Sanjay Mohan Kaul, New Delhi V. DCIT, Circle- 11(2), New Delhi

ITA 3585/DEL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8675 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 11-05-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Assessee Lawyers: KAVINDRA KUMAR GILL
• Keywords: TDS
• Section: 143(3); 142(1); 15

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC, NEW DELHI BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER ITA NO. 3585/DEL/2018 ASSESSMENT YEAR: 2012-13 SANJAY MOHAN KAUL, VS. DCIT, CIRCLE-11(2), D-147, OKHLA INDUSTRIAL AREA, NEW DELHI PHASE-1, NEW DELHI 110 020 (PAN: AAEPK8398K) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. KAVINDRA KUMAR GILL, ADV. REVENUE BY : SH. SL ANURAGI, SR. DR. ORDER THE ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDE R DATED 01.9.2016 OF THE LD. CIT(A)-35, NEW DELHI PERTAINING TO ASSESSMENT YEAR 2012-13 ON THE FOLLOW ING GROUNDS:- I) ON THE FACTS OF THE CIRCUMSTANCES OF THE CASE AND IN LAW THE AUTHORITIES BELOW HAVE ERRED IN CONFIRMING ADDITION OF 2 RS. 6,39,301/- ON ACCOUNT OF INTEREST PAID TO BANK. THE ACTION OF AUTHORITIES BELOW IS WRONG, UNJUSTIFIED, BAD AT LAW AND DESERVES TO BE QUASHED. II) THE APPELLANT CRAVES THE RIGHT TO ADD/ ALTER/ AMEND ALL OR ANY OF THE GROUND OF APPEALS DURING OR BEFORE THE HEARING OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FI LED RETURN OF INCOME ON 30.9.2012 DECLARING INCOME OF RS. 4,29,899/-. THE CASE OF THE ASSESSEE WAS SELECTED F OR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE INC OME TAX ACT, 1961 (IN SHORT ACT) DATED 20.9.2013 WAS ISSU ED. NOTICE U/S. 142(1) OF THE ACT ALONGWITH QUESTIONNAI RE WAS ISSUED ON 17.11.2014. AGAIN NOTICE U/S. 142(1) DATE D 11.12.2014 ISSUED DUE TO CHANGE IN OFFICE OF INCUMB ENCY. IN RESPONSE TO THESE NOTICES, THE AR OF THE ASSESS EE ATTENDED THE PROCEEDINGS FROM TIME TO TIME AND FILE D THE REQUISITE DETAILS. IN THIS CASE THE ASSESSEE IS T HE DIRECTOR IN M/S HI-REACH CONSTRUCTION AND PROPRIETOR OF M/S SUNRISE 3 ENGINEERING SYSTEM. AO OBSERVED THAT AS PER COMPUT ATION OF INCOME AND STATEMENT OF AFFAIRS, THE TOTAL INCOM E FROM OTHER SOURCES HAS BEEN DISCLOSED AT RS. 6,39,301/-. AO FURTHER OBSERVED THAT THE ASSESSEE COMPANY HAS RECE IVED INTEREST FROM M/S HI-REACH CONSTRUCTION EQUIPMENT P VT. LTD. AT RS. 6,39,301/- AND TDS HAS ALSO BEEN DEDUCT ED THEREON. THE AO OBSERVED THAT ASSESSEE HAS NOT DIS CLOSED INTEREST INCOME IN THE RETURN AND ACCORDINGLY CONC EALED THE PARTICULARS OF INCOME FROM INTEREST IS LIABLE T O BE ADDED TO THE TOTAL INCOME AS UNDISCLOSED INCOME AND DIREC TED THE ASSESSEE THAT COPY OF ACCOUNT IN THE COMPANY M/S HI - REACH CONSTRUCTION PVT. LTD. FOR THE YEAR UNDER REF ERENCE AND ALSO TO ONE PRECEDING YEAR AND TO SUCCEEDING ASSESSMENT YEAR ALSO TO BE FILED. IN COMPLIANCE THE RETO THE AR OF THE ASSESSEE FILED WRITTEN REPLY STATING THAT THE SAME AMOUNT OF RS. 6,39,301/- HAS BEEN PAID AS INTEREST EXPENSE TO HSBC BANK. SINCE THE NET EFFECT BEING NI L, IT HAS NOT BEEN REFLECTED IN THE COMPUTATION OF INCOME STATEMENT. THE PLEA OF THE ASSESSEE COMPANY WAS 4 EXAMINED WITH REFERENCE TO STATEMENT OF AFFAIRS AND ALSO DEBIT BALANCE OF M/S HI-REACH CONSTRUCTION EQUIPMEN TS PVT. LTD. AND FOUND THAT THE INTEREST AT THE END O F THE YEAR HAS BEEN CREDITED IN THE ACCOUNT OF THE ASSESS EE COMPANY BUT IN THE STATEMENT OF AFFAIRS THE ORIGINA L AMOUNT OF LOAN HAS ONLY BEEN DISCLOSED WHICH CLEARL Y MEANS THAT THE ASSESSEE WAS HAVING ASSETS MORE THAN THE LIABILITIES AS ON 31.3.2012 BY A SUM OF RS. 6,39,30 1/- HENCE, THE INTEREST OF RS. 6,39,301/- WAS DISALLOWE D AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE BY ASSESS ING THE INCOME AT RS. 10,29,200/- VIDE ORDER DATED 26.03.20 15 PASSED U/S. 143(3) OF THE ACT. AGAINST THE SAID ASS ESSMENT ORDER, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 01.9.2016 HAS DISMISSED T HE APPEAL OF THE ASSESSEE. AGGRIEVED WITH THE IMPUGNED ORDER, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. DURING THE HEARING, LD. COUNSEL FOR THE ASSESSEE HAS STATED THAT LD. CIT(A) HAS WRONGLY CONFIRMED THE AD DITION OF RS. 6,39,301/- ON ACCOUNT OF INTEREST PAID TO BA NK AND 5 RELIED UPON THE DECISION OF THE HONBLE SUPREME COU RT OF INDIA IN THE CASE OF CIT, WB III VS. RAJENDRA PRAS AD MOODY, CALCUTTA (1978) 115 ITR 519. 4. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT HE HAS PASSED A WELL REA SONED ORDER, WHICH DOES NOT NEED ANY INTERFERENCE. 5. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS ESPECIALLY THE IMPUGNED ORDER AS WELL AS THE CASE L AW CITED BY THE LD. COUNSEL FOR THE ASSESSEE. I NOTE THAT TH E ASSESSEE HAS MADE PAYMENT OF RS. 6,39,301/- TO HSBC BANK AND HAS ALSO CHARGED THE SAME AMOUNT OF INTER EST FROM M/S HI REACH CONSTRUCTION EQUIPMENT PVT. LTD. HOWEVER, THE INTEREST HAS BEEN PAID FOR HOUSING LO AN. THE SANCTION ORDER OF HSBC BANK DATED 30.11.2011 MENTIONS THE LOAN AS SANCTIONED FOR PURCHASE OF HOU SE PROPERTY AGAINST SECURITY OF ANOTHER PROPERTY. IT IS NOTED THAT THE TENURE OF LOAN HAS BEEN MENTIONED AT 225 M ONTHS AT FLOATING RATE OF INTEREST. IT IS A HOUSING LOAN, ELIGIBLE FOR LOWER RATES OF INTEREST WHICH HAS BEEN DIVERTED TO THE 6 COMPANY IN WHICH THE APPELLANT IS A DIRECTOR. SINCE , THE INTEREST PAYMENT IS ON HOUSING LOAN AND LOAN TAKEN WAS TO BE USED FOR PURCHASE OF PROPERTY, IT CANNOT HELD TH AT THE INTEREST PAYMENT WAS WHOLLY AND EXCLUSIVELY INCURRE D FOR EARNING INTEREST INCOME FROM THE COMPANY. IN FACT N O INTEREST INCOME HAS BEEN EARNED AS THE AMOUNT HAS BEEN CLAIMED TO HAVE BEEN DIVERTED AT THE SAME INTEREST. SUCH AN ACT ALSO RAISES ETHICAL QUESTIONS OF MISUSE OF CONCESSIONAL LOANS FOR HOUSING PURPOSE WHICH ARE GI VEN AT LOWER RATE THAN THE BUSINESS LOANS AND PERSONAL LOA NS. MOREOVER, AS PER STATEMENT OF AFFAIRS, TOTAL HOUSIN G LOANS ARE OF RS. 3.37 CRORES, WHILE INVESTMENT IN TWO HOU SES IS AT RS. 2.8 CRORES. THAT LEAVES A BALANCE OF ONLY RS. 5 4 LAKHS AGAINST THE CLAIM OF THE ASSESSE THAT THE ENTIRE H OUSING LOAN WAS DIVERTED AS INVESTMENT IN THE COMPANY. I N VIEW OF THESE FACTS THE DEDUCTION OF INTEREST PAID CANN OT BE GIVEN AS THE INTEREST PAYMENT HAS BEEN MADE FOR AMO UNT BORROWED FOR ACQUISITION / PURCHASE OF PROPERTY DE DUCTION OF INTEREST ON HOUSING LOANS IS GOVERNED BY SECTION 24B 7 AND NOT SECTION 36(1)III OR SECTION 57. IT IS ALSO NOTED THAT THE CASE LAW CITED BY THE LD. COUNSEL FOR THE ASSES SEE IS DISTINGUISHED ON FACTS. CONSEQUENTLY, THE ADDITIO N MADE BY THE AO WAS RIGHTLY CONFIRMED BY THE LD. CIT(A), WHICH DOES NOT NEED ANY INTERFERENCE ON MY PART, HENCE, I UPHOLD THE ACTION OF THE LD. CIT(A) ON THE ISSUE OF DISPUTE AND REJECT THE GROUND RAISED BY THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON 09-04-2019. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE: 09/04/2019 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT(A) 5. DR, ITAT BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES