2023 (1) TMI 411 - AT - Income Tax

Addition on account of cash loans - cash loans was less than that admitted by the assessee of having taken at 1.25 crores and addition upheld by the ld.CIT(A) of Rs.1.25 crores - HELD THAT:- Assessee had suitably demonstrated with evidence to the CIT(A) that the document represented details of interest paid on loans taken by the assessee and the rate of interest so paid was 2-2.5%. CIT(A), we have noted, found merit in the contentions of the assessee that figures mentioned in the said documents represented interest amount and not the cash loans, which finding has not been challenged by the Revenue before us. Since it is an admitted fact that Annexure II page 96 represented details of interest paid by assessee on various cash and cheque loans taken, which the assessee had suitably demonstrated as paid @ 2.5 %,the cash loans of Rs. 2.34 Crs worked out by the AO by taking interest rate of 1.5%, we hold, have been rightly rejected by the Ld.CIT(A).

AO applied rate of 1.5% to arrive at the amount of cash loan for the month of Feb., 2003 worked out on the basis of page no.99-100 of Annexure-2. As is evident, the rate of interest of 1.5% pertained to the month of January 2004 i.e. relating to subsequent year. The assessee on the other hand demonstrated to the ld.CIT(A) and substantiated the same also that during the impugned year, he had paid interest at the rate of 2.5%. Therefore, we agree with the ld.counsel for the assessee that the CIT(A) was satisfied and convinced with this explanation of the assessee and had accepted rate of interest paid at 2.5%; that therefore, he had not considered cash loans computed by the AO for the month of February, 2003 at Rs.2.34 crores and instead had restricted the addition to the amount of cash loans admitted by the assessee of Rs.1.25 crores.

We do not find any merit in the grounds of the appeal of the Revenue seeking restriction of addition on account of cash loan to Rs.2.34 crores as opposed to the ld.CIT(A) restricting to 1.25 crores. The Ground raised by the Revenue are accordingly dismissed.