Sunaini Sarin, New Delhi V. ACIT, New Delhi

ITA 3841/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7412 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 26-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 14-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIMA BUMWAR
• Assessee Lawyers: SANJEEV DEORA
• Keywords: Opportunity of being heard; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G, NEW DELHI BEFORE SHRI N. K. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER I.T.A. NO.3841/DEL/2013 (ASSESSMENT YEAR 2009-10) SUNAINI SARIN, VS. ACIT, CIRCLE 31(1), H-65, CONNAUGHT CIRCUS, NEW DELHI NEW DELHI. GIR / PAN: ALPBS4777N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANJEEV DEORA, CA RESPONDENT BY : SMT. ANIMA BUMWAR, SR. DR DATE OF HEARING: 26.11.2015 DATE OF PRONOUNCEMENT: 06.01.2016 ORDER PER KULDIP SINGH, JM: THE APPELLANT, MS. SUNAINI SARIN, (HEREINAFTER REFE RRED TO AS 'THE ASSESSEE'), BY FILING THE PRESENT APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 30.03.2013 PASSED BY LD. CIT(A) XXVI, N EW DELHI QUA THE ASSESSMENT YEAR 2009-10 ON THE GROUNDS INTER ALIA T HAT:- '1. THAT WITHIN THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE LAW ON THE POINT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - XXVI, NEW DELHI (LEARNED CIT (A)) HAS ERRED IN DISM ISSING THE APPEAL OF THE APPELLANT WITHOUT PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD IN THE MATTER, AND THEREFORE THE IMPUGN ED ORDER IS BAD IN LAW AND DESERVES TO BE SET ASIDE. 2 I.T.A.NO.3841/DEL/2013 2. THAT WITHIN THE FACTS AND CIRCUMSTANCES OF THE C ASE AND THE LAW ON THE POINT THE LEARNED CIT (A) HAS ERRED IN NOT A DMITTING ADDITIONAL EVIDENCE, THUS VIOLATING RULE 46A OF THE INCOME TAX RULES, 1962 AS THE AGREEMENTS TO SELL PRODUCED BEFO RE THE LEARNED CIT (A) MADE IT EVIDENT THAT THERE EXISTS A CLEAR N EXUS BETWEEN THE INTEREST INCOME EARNED ON FIXED DEPOSIT RECEIPT AND INTEREST PAID ON OVERDRAFT ACCOUNT BUT THE CIT(A) MADE NO ATTEMPT TO UNDERSTAND THAT SUFFICIENT NEXUS EXISTED BETWEEN BORROWING OF FUNDS FROM THE BANK AND INTEREST INCOME EARNED ON THE FDR AND ALSO FAILED TO APPRECIATE THAT THE INTENTION OF THE APPELLANT WAS TO TAKE UP ACTIVITIES IN THE NATURE OF PURCHASE AND SALE OF PR OPERTIES, AND THEREFORE THE IMPUGNED ORDER IS ERRONEOUS AND IS BA D IN LAW AND DESERVES TO BE SET ASIDE. 3.1 THAT WITHIN THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW ON THE POINT, THE LEARNED CIT (A) HAS ERRED IN CONFIRM ING DISALLOWANCE OF INTEREST OF RS.27,29,491.00 PAID BY THE APPELLAN T WHICH WAS ADJUSTED OUT OF INTEREST INCOME EARNED BY THE APPEL LANT ON FIXED DEPOSITS FOR THE REASON THAT THERE IS NO NEXUS BETW EEN THE INTEREST INCOME EARNED ON FIXED DEPOSIT RECEIPT AND INTEREST PAID ON OVERDRAFT ACCOUNT FOR MAKING ADVANCE PAYMENTS FOR P URCHASE OF PROPERTIES, WITHOUT APPRECIATING THAT THE SAID BORR OWED FUNDS WERE UTILIZED FOR PURCHASE OF AN INDUSTRIAL PLOT AND COM MERCIAL AREA FOR BUSINESS ACTIVITY AND THAT SUCH FACT IS EVIDENT FRO M THE DOCUMENTS PLACED ON RECORD, AND THEREFORE, THE LEARNED ASSIST ANT COMMISSIONER OF INCOME TAX (LEARNED ACIT) HAS ERRED IN CONSIDERING THE PURCHASE OF PROPERTY IN THE NATURE OF RESIDENTIAL HOUSE, AND THEREFORE, THE IMPUGNED ORDER IS ERRONEO US AND IS BAD IN LAW AND DESERVES TO BE SET ASIDE. 3.2 THAT WITHIN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND THE LAW ON THE POINT THE LEARNED CIT(A) HAS ERRED IN NO T ACCEPTING THE SUBMISSIONS OF THE APPELLANT THAT THE PAYMENT OF IN TEREST WAS AN ALLOWABLE DEDUCTION UNDER SECTION 36(1)(III) OF THE ACT AND HAS FURTHER ERRED IN RELYING ON THE EXPLANATIONS OF THE LEARNED A CIT THAT 'THE BORROWED FUNDS ON WHICH INTEREST WAS PAID WERE USED FOR MAKING ADVANCE PAYMENTS FOR PURCHASE OF PROPERTIES HAS NO NEXUS WITH ANY BUSINESS ACTIVITY FOR THE REASONS THAT THE INTEREST EARNED ON FIXED DEPOSIT RECEIPT WAS NOT IN ANY WAY CONNECTED WITH ANY 3 I.T.A.NO.3841/DEL/2013 BUSINESS ACTIVITY OF THE APPELLANT', AND THAT THE R EJECTION OF THE ARGUMENTS OF THE APPELLANT IS SIMPLICITOR AND WITHO UT PROVIDING ANY REASONS THEREFORE, AND THEREFORE, THE IMPUGNED ORDE R IS ERRONEOUS AND IS BAD IN LAW AND DESERVES TO BE SET ASIDE. 3.3 THAT WITHIN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND THE LAW ON THE POINT THE LEARNED CIT (A) HAS ERRED IN D ISALLOWING INTEREST OF RS.27,29,491.00 CLAIMED AS DEDUCTION UN DER SECTION 57 OF THE ACT AND IGNORING THE FACT THAT PAYMENT OF IN TEREST PROVIDED AN ARBITRAGE TO THE APPELLANT BY WAY OF SETTING OFF TH E SAME AGAINST HIGHER AMOUNT OF INCOME EARNED BY THE APPELLANT, AN D THAT THE REJECTION OF THE AFORESAID ARGUMENT OF THE APPELLAN T IS A SIMPLICITOR REJECTION WITHOUT PROVIDING ANY REASON THEREFORE, A ND THEREFORE, THE IMPUGNED ORDER IS ERRONEOUS AND IS BAD IN LAW AND D ESERVES TO BE SET ASIDE. 3.4 THAT WITHIN THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE LAW ON THE POINT THE LEARNED CIT(A) HAS WITHOUT BEING S UPPORTED BY ANY PRECEDENTS, ERRED IN DISREGARDING THE DECISION OF T HE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF KAVIRAJ MAHIPAT SINGH V. COMMISSIONER OF INCOME TAX, [2002} 255 ITR 470, AND ERRONEOUSLY UPHELD THE ADDITION MADE BY THE LEARNED ASSISTANT C OMMISSIONER OF INCOME TAX NOTWITHSTANDING THAT IN THE AFORESAID DE CISION IT WAS HELD ' .... THAT BORROWINGS AGAINST FIXED DEPOSITS PLACED WITH A BANK UTILIZED FOR BUSINESS PURPOSE WILL ALLOW THE BORROW ER TO SET-OFF THE INTEREST PAID ON BORROWINGS AGAINST INTEREST EARNED ON FIXED DEPOSITS, AND THAT THE INTEREST PAID ON BORROWINGS AGAINST FIXED DEPOSITS UTILIZED FOR PURPOSES OTHER THAN BUSINESS WILL NOT ALLOW THE BORROWER TO SET-OFF THE INTEREST PAID AGAINST INTER EST EARNED ON FIXED DEPOSITS. 4. THAT THE GROUNDS OF APPEAL SUBMITTED HEREINABOVE BE READ WITHOUT PREJUDICE TO ONE ANOTHER IN SUCH CASES AND CIRCUMSTANCES WHEREVER THE CONTEXT SO REQUIRES. ' 2. BRIEFLY STATED THE FACTS OF THIS CASE ARE: DURI NG THE PROCESSING OF RETURN OF INCOME FILED BY THE ASSESSEE QUA THE ASSE SSMENT YEAR 2009-10 DECLARING TAXABLE INCOME AT RS.88,74,769/-, THE CAS E WAS SUBJECTED TO SCRUTINY AND CONSEQUENTLY, NOTICES U/S 143(2) AND 1 42(1) OF THE ACT WERE 4 I.T.A.NO.3841/DEL/2013 SERVED UPON THE ASSESSEE AND IN RESPONSE THERETO SH RI RAKESH JAIN CA/ AR ATTENDED THE PROCEEDINGS AND FILED NECESSARY DET AILS AND DOCUMENTS. 3. THE ASSESSEE CLAIMED DEDUCTION U/S 57 OF THE LT . ACT, 1961 TO THE TUNE OF RS.27,29,491/- AND ON QUERY, ASSESSEE FILED THE DETAILS OF INTEREST CLAIMED AND THE ASSESSEE WAS SHOW CAUSED AS TO WHY THE INTEREST DEDUCTION AND CLAIMED U/S 57 OF THE ACT AMOUNTING T O RS.27,29,491/- SHALL NOT BE ALLOWED. FINDING THE EXPLANATION FILED BY TH E ASSESSEE NOT TENABLE AND IN VIEW OF THE FACT THAT THE PAYMENT OF INTERES T FOR THE PURCHASE OF PROPERTY CANNOT BE TREATED AS EXPENDITURE WHOLLY AN D EXCLUSIVELY FOR THE PURPOSE OF EARNING INTEREST INCOME FROM FD, THE ADD ITION OF RS.27,29,491/- HAS BEEN MADE. 4. THE ASSESSEE CARRIED THE MATTER BEFORE LD. CIT( A) WHO HAS DISMISSED THE APPEAL VIDE IMPUGNED ORDER. FEELING A GGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING TH E PRESENT APPEAL. 5. LD. A.R. FOR THE ASSESSEE CHALLENGING THE IMPUG NED ORDER CONTENDED THAT LD. CIT(A) HAS ARBITRARILY DECIDED T HE APPEAL WITHOUT ENTERTAINING ADDITIONAL EVIDENCE OUGHT TO BE BROUGH T ON RECORD BY THE ASSESSEE AND CONSEQUENTLY ERRED IN CONFIRMING THE D ISALLOWANCE OF INTEREST OF RS.27,29,491/-. 6. ON THE OTHER HAND, LD. D.R. RELIED UPON THE ORD ER PASSED BY LD. CIT(A). 7. WE HAVE HEARD BOTH THE AUTHORIZED REPRESENTATIV ES AND HAVE PERUSED THE MATERIAL ON RECORD IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ORDERS OF TAX AUTHORITIES BELOW. 5 I.T.A.NO.3841/DEL/2013 8. UNDISPUTEDLY, ASSESSEE HAS CLAIMED DEDUCTION AM OUNTING TO RS.27,29,491/- U/S 57 OF THE ACT AND DURING ASSESSM ENT PROCEEDINGS, FILED DETAILED REPLY VIDE LETTER DATED 07.12.2011 WHICH H AS BEEN FOUND NOT TENABLE BY THE ASSESSING OFFICER. LD. A.R. CONTENDE D THAT LD. CIT(A) HAS ERRED BY NOT ADMITTING ADDITIONAL EVIDENCE VIOLATIN G THE PROVISIONS CONTAINED UNDER RULE 46A OF I. T. RULES, 1962. 9. LD. CIT(A) DECLINED TO ALLOW THE APPLICATION FO R ADMISSION OF ADDITIONAL EVIDENCE FILED BY THE ASSESSEE UNDER RUL E 46A OF I. T. RULES, 1962 MERELY ON THE BASIS OF REMAND REPORT SENT BY A SSESSING OFFICER BY RECORDING FOLLOWING FINDINGS:- '8. I HAVE CONSIDERED THE FACTS OF THE CASE, SUBMIS SIONS OF THE APPELLANT WITH REGARD TO ADMISSION OF ADDITIONAL EV IDENCE, REMAND REPORT OF THE ASSESSING OFFICER, APPELLANT'S REJOIN DER. THE ASSESSING OFFICER HAS RIGHTLY POINTED OUT IN HIS REMAND REPOR T THAT THE 'COPIES 'OF AGREEMENT TO SELL' SUBMITTED AS AN ADDITIONAL E VIDENCE MADE IT EVIDENT THAT THE AMOUNT TAKEN FROM OVERDRAFT ACCOUN T WAS ACTUALLY SPENT ON PURCHASE OF THE PROPERTY, WHICH WAS ALSO S TATED IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER OPINED THAT SUBMISSION OF THESE AGREEMENTS DOES NOT PROVE ANY NEXUS BETWEEN T HE INTEREST INCOME EARNED ON FOR AND 'INTEREST PAID ON OVERDRAF T ACCOUNT WHICH WAS CLAIMED U/S 57 OF THE INCOME-TAX ACT, 196 1. SINCE, THE ADDITIONAL EVIDENCE HAS NO RELEVANCE IN ANY WAY TO THE ISSUES RAISED IN THE APPEAL, THE SAME IS THEREFORE NOT ADM ITTED. ' 10. BARE PERUSAL OF THE FINDINGS RETURNED BY LD. C IT(A) REPRODUCED ABOVE GO TO PROVE THAT LD. CIT(A) HAS NOT APPLIED H IS MIND TO DECIDE THE EVIDENTIARY VALUE OF THE DOCUMENTS SOUGHT TO BE BRO UGHT ON RECORD BY THE ASSESSEE RATHER ACTED AS A POST OFFICE TO TOW THE L INE OF ASSESSING OFFICER. WHEN THE ASSESSEE HAS SPECIFICALLY COME UP WITH THE DEFENSE THAT THE 6 I.T.A.NO.3841/DEL/2013 DEDUCTION CLAIMED BY HER (THE ASSESSEE) U/S 57 OF T HE ACT ARE BASED UPON THE DOCUMENTS SOUGHT TO BE BROUGHT ON RECORD BY WAY OF ADDITIONAL EVIDENCE, IT WAS INCUMBENT UPON LD. CIT(A) TO DECID E THE APPLICATION ON MERIT AND NOT WITHOUT DISPUTING THE DOCUMENTS (AGRE EMENT TO SELL) IN QUESTION SOUGHT TO BE BROUGHT ON RECORD BY THE ASSE SSEE. THE CLAIM OF THE ASSESSEE CANNOT BE THROWN INTO THE DUSTBIN ON THE B ASIS OF CONJECTURES AND SURMISES THAT THE AGREEMENT DOES NOT PROVE ANY NEXU S BETWEEN THE INTEREST INCOME EARNED FORM FDR AND INTEREST PAID ON OD ACCO UNT CLAIMED U/S 57 OF THE ACT WITHOUT DECLARING THE AGREEMENT AS FALSE AND FRIVOLOUS DOCUMENT. 11. WITHOUT ENTERING INTO THE MERITS OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE FILE IS REQUIRED TO BE RES TORED TO LD. CIT(A) FOR FRESH ADJUDICATION BY TAKING OUT INTO ACCOUNT THE L OAN DOCUMENTS RELIED UPON BY THE ASSESSEE. NEEDLESS TO SAY THAT LD. CIT( A) IS REQUIRE TO PROVIDE ADEQUATE OPPORTUNITY OF BEING HEARD TO THE PARTIES BEFORE PASSING FRESH ORDER. CONSEQUENTLY, WE HEREBY ACCEPT THE PRE SENT APPEAL FOR STATISTICAL PURPOSES. 12. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH JAN, 2016. SD./- SD./- (N. K. SAINI) (KULDIP S INGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 06.01.2016 SP. 7 I.T.A.NO.3841/DEL/2013 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI) S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 30/12,5,6/1 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FOR PRONOUNCEMENT SR. PS/PS 7 FILE SENT TO BENCH CLERK SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER