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2019 (4) TMI 1054 - ITAT CHENNAIBlock assessment u/s 158BC & 158BD - Addition towards interest earned on pro-notes - accrued interest from such investments and patras - HELD THAT:- No merit in the order of the Ld.Revenue Authorities in this regards because the additions are made on the basis of estimate when the Ld.Revenue Authorities could have computed the accrued interest from such investments and patras. Moreover the interest accrued on such investment is not realized by the assessee during the relevant assessment year and if the assessee prefers to account the same on cash basis, the income arising out of such investment will be taxed in the year in which assessee realizes such interest or on the redemption of the bond and the patras. Therefore we hereby direct the Ld.AO to delete the addition Addition towards the business income of the assessee - HELD THAT:- Revenue Authorities has not examined the return of income produced before them stated to have been filed by the assessee. It was simply rejected because the acknowledgment numbers of the return of income filed by the assessee did not match with the records maintained by the Revenue authorities. Since the Ld.Revenue Authorities had not conducted proper enquiries on that regard and had simply brushed aside the documents produced by the assessee, we do not find any merit in the stand of the Ld.Revenue Authorities. Therefore we are of the considered view that the addition made by the Ld.Revenue Authorities for ₹ 4,00,000/- towards the business income of the assessee is not warranted. Penalty u/s 271F - AO rejected the reply filed by the assessee in lieu of the notice issued U/s.142(1) that she had filed the return of income belatedly by admitting income claiming an amount as refund - HELD THAT:- Revenue Authorities has also not verified the claim of the assessee that she had claimed an amount of ₹ 65,719/- as refund. Therefore we are of the considered view that the penalty levied by the Ld.AO invoking the provisions of Section 271F of the Act is not warranted because it is not conclusively proved that the assessee has not filed her return of income. Hence we hereby direct the Ld.AO to delete the penalty levied Addition by estimating the accrued interest on sundry debtors - HELD THAT:- The assessee has only declared ₹ 4,21,490/- as her income in her return of income filed with respect to the relevant assessment year. Since the income declared by the assessee in her return of income is meager there is nothing to suggest that the assessee is maintaining her accounts as per mercantile system of accounting because predominantly her income flows only from huge advance extend which is disclosed as sundry debtors and that has to be enormous in commensurate with the advance extended . The assessee has also claimed that she is maintaining her books of accounts as per cash system of accounting and her declared sundry debtors from which she has to receive substantial revenue as interest. Since the assessee is maintaining her books of accounts as per cash system of accounting we are of the considered view that the addition made by estimating the accrued interest on the sundry debtors by the Ld.Revenue Authorities is not warranted because the same ought to be treated as the income of the assessee in the previous year in which the assessee receives the interest as per cash system of accounting. Addition u/s 14A r.w.r.8D - assessee have claimed no expenditure as deduction - HELD THAT:- The assessee is an individual and it appears that she has made the investment based on her own decision without any external or internal aid and from her own interest free funds. In such situation no expenditure could be attributed for making such investment. Moreover there is nothing on record to suggest that the assessee have claimed any expenditure as deduction. When the assessee has not claimed any expenditure there could not have be any expenditure that is attributable towards earning exempt income.Therefore we are of the considered view that no disallowance can be made U/s.14A of the Act or by invoking Rule 8D of the Rules in the case of the assessee. Hence we hereby direct the Ld.AO to delete the addition
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