MADAN JINDAL,PATIALA V. DCIT CIRCLE, SIRHIND, PATIALA

ITA 835/CHANDI/2024

AI Insights

The case involves an appeal by Madan Jindal against the order of the CIT(A) which confirmed the addition of Rs. 10,12,400 on account of interest claimed for the Assessment Year 2012-13. The primary contention was the lack of opportunity provided under the new Faceless Appeal Scheme and issues related to the jurisdiction and validity of the notice under section 148. The assessee argued that the interest payment was genuine and had been consistently allowed in previous years. The Tribunal, after reviewing the submissions and evidence, particularly the confirmation from Mr. Vivek Jindal regarding the interest payment, decided in favor of the assessee for the specific disallowance of interest.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 107797 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANJEET KAUR
• Assessee Lawyers: ASHOK GOEL; C.A
• Keywords: Principle of natural justice
• Section: 147; 143(3); 142(1); 143(2)

Judgement Text

"आयकर अपीलीय अिधकरण,च᭛डीगढ़ ᭠यायपीठ “एस.एम.सी” , च᭛डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCHES, “SMC” CHANDIGARH HEARING THROUGH: VIRTUAL MODE ᮰ी िवᮓम ᳲसह यादव, लेखा सद᭭य BEFORE: SHRI. VIKRAM SINGH YADAV, AM आयकर अपील सं./ ITA No. 835/Chd/2024 िनधाᭅरण वषᭅ / Assessment Year : 2012-13 Madan Jindal C/o A Goel & Associates 50 SCF, Leela Bhawan, Patiala, Punjab-147001 बनाम The DCIT Circle, Sirhind Patiala ᭭थायी लेखा सं./PAN NO: AAMPJ2919F अपीलाथᱮ/Appellant ᮧ᭜यथᱮ/Respondent िनधाᭅᳯरती कᳱ ओर से/Assessee by : Shri Ashok Goel, C.A राज᭭व कᳱ ओर से/ Revenue by : Dr. Ranjeet Kaur, Sr. DR सुनवाई कᳱ तारीख/Date of Hearing : 08/01/2025 उदघोषणा कᳱ तारीख/Date of Pronouncement : 20/01/2025 आदेश/Order PER VIKRAM SINGH YADAV, AM This is an appeal filed by the Assessee against the order of the Ld. CIT, ADDL/JCIT(A)-8, Delhi dt. 28/06/2024 pertaining to Assessment Year 2012-13 wherein the Assessee has taken the following grounds of appeal: 1. “In Law, on the facts and in the circumstances of the case, the Ld. CIT(A) is not justified confirming the addition of Rs. 10,12,400/- on account of interest claimed. 2. The learned CIT(A) has erred in deciding the appeal without giving any opportunity as per CBDT Notification No. 139/2021/F. No. 370142/66/2021-TPL notified the Faceless Appeal Scheme, 2021 (hereinafter referred to as 'new scheme') applicable w.e.f. 28 December 2021 which is in supersession of the old scheme, Which is against natural justice as no notice was given after Dec 2020.When appeal decided in June 2024. 3. The learned CIT(A) has erred in law and in the facts confirming the issue of notice u/s 148 and recording of reason, when the AO was having no jurisdiction over the assessee. 4. The learned CIT(A) has erred in law in the facts confirming the issue of notice u/s 148 when reason recorded were on incorrect facts and not as per law. 5. The learned CIT(A) has erred in law in the facts upholding the addition Rs 10,12,400/- made on account of interest which is against natural justice as only four days were allowed to file submission for information relating to 7 years old. 2 6. The learned CIT(A) has erred in law in the facts upholding the addition Rs 10,12,400/- made on account of interest when, no addition have been made on the ground for which the case was reopened u/s 148. Hence no other addition can be made. 7. The learned CIT(A) has erred in law in the facts upholding the addition Rs 10,12,400/- made on account of interest when the claim of the same is genuine and has been allowed in scrutiny assessment also in other years. 8. That the appellant craves leave to add delete or modify any ground of appeal and to add any new ground of appeal. Before the same is heard or disposed off.” 2. Briefly the facts of the case are that basis information in possession of the AO that the assessee has carried out certain transaction in immovable property amounting to Rs. 57,73,000/- and in absence of any plausible explanation submitted by the Assessee, reasons were recorded whereby the AO held that he has sufficient reasons to believe that nature and source of financial transaction crystallizing his income by way of capital income on sale of immovable property remain unexplained and as such represents assessee’s income which has escaped assessment and notice under section 148 dt. 29/03/2019 was issued by ITO, Ward Nabha. Thereafter, case of the assessee was transferred to DCIT, Mandi Gobindgarh and in response to the initial notice dt. 29/03/2019, the assessee filed its return of income on 21/10/2019 thereafter notice under section 143(2) and 142(1) were issued calling for necessary information/ documentation from the assessee. During the course of assessment proceeding, the AO noted from the computation of income furnished by the assessee that he has claimed expenditure of Rs. 10,12,400/- as interest paid under the head “income from other sources” and vide notice dt. 28/11/2019 necessary information, details alongwith documentary evidence like interest certificate etc. regarding interest paid was called for. In response, the assessee submitted that the documentary evidence for interest received and interest paid relates to very old transactions and sought 10 days time to respond to the notice so issued. Thereafter, another notice was issued on 06/12/2019 and in absence of any explanation submitted by the assessee/ documentary evidence furnished by the assessee, the AO finalized the assessment under section 147 r.w.s 143(3) vide order dt. 09/12/2019 at an assessed income of Rs. 44,13,820/- by making an addition of Rs. 10,12,400/- on account of interest payment claimed by the assessee. 3 3. Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A) who has since sustained the said findings and against which, the assessee is in appeal before us. 4. During the course of hearing, the Ld. AR taken us through the return of income furnished by the assessee wherein the assessee has shown interest income of Rs. 2,689,960/- under the head “income from other sources” against which he has claimed interest expenses of Rs. 10,12,400/- and net interest income of Rs. 1,677,560/- have been offered in the return of income under the head “income from other sources”. It was submitted that where the interest income has been brought to tax by the AO and in such circumstances, the interest paid which has direct nexus with the earning of the interest income has been disallowed merely for the reason that the assessee could not produce the certificate / confirmation from the person to whom the assessee has paid the interest. It was submitted that the AO did not provide sufficient opportunity to the assessee and has hurriedly decided the matter by providing a very short period to respond and being an old matter, the assessee could not respond with the necessary certificate / confirmation from the person to whom he has paid the interest. It was submitted that the assessee has since obtained the confirmation and which has been placed as part of the assessee’s paper book wherein Mr. Vivek Jindal has confirmed that the assessee has paid an amount of Rs. 10,12,400/- to him for the financial year relevant to impugned assessment year. It was further submitted that the similar claim has been made and allowed in the earlier years and therefore following the principles of consistency, the assessee be allowed the necessary relief. 5. Per contra, the Ld. DR has relied on the findings of the lower authorities. It was submitted that during the course of assessment proceedings, the assessee has failed to furnish the necessary evidence in support of interest payment which has resulted in the subject disallowance and which has rightly been confirmed by the Ld. CIT(A). 6. Have heard the rival contentions and purused the material available on record. In the return of income, under the head “income from other sources”, the assessee has offered interest income after claiming deduction for the interest expense. There is no dispute which has been raised in terms of establishing the nexus between the interest 4 income and interest expense and the former has been brought to tax and the latter has been disallowed for want of supporting documentation which the assessee couldn’t submit earlier due to paucity of time and has now been placed on record and on perusal thereof, I find that the Mr. Vivek Jindal has confirmed that the assessee has paid an amount of Rs. 10,12,400/- to him for the financial year relevant to impugned assessment year. In light of same, the assessee has duly demonstrated the incurrence of the interest expenditure and there is thus no basis to disallow the same and the disallowance so made is hereby directed to be deleted. 7. In light of aforesaid, other grounds of appeal have become academic and the same are dismissed as infructious. 8. In the result, the appeal of the assessee is partly allowed. (Order pronounced in the open Court on 20/01/2025 ) Sd/- िवᮓम ᳲसह यादव (VIKRAM SINGH YADAV) लेखा सद᭭य / ACCOUNTANT MEMBER AG Date: 20/01/2025 आदेश कᳱ ᮧितिलिप अᮕेिषत/ Copy of the order forwarded to : 1. अपीलाथᱮ/ The Appellant 2. ᮧ᭜यथᱮ/ The Respondent 3. आयकर आयुᲦ/ CIT 4. आयकर आयुᲦ (अपील)/ The CIT(A) 5. िवभागीय ᮧितिनिध, आयकर अपीलीय आिधकरण, च᭛डीगढ़/ DR, ITAT, CHANDIGARH 6. गाडᭅ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar "