelwal, ld. A/R of the assessee attended the hearing and
furnished the books of accounts consisting of cash book, ledger, bills and vouchers
produced which have been examined on test check basis. During the assessment
proceedings, the AO noticed that in the computation of income the assessee has
claimed interest expenses of Rs. 5,10,573/- on borrowed funds. On perusal of the
Balance Sheet of the assessee, the AO found that the assessee has not utilized the
borrowed funds neither for earning the interest income nor for business purposes.
On being asked to explain justification regarding claimed interest expenses, the
assessee could not submit any nexus relationship between the borrowing fund and
utilization of fund. The AO thus disallowed the interest expenses and made the
addition of Rs. 5,10,513/-. On appeal, the ld. CIT (A) confirmed the disallowance
and sustained the addition.
4 ITA No. 551/JP/2019 Smt. Titika Gupta, Jaipur.
Now the assessee is in appeal before the Tribunal.
The solitary ground raised by the assessee is challenging the disallowance of interest expenses.
Before us, the ld. A/R for the assessee has submitted her written submissions
as under :-
“ The assessee purchased immovable properties situated in Central Spine, Vidhyadhar Nagar, Jaipur. For purchasing the same assessee obtained interest bearing unsecured loans from Machiwal & Sons and Ramesh Chand Machiwal & Sons HUF. 2. Such properties were let out by the assessee and the rental income from the same was offered for taxation. Since the assessee took loan for purchasing the said properties and paid interest during the year under consideration the assessee was entitled to claim deduction of interest u/s 24. The amount eligible for deduction u/s 24 was Rs. 5,10,573. 3. While filing return of income the assessee inadvertently claimed deduction of the said amount u/s 57. 4. The case of the assessee was selected for scrutiny and was asked to explain the deduction claimed u/s 57. The assessee furnished confirmation of accounts from Machiwal & Sons and Ramesh Chand Machiwal & Sons HUF. 5. Without disputing the fact of making payment of interest addition was made and confirmed as the assessee could not establish link with the loan with the properties let out. 6. It is submitted that the assessee may please be allowed deduction of interest expense u/s 24. 7. The transaction of loan was complicated and, therefore, the assessee could not understand what to submit in order to satisfy the lower authorities.
5 ITA No. 551/JP/2019 Smt. Titika Gupta, Jaipur.
The assessee purchased property, however, was not having funds. Therefore, the assessee took loan from Machiwal & Sons and Ramesh Chand Machiwal & Sons HUF. These entities in turn took loan from bank for purchasing commercial properties. The loan got disbursed directly in the bank account of the seller. Hence, the bank made payment to the seller, Machiwal & Sons and Ramesh Chand Machiwal & Sons HUF made payment to bank by way of EMI and the assessee made payment to Machiwal & Sons and Ramesh Chand Machiwal & Sons HUF. 9. Since the loan did not get credited to the account of the assessee, the assessee could not establish the nexus that the loan which was taken was utilized for the purpose of purchasing the property. 10. Now the assessee before the Hon’ble Bench have furnished additional evidences which further proves the case of the assessee. A confirmation of account, ledger accounts, bank statements of Machiwal & Sons have been placed on record. The confirmation states that the Machiwal & Sons made payment to the seller Rajendra Kumar Vaid through cheque no. 686540. Rajendra Kumar Vaid is the seller of the property which assessee purchased. Also the cheque number as mentioned in the confirmation finds mentioned the sale deed. Thus from the additional evidences nexus between the loan taken by the assessee and purchase of properties could be established. 11. Thus, the loan has direct nexus with the properties purchased and let out by the assessee and, hence, the assessee is eligible to claim deduction of the interest paid during the year u/s 24 amounting to Rs. 5,10,573/-.
In view of above the addition of Rs. 5,10,573/- deserves to be deleted. Alternatively, the matter may please be set aside to the file of AO for appreciation of additional evidence.”
6 ITA No. 551/JP/2019 Smt. Titika Gupta, Jaipur.
On the other hand, the ld. D/R supported the orders of the revenue
authorities.
I have heard learned Counsels for both the sides, perused the material
available on record and gone through the orders of the revenue authorities. On
perusal of the orders of revenue authorities, it is noticed that both the lower
authorities have disallowed the interest expenses in absence of any nexus between
the borrowed fund and utilization of the same. The assessee claimed that the
assessee has paid interest on the loan taken from Machiwal & Sons and Ramesh
Chand Machiwal & Sons HUF for purchase and construction of the property but she
could not furnish any documentary evidence before the lower authorities in respect
of loan taken from the above mentioned parties. Before us, the assessee has
submitted additional evidences by way of filing (1) Confirmation of loan by Machiwal
and Sons, (2) Ledger accounts for repayment of loan in the books of Machiwal and
Sons, (3) Journal voucher in the books of Machiwal and Sons prepared at the time of
taking loan, (4) Ledger accounts of Ritika Gupta in the books of Machiwal and Sons
and (5) Bank statement (Loan A/c) in the books of Machiwal and Sons in support of
her claim and prayed admission of these additional evidences under Rule 29 of ITAT
Rules, 1963. Under the facts and circumstances of the case and in the interest of
natural justice, I admit the additional evidences produced before me. I note that
since the case of the assessee was decided in the absence of proper representation
from the side of the assessee, I am of the considered view that it will be in the
interest of justice if the matter is restored back to the file of the A.O. for deciding
the matter afresh after providing a reasonable opportunity of being heard to the
7 ITA No. 551/JP/2019 Smt. Titika Gupta, Jaipur.
assessee and considering the submissions and after verifying the additional evidences to be furnished by the assessee before the AO. The assessee is directed to appear before the AO and furnish necessary corroborative evidences in support of her case. As stated hereinabove, the case of the assessee is remitted back to the file of the AO for deciding afresh after affording an opportunity of hearing to the assessee. 9. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 20/02/2023.
Sd/- ¼lanhi xkslkbZ½ (Sandeep Gosain) U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 20/02/2023. Das/ आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- Smt. Ritika Gupta, Jaipur. 2. izR;FkhZ@ The Respondent- The ITO, Ward 4(2), Jaipur. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 6. xkMZ QkbZy@ Guard File {ITA No. 551/JP/2019}
vkns'kkuqlkj@ By order,
8 ITA No. 551/JP/2019 Smt. Titika Gupta, Jaipur.
सहायक पंजीकार@Aेेज. त्महपेजतंत
