2023 (9) TMI 751 - AT - Income Tax

Addition on account of interest income - Income from other sources u/s 56 - difference of interest income as reflected in Form No. 26AS and the amount of interest income as declared in the books of account - HELD THAT - We are in agreement with the assessee that the Assessing Officer did not take into consideration the other ledger account maintained by the assessee reflecting interest income - Accordingly, in view of the arguments made before us and the Rectification Applications filed by the assessee, alongwith supporting documents viz. ledger account produced before us for our perusal, we are hereby directing that the addition made by the AO may be deleted. No cogent reason has been furnished by the Assessing Officer for rejecting the rectification application filed by the assessee. Appeal of the assessee is allowed.

Summary

Issues:
The appeal against the order passed by the Ld. Commissioner of Income Tax(Appeals), National Faceless Appeal Centre, Delhi for Assessment Year 2017-18.

Grounds of Appeal:
1. The addition on account of interest income of Rs. 3,26,150/- upheld by NFAC CIT(A) is illegal and against natural justice.
2. Alleged failure to respond to hearing notices was not adequately considered.
3. Confirmation of the addition on account of interest income was erroneous.
4. The interest income was already disclosed in the books of accounts, hence the addition was unjustified.

Facts of the Case:
The assessee, engaged in Milk Procurement, Processing, and Sale, declared a total income of Rs. 7.87 crores for A.Y. 2017-18. Discrepancy in interest income led to an addition of Rs. 3,26,150/- under Section 56 as "income from other sources." The assessee's rectification application highlighting multiple ledger accounts for interest income was rejected, and the appeal to CIT(A) was dismissed due to non-prosecution.

Arguments and Decision:
The Counsel for the assessee presented evidence of multiple ledger accounts for interest income, pointing out the discrepancy. The Assessing Officer failed to consider all ledger accounts, leading to potential double taxation. After reviewing the submissions and supporting documents, the Tribunal found merit in the assessee's arguments. The addition made by the Assessing Officer was directed to be deleted due to lack of justification for rejecting the rectification application.

Conclusion:
The Tribunal allowed the appeal of the assessee, emphasizing the failure of the Assessing Officer to consider all ledger accounts and the risk of double taxation. The addition on interest income was deemed unjustified and ordered to be deleted.