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TMI Blog2016 (7) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the addition of Rs. 39,26,062/- even when the unaccounted investment was computed by the AO in a logical way. 2. On the facts and circumstances of the case, the ld.CIT(A) has erred on the facts and in law, in estimating the investment in pawning business during the year at Rs. 3,92,506/- and also in holding that this unaccounted investment has been invested out of interest income earned during the year. Whereas, contrary to his own observation, the interest income during the year has been computed at Rs. 2,55,634/-. This observation of the ld.CIT(A) is irrational as the interest income of Rs. 2,55,634/-, in no way defend the investment of Rs. 3,92,506/-. 3. That the judgments relied upon by the ld.CIT(A) are distinguishable. The rati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest income on the basis of estimated amount of loan advanced against pawned ornaments. It is, however, relevant to consider if the entire loan amounts estimated against the pawing of silver/gold ornaments can be unexplained investment and relevant to only assessment year 1992-93. It would not be prudent to infer that total loan amount advanced to 2009 persons and estimated at Rs. 39,25,062/- could be unexplained investment, particularly when it has not been disputed by the AO that the assessee was in the money lending business since last 35 years. It is abundantly clear from the assessment order that the AO did not make any enquiry from any of the person who pledged/mortgaged their ornaments against loan taken from the appellant, despite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r from the money advanced in earlier year out of repayments or from interest income earned in earlier years. Therefore, it was incumbent upon the AO to at least look into the background behind the direction of ld.CIT(Appeals) against taxing the entire investment only in one year. It remains an undisputed fact that the unclaimed articles would also not generate any interest income. Thus, the estimation of interest income at Rs. 8,24,263/- by considering the entire investment made in one year and that to as income generating is against the basic business principles of pawning. When the AO has estimated interest income of Rs. 8,24,263/- for the year under appeal (subject to adjudication), it cannot be inferred that the appellant had not been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), relied upon by the learned counsel, has held that in the first instance it is incumbent upon the authority to establish that there was investments made by the assessee; that such investments were not recorded in the books of account maintained by the assessee; and that, such investments had been made in the financial year immediately preceding the assessment year in question. Therefore, the AO has utterly failed to discharge the primary burden that lay on him. At the relevant time when the assessments were made, the block period for search assessment consisted of 10 years and even the provisions of section 149 of the Act provided for reopening of last 10 assessment years. When the appellant had been engaged in the business of pawning for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A). When admittedly the assessee is carrying on pawning business for more than three decades, the entire investment in the pawning business cannot be attributable to one year. Thereafter, the CIT(A) did not sustain the addition of Rs. 3,92,506/- also on the ground that it was made out of the income from pawning business which the Assessing Officer has determined at Rs. 8,24,263/-. We also agree with the Assessing Officer that the income from pawning business can be reinvested in the pawning business in the subsequent year. The CIT(A), while deciding the second ground, has reduced the income from interest of the pawning business determined by Assessing Officer at Rs. 8,24,263/- to Rs. 2,55,634/-. However, while considering the availability ..... X X X X Extracts X X X X X X X X Extracts X X X X
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