2021 (1) TMI 536

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....is case was completed u/s 143(3) of the Act vide order dated 22.12.2010, determining the total income of the assessee at Rs. 2,32,870/-. It may be noted here that in para 5 the AO in this order noted that a sum of Rs. 11,13,955/- has been claimed on account of interest paid on loans raised from different banks. The AO asked the assessee to furnish bank/party wise details which was filed the AO noted that loan has also been raised for construction of house but no bifurcation of the loan could be given by the assessee. In absence of any clear bifurcation the assessee surrendered a sum of Rs. 50,000/- on the interest paid which was disallowed by the AO. Thereafter, proceeding u/s 147 of the Act were initiated after recording the reasons, notic....

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....diture through profit and loss account, it would be concluded all the business transactions were not audited by the Chartered Accountant resulting in incomplete audit. Since the complete audit was not conducted by the auditor assessee shall be treated in default for not conducting the audit for which he was liable to pay penalty of Rs. 1,00,000/- u/s 271B. Since the interest on borrowed capital amounting to Rs. 11,13,955/- was claimed as deduction through statement of taxable income, assessee was required to deduct TDS on such payment. As the payment was made out of books, assessee had not deducted TDS on such interest which needed to be disallowed u/s 40(a)(ia) of the Act. Omission resulted in under assessment of income of Rs. 11,13,955/-.....

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....n the basis of reasons recorded for reopening of the assessment. The reasons for reopening of the assessment are reproduced above in which AO has specifically mentioned that the entire interest of Rs. 11,13,955/- needed to be disallowed. This omission which resulted in under assessment of income of Rs. 11,13,955/-, therefore, he formed his opinion that income chargeable to tax to this amount has escaped assessment. It is an admitted fact that originally the AO passed the assessment u/s 143(3) of the Act dated 22.12.2010 and out of the impugned amount of Rs. 11,13,955/- disallowed Rs. 50,000/- only. Thus, assessee disclosed all the primary facts with regard to deduction claimed on account of interest paid on loans at the original assessment ....