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Order
Per A.D. Jain, Vice President:
This is assessee’s appeal for A.Y. 2017-18, filed against the addition of Rs. 33,32,734/- made on account of difference in Income from other Sources as shown in the Income Tax Return and the Tax Audit Report in Form No. 26AS, which addition has been confirmed by the ld. CIT(A).
-2024 - Ramesh Chander Mahajan, Panchkula 2 2. There is a delay of four days in the filing of the appeal. In the application for condonation of delay accompanied by Affidavit of the Assessee, the Assessee has contended he is a senior citizen of 80 years of age; that he has been facing many health issues; that his son, who previously assisted him in managing his affairs went abroad during the period under consideration, causing disruption in communication channels and support system which disruption was also there prior to his leaving; that the age and health of the Assessee had necessitated a change in his residential address; that the Assessee had changed his contact details and he was not aware abut the significance of updating information on the Income Tax site; that this was also due to the fact of his limited knowledge of the Income Tax portal and associated procedures as well as his advance age and falling health; that it was in these circumstances that order under appeal was not delivered to the Assessee, nor was it sent on his e-mail; that the order was, in fact, sent to his old address, where it remained and it was undelivered to the Assessee due to his relocation; order was received by his C.A. office in the first week of January; and that, however,, their attempts to contact him remained futile as his contact information had changed, which information was not available with his C.A.
-2024 - Ramesh Chander Mahajan, Panchkula 3 3. Finding that the Assessee, in the aforesaid circumstances, was prevented by sufficient cause, the delay of four days in filing the appeal is condoned.
Regarding the merits of the case, the CPC made an adjustment of Rs. 33,32,734/- under the head ‘Income from other Sources’, the quantum covered u/s 194A of the Income Tax Act, 1961 (in short 'the Act') and reflected in Form No. 26AS. This amount was, however, not disclosed in the ITR filed by the Assessee for the year under consideration, i.e., A.Y. 2017-18.
The ld. CIT(A) held that the Assessee had chosen a wrong ITR, being ITR 1 to disclose the true and correct income of the Assessee for the year, wherein there was no provision to simultaneously report the quantum of income from other sources and the eligible deduction u/s 57(iii) of the Act; that in ITR 1 filed by the Assessee, the income from other sources was reported to be zero, whereas in Form No. 26AS, receipt of interest income of Rs. 33,32,734/- was shown as received from M./s S.R. Industries; that beyond the statement that the loan funds had been diverted, there was no evidence that the EMIs had been directly remitted by S.R. Industries to M/s Cholamandalam; that if the stand of the Assessee were true, TDS u/s 194A of the Act would have been deducted, treating M/s Cholamandalam as the deductee; that to the contrary, when the Assessee appears as the -2024 - Ramesh Chander Mahajan, Panchkula 4 deductee in Form No. 26AS, it is his duty to disclose the receipts in the ITR filed; that even if the claim is factually correct, unless the ITR exhibits the treatment given, the CPC cannot be faulted. It was on these observations that ld. CIT(A) found the adjustment made by the CPC u/s 143(1)(a)(iii) to be in order. The ld. CIT(A) confirmed the same and dismissed the appeal.
Heard.
First off, the ld. CIT(A), as is evident from the observations made in the impugned order, did not dispute the claim of the Assessee to be factually correct. It was only that since Assessee erroneously filed his return of income in ITR 1, that he could not state the correct income. This was so because, as also observed by the ld. CIT(A), in ITR 1, there was no provision to report the income from other sources and the eligible deduction u/s u/s 57 (iii) of the Act simultaneously. Otherwise, it does not stand disputed that the Assessee took a loan from a third party and transferred the same to his Company. The interest received on this loan from the Company of the Assessee was repaid to the third party, i.e., the party from whom the loan was taken by the Assessee. The amount of interest received and the amount of interest paid during the year was the same. It was due to this fact that after claiming deduction under section 57 of the Act, income was shown at nil. On the interest reimbursed to the -2024 - Ramesh Chander Mahajan, Panchkula 5 Assessee, however, the Assessee company deducted TDS. The Assessing Officer did not allow any deduction u/s 57 of the Act, but made addition of Rs. 33,32,734/- on account of interest received by the Assessee from his Company.
The above facts were duly disclosed by the Assessee before the ld. CIT(A) by way of Statement of Facts, as reproduced by the ld. CIT(A) at page 2, in para 2.1 of his order. The ld. CIT(A) has nowhere disputed these facts and as noted, he has circumlocutionally held them to be correct. He has only gone by the fact that the Assessee had chosen a wrong ITR, i.e., ITR 1. This inadvertent error of the Assessee, to our minds, cannot erase the undisputed facts, as dealt with herein above. It is trite law that procedure is handmaid of justice. Otherwise too, the Assessee cannot be said to gain anything by filing a wrong ITR intentionally, knowing that ITR 1 would heavily prejudice the interest of the Assessee, which has come about by passing of CPC order, wrongly confirmed by the ld. CIT(A). It is, in fact, a case of gift from his son to the Assessee, from the account of the company formed in Australia.
Given the above facts and circumstances, we do not find the order of the ld. CIT(A) to be justified. The same is, accordingly, set aside and quashed. The grievance of the Assessee is found to be -2024 - Ramesh Chander Mahajan, Panchkula 6 justified and it is accepted as such. The addition of Rs. 33,32,734/- is, therefore, deleted.
In the result, the appeal is allowed.
Order pronounced on 09.10.2024.