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2011 (11) TMI 473 - ITAT, CHANDIGARHUnexplained investments in the excess stock of wheat - survey u/s 133A - Held that:- This is a settled position of law that any addition made by the AO should be based on relevant and material evidences and not on the basis of inferences and surmises. AO failed to establish that the said wheat was unexplained or there was any discrepancy in the wheat account. A mere surrender letter which was duly explained later on in the course of appellate proceedings, cannot be made the foundation of making addition without bringing any credible and cogent evidence on record. Since the appellant has been able to explain that there was no unexplained stock of wheat, no addition was called for on this account and hence the addition made by the AO is rightly deleted by CIT - Decided against the Revenue. No addition on account of low household withdrawal can be made merely on estimate basis without bringing relevant material on record. However, since, no plausible explanation was filed by the assessee or evidences are brought on record in respect of the addition made on account of excess cash found during the year, dis-allowance u/s 40A(3) for purchase of wheat in cash, dis-allowance of fright expenses on ground of it being bogus, hence AO rightly made the addition. Addition on account of interest free advance - Held that:- Assessee has failed to justify the advance made to the said party without interest, though he was paying interest on the loans taken by him. The assessee has also failed to demonstrate any business expediency in the matter. Addition rightly made - Decided against the assessee Interest applying rate of interest at 15% as against 18.25% actually paid on account of interest on old loan received from Smt.Shakuntala Devi, mother of karta, HUF - Dis-allowanceSection 40A(2)(b) - Held that:- Assessee failed to file any plausible explanation before the AO as well as before the CIT(A). As the rate of interest as higher in comparison to prevailing market rate of interest at that time dis-allowance made is upheld - against assessee.
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