Inder Kumar Nigotiya Vs ITO (ITAT Jaipur)
Interest on Money Lending Declared Under IDS 2016 Not Unexplained – ITAT Jaipur Deletes 69A & 115BBE Tax on IDS Interest Income
Tribunal examined whether interest earned on market lending declared under the Income Declaration Scheme (IDS), 2016 could be taxed as unexplained income u/s 69A & subjected to higher tax u/s 115BBE.
Assessee, a jeweller, had declared ₹1.5 crore market lending along with interest under IDS 2016 & paid tax @45%. During AY 2017-18, he recovered the lending & also earned interest of ₹11,01,370/-, which he disclosed in his return as income. AO, however, held that since Assessee failed to provide names of borrowers, the interest was unexplained & taxable u/s 69A read with s.115BBE. CIT(A) upheld AO’s order.
Before Tribunal, Assessee argued that IDS declaration itself covered market lending with interest, & CBDT FAQ No.8 (Circular No.25/2016) granted immunity from disclosing counterparties. Interest earned post-IDS was a natural accrual from the declared asset & immunity extended to it. ITAT Jaipur in Shanti Kumar Sethi & Sons (ITA 332/JP/2024) had already held in identical facts that interest earned on declared advances cannot be treated as unexplained.
Tribunal accepted the contention, observing that once advances were validly declared under IDS, interest accrued thereon until realization could not be treated as undisclosed. Immunity granted under IDS from disclosing counterparties also covered such interest. Hence, addition u/s 69A & levy u/s 115BBE were unsustainable. Accordingly, Tribunal directed deletion of addition of ₹11,01,370/- & allowed appeal.
