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TMI Blog2018 (10) TMI 362X X X X Extracts X X X X X X X X Extracts X X X X ..... es to addition of Rs. 2,51,030/- towards interest accrued on the amounts due. 4. Facts of this issue, in brief, are that assessee is a firm carrying business under the name and style of M/s. Vasu Chits, filed its return of income admitting total income of Rs. 27,960/-. The return filed by the assessee was processed under section 143(1) of the Income Tax Act, 1961 (hereinafter referred to as "Act"). Subsequently, survey operation was conducted in the business premises of the assessee on 15/06/2014 along with its sister concern M/s. Vasu Builders. Thereafter, a notice under section 143(2) was issued to the assessee and assessment is completed under section 143(3) of the Act. In the assessment order, the Assessing Officer has noted as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee that cash system of accounting is being followed for all interest 'receipts and payments. Once accrual system of accounting is followed, the assessee cannot make a claim that interest i8 being admitted at the time of repayment of loan by the debtors on cash basis in some cases. Under section 145, income shall be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee and the assessee cannot follow mercantile system of accounting for certain transactions and cash system of accounting for other transactions. On similar facts and circumstances, it has been held by the Tribunal, Hyderabad, in its order dated 10-08-2003 in ITA No.699/Hyd/2002 in the case of Shakuntala Rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... simply submitted that no interest is charged. The assessee has not filed any material to show that he is not charging any interest from the customers. Under these facts and circumstances of the case, we are of the opinion that the Assessing Officer has rightly made the addition on account of interest and the same is confirmed by the ld. CIT(A). For the sake of convenience, the relevant portion of the ld. CIT(A)'s order is extracted as under:- "5. I have considered the findings of the AO carefully. The appellant was issued notice of hearing dated 08.12.2017, fixing hearing on 18.12.207. An adjournment letter was received seeking hearing of the case in the next camp sitting. Accordingly, the appellant was informed that his case is adjourne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal in the case of Jayanti Commerce Ltd. Vs. ACIT, 61 ITD 183, decision of the Hon'ble Calcutta High Court in CIT Vs. Hindustan Motors Ltd., 202 ITR 839 and decision of the Rajasthan High Court in the case of SMS Investment Corporation Pvt. Ltd., vs. CIT, reported in 113 CTR 469, 203 ITR 1001 (Raj.). Thus, the addition is confirmed." 10. Considering the above, we find no infirmity in the order passed by the ld. CIT(A). Thus, this appeal filed by the assessee is dismissed. ITA No.58/VIZ/2018 11. Ground Nos. 2 to 7 are not pressed, therefore same are dismissed. 12. Ground No. 1 relates to addition of Rs. 3,65,234/- towards interest accrued on the amounts advanced to the customers. 13. Facts of this issue in brief are that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material found in respect of two persons, addition cannot be made and in respect of other persons, where no interest is charged. Therefore, he prayed for deletion of addition. 16. On the other hand, ld. Departmental Representative strongly supported the orders passed by the Assessing Officer. 17. We have heard both the parties, perused the material available on record and gone through orders of the authorities below. 18. The assessee has advanced various amounts to the customers which is attached with Annexure-A of the assessment order. The case of the assessee is that he has not charged any interest, however, the Assessing Officer has pointed out from the material collected during the course of survey, the assessee has charged interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicating charging of interest on advances on accrual basis. The AO while making assessment for AY 2005-06 found from the impounded material during the course of survey action that assessee has charged interest on advances made to several persons like Sri B. Pradeep Kumar, Sri G. Yatiraj Kumar, on accrual basis. The Assessing Officer also gave a categorical finding in the order of assessment that assessee-firm offered interest on advances made to Smt. K. Seshavataram. However, in the statement of facts, the appellant did not controvert the findings of the AO. The appellant did not file any evidence in support of claim of any doubtful advances. The assessee is following mercantile system of accounting in respect of interest charged. The averm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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