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2020 (5) TMI 622 - AT - Income TaxAddition on account of notional interest on interest free advances given - addition being deemed interest @ 15% on such interest free advances - HELD THAT:- Referring to submission that the assessee has a capital balance and unsecured interest free loan and, therefore, no disallowance is called for - when the assessee has trade dealings with persons to whom advances were made and looking to the business expediency, disallowance of interest is not permissible. We find force in the above argument of the assessee. However, as mentioned by the Ld. CIT(A), the assessee has not submitted any reconciliation to show that the advances have been made out of non-interest bearing funds. The assessee also could not substantiate before us the trade dealings with the persons to whom such interest free advances are given - restore the issue to the file of the AO with a direction to give one more opportunity to the assessee to substantiate his case. The first issue raised by the assessee in the grounds of appeal is accordingly allowed for statistical purposes. Addition of unexplained creditors - HELD THAT:- Referring to assessee submission that all the details were given before the CIT(A) and it was submitted that purchases have been made from the parties continuously throughout the year for which cheques were issued to them at the end of the year. However, we find the ld.CIT(A) sustained the addition on the ground that the cheques were not encahsed during the year and the amounts were unpaid and the assessee did not furnish any further details to show when and how the payments to the sundry creditors have been made in subsequent years. Restore the issue to the file of the AO with a direction to give one final opportunity to the assessee to substantiate regarding the subsequent clearance of the cheques and give an opportunity to the assessee to file confirmations from the said sundry creditors. The Ground No.2 raised by the assessee is accordingly allowed for statistical purposes. Addition on account of low household expenses, loans from friends and opening cash - HELD THAT:- When the assessee is having a turnover of more than ₹ 3 crores during the year and the assessee has filed the cash flow statement of the whole year and the assessee is a person of means, therefore, merely because the assessee has not deposited the cash in bank account cannot be a ground for disbelieving the opening cash of ₹ 99,125/- which, in the peculiar facts and circumstances of the case, appears to be reasonable. We, therefore, set aside the order of the CIT(A) on this issue and direct the AO to delete the addition. So far as the amount received by the assessee from his friends and relations in cash is concerned, no justification or no details whatsoever was filed either before the AO or before the CIT(A) or even before us. Therefore, in absence of any details of such cash loan received from his friends and relations and considering the fact that the assessee was showing a huge amount of opening cash balance, there was no justification for receiving cash from friends and relations, the addition made by the AO and sustained by the CIT(A) is justified. - Decided partly in favour of assessee. Addition of transportation expenses and HRA - HELD THAT:-, we find in absence of any supporting details regarding the transportation expenses and house rent allowance, the AO made the additions. Since no details were furnished before the CIT(A) he also sustained the addition. It is the submission of the ld. Counsel that these are part of the salary statement and the lower authorities have not gone through the same - restore the issue to the file of the AO with a direction to give one final opportunity to the assessee to substantiate the same. Ground No.5 raised by the assessee is accordingly allowed for statistical purposes. Deduction under the head ‘Property income’ - HELD THAT:- We find it is the submission of the ld. Counsel that the statutory deduction u/s 24 of the IT Act was not granted by the AO or the CIT(A). We, therefore, deem it proper to restore the issue to the file of the AO with a direction to verify the details and allow the statutory deduction allowable to the assessee from his income from house property as per law.
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