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2021 (10) TMI 559 - Income Tax
Disallowance u/s.36(1)(ii) of interest expenditure on loans availed - As pleaded that AO has failed to consider that assessee has incurred expenditure on account of interest on various loans that assessee has made advance loans to directors and sister concerns received for business purpose and out of that advances they have earned interest income - HELD THAT:- We note that AO in the assessment order has opined that assessee has incurred abnormally high expenditure as compared to income declared. This is an abstract observation without any figures given for comparison - As mentioned that similar interest on loans taken from the parties were disallowed in earlier years as assessee has failed to prove the nexus between interest expenditure incurred and income earned - AO observed that assessee failed to justify the nexus of interest paid and income earned as there was no business activity during the year. This again is an abstract observation in contrast to the earlier observation that there was income declared by the assessee. AO further mentioned that assessee was asked to explain as to why the entire interest payment should not be disallowed and added. After putting this issue in the order sheet that question was issued to the assessee, there is no mentioned as to whatsoever was the reply of the assessee. The AO simply says that in earlier years the disallowance was done and assessee had not made cogent or convincing explanation, hence the AO disallowed the amount of interest paid to these parties.
Thus without any application of mind, the authorities below are passing orders year after year for reason best known to them when assessee has given the necessary details and no disallowance was done in earlier years as noted by the Tribunal. Without any change in facts and circumstances and without any application of mind, the revenue authorities are going on making the additions in abstract manner without bringing on record, cogent material. Such a relinquishment of statutory duties cannot be rewarded by remitting the matter for fresh inning every time. In this view of the matter, in our considered opinion, the orders of the authorities below shows complete lack of application of mind and in the background of aforesaid discussions, we are inclined to set aside the order of the authorities below and decide the issue in favour of the assessee.
Admission of fresh claim - ITAT power in admitting fresh claims otherwise that by revised return - HELD THAT:- Authorities below have declined to accept the fresh claim of the assessee on the touchstone of Hon’ble Supreme Court in the case Goetz( India) Ltd [2006 (3) TMI 75 - SUPREME COURT] wherein as held that their decision in that case will not impinge upon the ITAT power in admitting fresh claims otherwise that by revised return. Accordingly, we remit the issue to the file of AO and direct him to examine the factual veracity of assessee’s claim and decide the same after giving due opportunities of being heard to the assessee.