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2016 (7) TMI 512 - ITAT DELHI

2016 (7) TMI 512 - ITAT DELHI - TMI - Unexplained investment in the pawning business by the assessee - Held that:- CIT(A) has recorded that the assessee was engaged in the pawning business over the last 35 years and therefore, the entire investment cannot be attributed to one year. He, therefore, opined that only 1/10th of the investment can be considered as attributable to the year under consideration which he worked out at ₹ 3,92,506/-. To this extent, we entirely agree with the finding .....

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rmined by Assessing Officer at ₹ 8,24,263/- to ₹ 2,55,634/-. However, while considering the availability of funds for investment in the pawning business, he considered the income from interest as determined by the Assessing Officer. In our opinion, when he has reduced the interest income from pawning business, the funds available for investment in the pawning business would be the interest income as determined by learned CIT(A) and not the interest income as assessed by the Assessing .....

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377; 3,92,506/- minus ₹ 2,55,634/-. - Decided partly in favour of revenue - ITA No.1966/Del/2012 - Dated:- 5-7-2016 - SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI KULDIP SINGH, JUDICIAL MEMBER For The Appellant : Shri V.R. Sonbhadra, Senior DR. For The Respondent : Shri Ankit Gupta, Advocate. ORDER PER G.D. AGRAWAL, VP :- This appeal by the Revenue for the assessment year 1992-93 is directed against the order of learned CIT(A), Faridabad dated 19th January, 2012. 2. The Revenue has raised th .....

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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 ₹ 2,55,634/-. This observation of the ld.CIT(A) is irrational as the interest income of ₹ 2,55,634/-, in no way defend the investment of ₹ 3,92,506/-. 3. That the judgments relied upon by the ld.CIT(A) are distinguishable. The ratio of the judgment of Hon ble High Court of Madhya Pradesh, in the case of CIT vs. Bajranglal Dwa .....

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s order dated 24th January, 1997, set aside the assessment to the file of the Assessing Officer. The Assessing Officer completed the set aside assessment vide order dated 26th March, 1999 on a total income of ₹ 47,49,325/- wherein he made the addition of ₹ 39,25,062/- for unexplained investment in pawning business and ₹ 8,24,263/- as interest income from pawning business. On appeal, learned CIT(A) deleted the addition of ₹ 39,25,062/- and reduced the addition of ₹ 8 .....

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nst 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 ₹ 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 a .....

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eatures of pawning business. An intending loanee agrees to take loan at agreed rate of interest by giving gold/silver ornaments as security and the loan amount alongwith interest is required to be repaid within the agreed period. When the amount of loan repayable alongwith interest exceeds the market value of the pawned article, the loanee may prefer not to make the repayment. In such situations, the pawned articles remain in the custody of the loaner which also cannot be disposed of or sold by .....

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rticles, earlier unclaimed by the loanees, in respect of which the appellant did neither receive back the loan amount nor the interest. These unclaimed articles are thus, generated either 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 tha .....

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e standard adopted by the AO for estimating interest income at ₹ 8,24,263/- in one year and leaving aside the interest earned and utilized in financing during the year prior to the date of dacoity, the major part of investment in advancing loan against pawned articles is covered by earlier five years if it is accepted that the appellant earned almost similar amount of interest income in earlier five years also. Thus, the whole exercise of the AO in making so called estimation and entire ad .....

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n no evidence has been brought on record if the assessee was having income from any source other than the money lending business. Therefore, the entire addition made by the AO is wholly unwarranted and highly unjustified. Even if the appellant has not filed necessary details or not produced books of accounts, it does not necessarily entail the AO to make any absurd addition. The Hon ble Gujarat High Court in Ushakant N. Patel vs. CIT (282 ITR 553), relied upon by the learned counsel, has held th .....

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ssessment 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 over last 35 years (a fact not denied by the AO), it would not be in any dispute to reasonably infer and spread the unaccounted investment over last 10 years considering the above provisions. Hence, the unaccounted investment during the year under appeal would work out to only ₹ 3,92,506/-. O .....

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unt of unaccounted investment is not sustainable and deleted. 5. From the assessment order, order of learned CIT(A) and arguments of both the parties, it is gathered that the Assessing Officer made an addition of ₹ 39,25,062/- in respect of unexplained investment in the pawning business by the assessee. The CIT(A) has recorded that the assessee was engaged in the pawning business over the last 35 years and therefore, the entire investment cannot be attributed to one year. He, therefore, op .....

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