TMI Blog2018 (7) TMI 657X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorities did not invoke Section 269SS to disbelieve the claim of the assessee. The authorities went by the statement of the assessee at the time of the raid and the explanation offered by him subsequently as an after thought and disbelieved the story with which he came up later. Therefore, in our considered view, the reframed substantial questions of law 1 and 2 are liable to be answered against the assessee Addition as interest income - claiming credit for TDS on entire amount in utter disregard to the provisions of Section 145 and method of accounting followed by the assessee? - Held that:- Issue as decided in PENDURTHI CHANDRASEKHAR VERSUS THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-11, HYDERABAD [2018 (3) TMI 799 - TELANGANA AND ANDHRA PRADESH HIGH COURT] as held that the finding that the assessee has received interest income but chose to keep it in the account in order to get interest, is in conflict with his previous observations that there is no prohibition for the assessee to withdraw the interest on the unsecured loan in the books of account of the company. Indeed, the Revenue has not disputed the claim of the assessee that the loanee company converted the u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 145 of the Act and method of accounting followed by the assessee? BRIEF FACTS: 4. A search and seizure operation under Section 132 of the Income Tax Act, 1961, was carried out in the group cases of M/s. Ambiance Properties Private Limited and its sister concerns. The assessee is one of the Directors of a company by name Dakshin Shelters Private Limited. His residential house was also searched on 09-10-2007. 5. Thereafter, notices under Section 153A dated 20-10-2008 were issued, in relation to the Assessment Years 2002-03 to 2007-08. For the Assessment Year 2008-09, the assessee filed his return of income on 02-02-2009. 6. Subsequently, notices under Sections 143(2) and 142(1) were issued on 27-4-2009. The assessee filed his response and after giving an opportunity of hearing, the Assessing Officer passed an order on 24-12-2009. 7. In the order of assessment, the focus of attention was on three items. One was unexplained cash of ₹ 23,35,000/- found in the residential premises in the course of search and seizure operation. Out of the said amount, ₹ 22,50,000/- was seized as unexplained. The Assessing Officer rejected the explanation offered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case, the Income Tax Appellate Tribunal while confirming the addition of ₹ 3,05,713/- as interest income on mere ground of claiming credit for TDS on entire amount in utter disregard to the provisions of Sec.145 of the Act and method of accounting followed by the assessee? 13. The answer to the above question is found to be in paragraph-42 of the judgment dated 23-02-2018, which reads as follows: 42. As regards the first mentioned aspect, it defies any logic for, crediting of interest in account books does not enable the assessee to withdraw the amount as the same was not physically made available by M/s. Dakshin Shelters Private Limited for the assessee to make such withdrawal. The finding that the assessee has received interest income but chose to keep it in the account in order to get interest, is in conflict with his previous observations that there is no prohibition for the assessee to withdraw the interest on the unsecured loan in the books of account of the company. Indeed, the Revenue has not disputed the claim of the assessee that the loanee company converted the unsecured loan and unpaid interest into equity shares during the year 2011-12 and ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 21-7-2007. 3. In this connection the assessee has submitted a confirmation letter allegedly signed by Smt. Anantha Lakshmi dated 13-10-2009 along with the above said documents. 17. The Assessing Officer as well as the CIT (Appeals) refused to buy this theory. The Tribunal concurred with the Assessing Officer and the Appellate Authority. 18. Assailing the decision of all the three authorities, it is contended by Mr. K.Vasanthakumar, learned counsel for the appellant (i) that an answer provided by an assessee at the time of a raid, when he will be in a state of shock, cannot be held against him especially when his subsequent claim was evidenced by documents; (ii) that at the time when the search was conducted, Section 269SS had not been amended, but was applicable only to loans and advances and not sales; (iii) that when admittedly the assessee had no source of income, the explanation offered by him had to be accepted; (iv) that in support of the explanation offered by the assessee later, he had not only produced the sale agreement with Anantha Lakshmi, but the Assessing Officer also got a letter of confirmation from Anantha Lakshmi and that therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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