Nirmal Singhal, Delhi V. ITO, New Delhi

ITA 4452/DEL/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6540 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 14-03-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 17-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BEDOBANI CHOUDHARI
• Keywords: Opportunity of being heard; Additional evidence; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 143(1); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC , NEW DELHI BEFORE SH. N. K. SAINI, A CCOUNTANT M EMBER ITA NO. 4452 /DEL/2016 : ASSTT. YEAR : 2012 - 13 NIRMAL SINGHAL, C - 4, TOP FLOOR, SHOP PING CENTRE, VASANT VIHAR, DELHI - 110067 VS INCOME TAX OFFICER, WARD - 33(2), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A TQPS8233C ASSESSEE BY : SH. S. C. GARG, CA REVENUE BY : MS. BEDOBANI CHOUDHARI , SR. DR DATE OF HEARING : 14.03 .201 7 DATE OF PRONOUNCEMENT : 16 .03 .201 7 ORDER THIS IS AN APPEAL BY THE ASSE SSEE AGAINST THE ORDER DATED 29 .06.2016 OF LD. CIT(A) - 11 , NEW DELHI . 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THA T THE LD. AO ERRED IN LAW AND ON FACTS IN MAKING AN ADDITION OF RS.362814/ - AND THE LD. CIT(APPEALS) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THAT THE LD CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRM ING THE ADDITION MADE BY THE AO BY DI SALLOWING INTEREST OF RS.362814/ - OUT OF INTEREST PAID BY THE ASSESSEE AND CLAIMED U/S 57, JUST FOR THE PURPOSE OF RESTRICTING THE INTEREST PAID TO INTEREST INCOME. ITA NO . 4452 /DEL /201 6 NIRMAL SIN GHAL 2 3. THE LD CIT(A) ERRED IN LAW AND ON FACTS IN NOT ALL OWING U/S 24 THE INTEREST PAID BY THE ASSESSEE AND ATTRIBUTABLE TO CAPITAL BORROWED FOR ACQUISITION OF HOUSE PROPERTY TO THE EXTENT OF RS.275636/ - AS PER DETAILS GIVEN TO HIM. 4. THE LD A.O ERRED IN MAKING AND CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMIN G THE AD DITION OF RS.362814/ - ON THE PREMISE THAT PROVISIONS OF SECTION 40A(2)(B) OF THE ACT ARE APPLICABLE TO THE DEDUCTIONS CLAIMED U/S 57. 5. THAT THE ADDITION MADE AND CONFIRMED BY CONSIDERING INTEREST PAID TO RELATIVES @ 10% TO 13% PER ANNUM AS UNREA SONABLE WAS UNJUSTIFIED. 6. THE LD A.O SHOULD HAVE ALLOWED INTEREST PAID BY THE ASSESSEE AND CLAIMED U/S 57 IN THE FACTS AND CIRCUMSTANCES OF THE CASE SINCE THE FUNDS WERE BORROWED FOR THE PURPOSE OF EARNING INCOME AND CONDITIONS U/S 57 FOR ALLOWANCE OF I NTEREST WERE SATISFIED. 7. THE ASSESSEE CRAVES LEAVE TO AMEND, ALTER, ADD TO OR DELETE ANY OF THE GROUNDS OF APPEAL. 3. FROM THE ABOVE GROUNDS, IT IS GATHERED THAT THE GRIEVANCE OF THE ASSESSEE RELATES TO THE CONFIRMATION OF ADDITION OF RS.3,62,814/ - MA DE BY THE AO ON ACCOUNT OF DISALLOWANCE INTEREST BY INVOKING THE PROVISIONS OF SECTION 40A(2)(B) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 4 . FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE E - FILED HER RETURN OF INCOME ON 06.07.20 12 DECLARING AN INCOME OF RS.14,89,350/ - WHICH WAS PROCESSED U/S 143(1) OF THE ACT. LATER ON, THE CASE WAS SELECTED FOR ITA NO . 4452 /DEL /201 6 NIRMAL SIN GHAL 3 SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE CLAIMED DEDUCTION ON ACCOUNT OF INTEREST PAID AT RS.7,61,849/ - , OUT OF INCOME FROM OTHER SOURCES AMOUNTING TO RS.3,99,035/ - . HE FURTHER OBSERVED THAT ALL THE PARTIES TO WHOM INTEREST HAD BEEN PAID WERE RELATIVES WITHIN THE DEFINITION OF SECTION 40A(2)(B) OF THE ACT AND THAT THE INTEREST PAID BY THE ASSE SSEE @10 % TO 15% WAS APPARENTLY APPEARING TO BE UNREASONABLE. THE AO RESTRICTED THE INTEREST PAID TO THE EXTENT OF INCOME EARNED AT RS.3,99,035/ - AND DISALLOWED THE REMAINING AMOUNT OF RS.3,62,814/ - (RS.7,61,849 RS.3,99,035). 5. BEING AGGRIEVED THE ASSE SSEE CARRIED THE MATTER TO THE LD. CIT(A) WHO SUSTAINED THE DISALLOWANCE MADE BY THE AO BY OBSERVING THAT NO REASON HAD BEEN GIVEN BY THE ASSESSEE TO JUSTIFY THE UTILIZATION OF LOAN TAKEN FOR EARNING INTEREST INCOME LOWER THAN INTEREST EXPENDITURE AND AS S UCH INTEREST EXPENDITURE COULD NOT HAVE BEEN STATED TO BE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF EARNING INTEREST INCOME RESULTING IN A LOSS. 6. NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE MOVED AN APPLICATION DATED 14.03.2017 UNDER RULE 29 OF THE ITAT RULES, 1963 FOR ADMISSION OF THE FOLLOWING ADDITIONAL EVIDENCE: (I) COPIES OF ACCOUNT OF PARTIES FOR AY 2009 - 10 TO 2012 - 13 (II) STATEMENT OF AFFAIRS OF THE ASSESSEE RELEVANT TO AY 2008 - 09 TO 2011 - 12 (III) BANK STATEMENT OF FY 2007 - 08 & 2008 - 09 (IV) DETAILS OF INVESTMENT IN ACQUISITION OF PROPERTY AND SOURCE THEREOF ITA NO . 4452 /DEL /201 6 NIRMAL SIN GHAL 4 7. IT WAS FURTHER SUBMITTED THAT THE AO DID NOT RAISE ANY QUERY AFTER THE EXPLANATION WAS FURNISHED BY THE ASSESSEE AND EVEN NO SHOW CAUSE NOTICE WAS ISSUED/SERVED PROPOSIN G ANY ADDITION. IT WAS FURTHER SUBMITTED THAT THE LD. CIT(A) ALTHOUGH NOTED THAT CERTAIN EVIDENCES WERE FURNISHED BY THE ASSESSEE WHICH WERE NOT REQUIRED TO BE PRODUCED BUT NO FINDING HAS BEEN GIVEN ON THESE EVIDENCES . IT WAS FURTHER SUBMITTED THAT ALL THE ADDITIONAL EVIDENCE S NOW FURNISHED, COULD HAVE BEEN FURNISHED BEFORE THE AO AND THE LD. CIT(A), IF THE ASSESSEE WAS SO REQUIRED TO FURNISH THE SAME. IT WAS STATED THAT THESE EVIDENCE S GO TO THE ROOT OF THE ISSUES RAISED IN THE APPEAL, T HEREFORE, THE SAME MAY BE ADMITTED. 8. IN HER RIVAL SUBMISSIONS THE LD. DR OPPOSED THE ADMISSION OF THE ADDITIONAL EVIDENCE S AND SUPPORT ED THE ORDER S OF THE AUTHORITIES BELOW. 9. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CAS E, IT APPEARS THAT THE EVIDENCES NOW FURNISHED BY THE ASSESSEE GO TO THE ROOT OF THE MATTER AND ARE RELEVANT TO RESOLVE THE PRESENT CONTROVERSY, SO THESE DESERVE TO BE ADMITTED. IN THE INSTANT CASE, IT IS AN ADMIT TED FACT THAT THESE DOCUMENTS WERE ASKED NEITHER BY THE AO N OR BY THE LD. CIT(A) TO BE FURNISHED AND WERE NOT AVAILABLE EITHER TO THE AO OR TO THE LD. CIT(A) FOR THEIR EXAMINATION . I, THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS , DEEM IT APPROPRIATE TO SET ASIDE THIS ISSUE BACK TO THE FILE OF THE AO TO BE ADJUDICATED AFRESH IN ACCORDANCE WITH LAW BY CONSIDERING THESE ITA NO . 4452 /DEL /201 6 NIRMAL SIN GHAL 5 ADDITIONAL EVIDENCE S FURNISHED BY THE ASSESSEE , AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 10 . IN T HE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . (O RDER PRONOUNCED IN THE COURT ON 16 /03 /2017 ) SD/ - (N. K. SAINI) ACCOUNTANT MEMBER DAT ED: 16 /03 /2017 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR