2019 (9) TMI 1708 - AT - Income Tax

Disallowance of expenses claimed against the gross income in the absence of any documentary evidence - Non justify the claim made against the income from other sources - HELD THAT - As primary onus lies on the assessee to justify the nature of the income shown under the head other sources but the assessee has failed to clarify the same. Similarly, the assessee has not specified the nature of the expenses against such gross income based on any cogent material. Generally, the income cannot the generated without incurring the expenses qua to the income. But it does not apply to each and every kind of income. For example, in case the assessee has invested his own fund in the bank account and earning interest income thereon. Then, there cannot be any claim of the expenses against such income. Yet, if the assessee claims any expense against such income, then the onus lies on the assessee to justify such expenses based on the documentary evidence. The provisions of section 57 of the Act requires that the expenditure against the income from other sources will be deducted provided it is not in the nature of capital expenditure and laid out or expended wholly and exclusively for the purpose of making or earning such income. Thus, it is the duty of the assessee to justify that the deduction claimed by him was incurred in connection with the impugned gross income. But the assessee, failed to do so. Therefore, we do not find any reason to interfere in the finding of the authorities below. Hence the ground of appeal of the assessee is dismissed.

Summary

Issues Involved:
1. Appeal against order of Learned Commissioner of Income Tax (Appeals) under s. 144 of the Income Tax Act, 1961 for A.Y. 2011-12.
2. Disallowance of expenses claimed against income from other sources.

Analysis:

Issue 1: Appeal against order of Learned Commissioner of Income Tax (Appeals) under s. 144 of the Income Tax Act, 1961 for A.Y. 2011-12:
The appeal was filed by the Assessee against the order of the Learned Commissioner of Income Tax (Appeals) confirming the assessment order passed under s. 144 of the Income Tax Act, 1961. The Assessee raised various grounds challenging the assessment order, including lack of reasonable opportunity, improper service of notice, and violation of principles of natural justice. The main contention was regarding the confirmation of the assessment order passed under s. 144. The Assessee sought annulment of the order based on several legal and factual errors alleged in the appeal.

Issue 2: Disallowance of expenses claimed against income from other sources:
The primary issue in this case was the disallowance of expenses claimed by the Assessee against the income from other sources. The Assessee declared income under this head and claimed deductions against it. However, the Assessing Officer (AO) disallowed the entire gross income and added it to the total income due to the Assessee's failure to justify the claimed expenses. The Assessee contended that the expenses were necessary to earn the income and referenced various judgments to support the claim. The Learned Commissioner of Income Tax (Appeals) upheld the disallowance, emphasizing the Assessee's failure to provide documentary evidence for the expenses claimed. The Assessee appealed this decision, arguing that income cannot be generated without incurring expenses and requesting calculation on an estimate basis. The tribunal, after considering the arguments, upheld the decision of the authorities below, stating that the Assessee failed to justify the expenses against the gross income from other sources as required by law.

In conclusion, the tribunal dismissed the appeal, upholding the disallowance of expenses claimed by the Assessee against the income from other sources. The decision was based on the Assessee's failure to provide documentary evidence to justify the claimed expenses, as required by the provisions of the Income Tax Act.