TaxTMI 
TaxTMI 
2021 (9) TMI 762
X X X X Extracts X X X X
X X X X Extracts X X X X
....(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by allowing the deduction of balance interest paid on housing loan, against interest income offered for tax under income from other sources. 3. In the facts and circumstances of the case and in law, ld. CIT(A) has erred in confirming the action of ld. AO, in making addition of Rs. 40,000/- under section 68 of the Income Tax Act, 1961. The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition, made by ld. AO and sustained by ld. CIT(A). " 2. Regarding Ground No. 1, the ld. submitted that the assessee has incurred interest expenses of Rs. 5,06,678/-. However, in the return of income, the assessee has claimed only a sum of Rs. 3,48,888/- u/s 24(b) of the Act and the balance interest pertaining to the construction period was inadvertently not claimed in the return of income amounting to Rs. 1,57,790/-. It was submitted that the revised claim was made before the ld. CIT(A) amounting to Rs. 5,06,678/-. However, the ld. CIT(A) amounting to Rs. 5,06,678/-. However, the ld. CIT(A) has confirm....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of Rs. 1,50,000/- against the self occupied property and disallowed the deduction of Rs. 1,98,888/- (3,48,888 -1,50,000). 2.5 During the assessment proceedings, it was explained vide letter dated 5th December, 2011 that a part of the housing loan has been used for giving advances to other parties. The ld. AO himself accepted the fact that the housing loan was not fully utilized for the purpose of construction of the house. However, he failed in appreciating the fact that interest on that part of the loan which has been used for lending and earning interest is allowable under section 56 of the Income Tax Act, 1961. 2.6 Interest pertaining to that portion of loan which is utilized for the purpose of construction of the house is allowable under section 24(b) and the remaining interest is allowable under section 56. Based on actual utilization of housing loan mentioned as above the interest of Rs. 5,06,678/- would be allowable as detailed in para 2.3 above and so claimed during assessment proceedings. 2.7 Deduction u/s 24(b) 2.7.1 It is humbly submitted that as per Explanation to section 24(b) interest payable on capital borrowed for the period prior to the previous year in wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re of getting a square deal from the department. Although, therefore, the responsibility for claiming refunds and reliefs rests with assessees on whom it is imposed by law, officers should:- (a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other; (b) freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs; (c) Public Relation Officers have been appointed at important centers, but by the very nature of their duties, their field of activity is bound to be limited." 2.7.6 The very purpose of assessment proceedings u/s 143(3) of the Act is to correctly assess the tax liability of an assessee in accordance with law.. It was therefore against all cannons of law for the ld. A.O. to not allow reliefs to which appellant was clearly entitled but which she had omitted to claim on account of bonafide error. The AO, under the law, is duty bound to pass the assessment order in accordance with the provisions of law. 2.7.7 We place reliance on the judgment of the jurisdictional High Court in the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... varied and increased, yet, alternatively without prejudice to above, the variation / increase in claim can be made for the first time before the CIT(A). 2.9.3 The total claim of interest stands at Rs. 5,06,678/- and the same is claimed under different sections as follows: S. No. Particulars Amount (In Rs.) 1. Interest to be allowed under Income from Other Sources 2,74,705/- 2. Balance Interest to be allowed under Income from House Property a) Rented House Property- 81,973/- b) SOP House Property- 1,50,000/- Total 5,06,678/- 2.9.4 First appeal is an extension of assessment proceedings. The powers of CIT(A) are co-terminus with that of AO. In this view of the scheme of the law even verification of facts at CIT(A) level should not obstruct admission of additional claim. When CIT(A) is empowered, on further verification of facts, for enhancement of income then there is no reason that same powers are not utilized for admitting additional claim. ITAT is not the extension of assessment proceedings and therefore any additional claim before ITAT may not be acceptable if the same requires verification of facts. 2.9.5 Since the entire assessment is open ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing appeal against the order of a subordinate authority, has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations, if any, prescribed by the statutory provisions. In the absence of any statutory provision, the Appellate Authority is vested with all the plenary powers which the subordinate authority may have in the matter. There appears to be no good reason and none was placed before us to justify curtailment of the power of the AAC in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the ITO." 2.9.8 In view of the Jute Corporation of India Ltd. vs. CIT (Supra) decision of the Hon'ble Apex Court, the first appellate authority is duty bound to accept additional claim if the twin conditions contained in section 250(5) are satisfied whether or not the facts are already on record. Thus, there is a difference in this regard when an additional ground/claim is taken before ITAT and when it is taken before CIT(A). 2.9.9 Even in National Thermal Power Company Ltd. vs CIT 1998 229 ITR 383 SC, the Hon'ble Supreme Court in Para 3 has observed as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce of cash deposited was explained to be out of cash in hand. The cash book is a further evidence to substantiate what was explained to the ld. AO. In view of the above, the addition of Rs. 40,000/- on account of unexplained cash credit may please be deleted. 6. Per contra, the ld. DR relied on the findings of the lower authorities and it was submitted that the housing loan was not fully utilized for housing purposes and the AO rightly allowed the interest to the extent of Rs. 1,50,000/- against self-occupied property and which was rightly sustained by the ld CIT(A) without allowing any further relief to the assessee. It was further submitted that the assessee has not been able to establish from where cash which was subsequently deposited in the bank account was initially generated. It was accordingly submitted that the addition of Rs. 40,000/- was rightly confirmed by the ld. CIT(A) and the appeal of the assessee be dismissed. 7. We have heard the rival submissions and pursued the material available on record. The facts which are emerging from records are that the assessee has taken housing loan from ICICI Bank of Rs. 45,00,000/-, a part of the said loan was utilized towards con....