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2023 (12) TMI 537 - ITAT PUNEPayment of interest in cash - Addition relying on the order passed by the Income Tax Settlement Commission in the case of unrelated third party - HELD THAT:- We find the AO considering the proceedings before the Income Tax Settlement Commission made addition in the hands of the assessee on account of interest payment in cash. In view of the same, we directed the ld. DR to furnish a copy of order of the Income Tax Settlement Commission regarding M/s. Wellbuild Merchants Pvt. Ltd. of the Damale Group[unrelated third party]. DR furnished the same which is on record by way of covering letter and we note that the said Damale Group representing 04 applicants filed applications u/sec. 245C before the ITSC. In turn, the ITSC sought reports from PCIT as required u/sec. 245D (2B) of the Act and also under Rule 9 of the Income Tax Settlement Commission Procedure Rule 1997. On perusal of the statement of CIT-DR representing Pr. CIT before the Income Tax Settlement Commission of the said order argued taking reference to Question that the cash expenses out of which already claimed and allowed at the time of search action were claimed on estimation basis without any supporting evidence or documents. He submitted the claim of cash expenses is a pure imaginary figure without any basis and argued to reject the claim in the case of M/s. Wellbuild Merchants Pvt. Ltd.. Further, taking reference to seized document concerning the assessee before us as referred by the AO in his order, we note that the CIT–DR argued that the applicant furnished a common reply regarding evidences of cash receipts in seized documents stating that entry pertain to cash loan/ repayment. Further, he vehemently argued that the claim of interest payment of Rs. 7,80,00,000/- out of Rs. 8,00,62,029/- is not verifiable in the absence of mention of its payment and also in absence of conformity of nature of funds which is evident from para 5A(ii) of Page No. 25 of Income Tax Settlement Commission order. However, the assessee therein got relief towards business expenditure. Therefore, in our opinion, that the information by way of a seized loose papers in the case of third party cannot be said to be tangible material without a further enquiry falling which the addition made in the hands of the assessee fails and, is not justified. Thus, the order of CIT(A) in confirming the order of AO is not maintainable and set aside. Thus, the grounds raised by the assessee are allowed.
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