TMI Blog2019 (12) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the facts of the present, because, by considering the system of money lending business explained by the assessee as well as gist of computation of income filed in the return of income for the assessment year 1999-2000 is the only basis for quantifying the rate of interest in the assessment year under appeal by the AO. Assessee s partner s case, the basis for quantification of interest was not on record and nothing was available in the Tribunal s order. Therefore, we are of the considered opinion that the above additions made by the Assessing Officer was validly confirmed by the CIT(A). Thus, the grounds raised by the assessee stand dismissed. Disallowance of agricultural income - HELD THAT:- What is possible to earn from the agricultural land is not the matter of dispute. In the absence of books of accounts for the agricultural operations in the dry land of 5.5 hectares, the Assessing Officer estimated the income at ₹.38,000/-, is admittedly very low, but the claim of the assessee of earning ₹.1,10,000/- (assessee s share) from the dry land is also exorbitantly higher. Though the Tribunal is of the considered opinion that the agricultural sector continue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment under section 143(3) r.w.s. 254 of the Act by making various additions. 2.1 Facts leading the ground of addition on investment in properties are that the assessee along with his brother has purchased a property at Door No. 4,5, 6 7 at Madurai Main Road, K. Abishekapuram, Crawford, Trichy on 09.05.2001. The cost of the property along with the stamp and registration charges works out to ₹.6,91,800/-. 50% share of the assessee works out to ₹.3,45,900/- and this has not been reflected in the balance sheet of the assessee. On perusal of the balance sheet for the current year, the Assessing Officer noticed that there are 15 properties and out of these, 14 properties were existing from the year 1999-2000. There is only one other property and the same is viz., land at Malakarur (P.T. P. K.) ₹.1,15,005/-, which seems to have been purchased during the assessment year 2000-01. On a query, it was submitted that there is one asset in the balance sheet mentioned as Building ₹.3,83,000/- and this is the asset mentioned above. On perusal of the balance sheet of the assessment year 1999-2000, the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s available on record and gone through the orders of authorities below. With regard to the claim of the assessee that the sum of ₹.3,83,000/- would have been paid earlier in the assessment year 1998-99 for the purchase of the Crawford land property, the assessee has not brought on record any material evidence. Moreover, from the purchase deed, the Assessing Officer noticed that the entire consideration was paid for the purchase of the Crawford land property on the day of registration on 09.05.2001, which is relevant to the assessment year 2002-03. In the absence of any material evidence, we find no infirmity in the order passed by the authorities below. Thus, the ground raised by the assessee stands dismissed. 3. The next ground raised in the appeal of the assessee relates to confirmation of addition on account of investment in individual money lending and interest income from private finance. Based on the survey findings a register containing details of loan outstanding as on 01.01.2004 and subsequent transactions, the Assessing Officer has worked out rate of interest on the above transactions. During the course of survey the amount outstanding as on 01.01.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of writing the accounts on a monthly basis and destroying the same as the month is over. It was also admitted that this money lending in individual capacity is not admitted in the returns. Also he explained the method of money lending elaborately. As per the assessee, if the borrower seeks one thousand rupees, then an amount of ₹.900/- would be advanced to him and the mode of repayment is ₹.10/- per day for 100 days. As per the above working the rate of interest works out to 40.5%, even without considering the fact that the interest collected on a daily basis is redeployed and earns interest, leading to a net rate of interest which is higher than 40.5% as calculated above. The assessee was requested to furnish the evidence regarding the details of loans advanced to various parties, such as date of loan advanced, amount of loan advanced, date of repayment of the loan by the parties, mode of payment of loan and receipt of the same, details of interest income earned, rate of interest, etc. However, the assessee has not produced any details or evidences for the claim of outstanding loans at the end of the year, or for the interest income offered in the return of income fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agricultural income : ₹. 80,000/- Tax payable : NIL From the above details, the Assessing Officer observed that while presenting the details for the assessment year 2002-03, the assessee has conveniently claims that the interest income received was ₹.45,000/- [for the assessment year 1999-2000], whereas, as per original return filed on 22.02.2000, the income from other sources was only ₹.1,200/- as reproduced hereinabove. Similarly, the agricultural income as per the details filed during the proceedings for the assessment year 2002-03 [for the assessment year 1999-2000] is ₹.90,000/-, whereas, as per the original return, it was only ₹.80,000/-. Thus, it is amply clear that the assessee s statements are not backed up by evidences or facts, but has been tailored to suit the needs, which contradicts his own statement filed earlier. Hence, due to the reason of non-production of details and evidences for the claim of outstanding loan amount and the amount of interest income offered, the Assessing Officer could not place any on the figure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n but to extrapolate the available date to quantify the income earned by the assessee. As seen above the difference between the outstanding as on 01.04.2002 estimated as above of ₹5,84,884/- and the figure declared in the balance sheet of ₹3,00,000/- was treated as unexplained investment of the assessee and brought to tax. 3.3 In this case, the assessee was not doing normal money lending business, in fact, in his individual capacity, the assessee was doing different kind of money lending business, as has been explained before the Assessing Officer, i.e., if the borrower seeks one thousand rupees, then an amount of ₹.900/- would be advanced to him and the mode of repayment is ₹.10/- per day for 100 days. In view of the above, the rate of interest could be arrived at 40.5%, even without considering the fact that the interest collected on a daily basis is redeployed and earns interest, leading to a net rate of interest which is higher than 40.5%. The assessee was required to furnish various details, as listed above, but could not produce any details or evidences for the claim of outstanding loans at the end of the year, or for the interest income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence contrary to the findings of the Assessing Officer, the ld. CIT(A) has confirmed the addition. 3.4 Similarly, with regard to the interest income from private financing, the difference between the outstanding as on 01.04.2001 and as on 01.04.2002, was treated as interest income earned from the money lending business and this amounts to ₹.1,56,398/-. Though the assessee has offered an interest income of ₹.72,000/- no telescoping could be considered, as in the above extrapolation made, the Assessing Officer assumed that the interest earned would be reinvested in the financing itself. In the absence of valid documentary evidence, the Assessing Officer estimated the interest income of the assessee at ₹.1,56,398/-, which was confirmed by the ld. CIT(A). 3.5 At the time of hearing, the ld. Counsel for the assessee has relied upon the decision of the Tribunal in assessee s partner s case in ITA Nos. 2985 to 2988/Mds/2014 ITA Nos. 2980 to 2984/Mds/2014 vide order dated 01.09.2016, wherein, the Tribunal has deleted the addition by observing that estimation of interest made by the Assessing officer at 25% was highly arbitrary and with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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