The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) deleted addition of Rs. 2.45 Lakh as the income tax dept. mistakes ‘interest’ for ‘instrument’.

The bench of Waseem Ahmed (Accountant Member) observed that the assessee’s Andhra Bank account was credited with ₹2.45 lakh, with the transaction description reading “Inst03551 Clg Axis Bank Ltd,” which was treated by the authorities below to be an interest credit. However, upon reviewing the same, Inst03551 represents the “instrument” and not the interest as alleged by the department.

During the assessment proceedings, the AO observed that the assessee’s bank account with Andhra Bank was credited with ₹10 lakh from M/s KR Shelter on account of commission, which was not offered to tax. Similarly, the Andhra Bank account was credited with ₹2.45 lakh as interest income, which was also not disclosed for tax purposes. Consequently, the AO added ₹12.45 lakh to the total income of the assessee.

On appeal, the CIT(A) upheld the addition made by the AO.

Aggrieved by the order of the CIT(A), the assessee has filed the appeal before ITAT.

The assessee submitted that the amount received from M/s KR Shelter has been duly disclosed in the books of accounts and offered to tax. Accordingly, the addition made by the authorities below is not sustainable.

The assessee submitted that the amount of Rs. 2.45 lakh was not representing the interest as alleged by the revenue. As such the impugned amount represents the encashment of the LIC which was duly disclosed in the books of accounts.

The tribunal quashed the finding of the learned CIT-A and directed the AO to delete the addition made by him for Rs. 2.45 lakhs on account of interest income. 

Case Details

Case Title:  Nanjudareddy Gopala Reddy Versus ITO

Case No.: ITA No. 2192/Bang/2024

Date: 20/02/2025

Counsel For Appellant: Inder Paul Bansal

Counsel For Respondent: Nandini Das

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