TMI Blog2023 (1) TMI 411X X X X Extracts X X X X X X X X Extracts X X X X ..... of Annexure-2. As is evident, the rate of interest of 1.5% pertained to the month of January 2004 i.e. relating to subsequent year. The assessee on the other hand demonstrated to the ld.CIT(A) and substantiated the same also that during the impugned year, he had paid interest at the rate of 2.5%. Therefore, we agree with the ld.counsel for the assessee that the CIT(A) was satisfied and convinced with this explanation of the assessee and had accepted rate of interest paid at 2.5%; that therefore, he had not considered cash loans computed by the AO for the month of February, 2003 at Rs.2.34 crores and instead had restricted the addition to the amount of cash loans admitted by the assessee of Rs.1.25 crores. We do not find any merit in the grounds of the appeal of the Revenue seeking restriction of addition on account of cash loan to Rs.2.34 crores as opposed to the ld.CIT(A) restricting to 1.25 crores. The Ground raised by the Revenue are accordingly dismissed. - IT (SS) A No. 234/Ahd/2014 - - - Dated:- 6-1-2023 - SMT. ANNAPURNA GUPTA , ACCOUNTANT MEMBER AND T. R. SENTHIL KUMAR , JUDICIAL MEMBER Assesseeby : Shri Mukund Bakshi , CA Revenue by : Shri A. P. Singh , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the ld.CIT(A) condoned the delay and thereafter proceeded to adjudicate the appeal on merits. While doing so, he deleted the addition made of Rs.3,88,35,500/- finding no basis or material with the AO to make the impugned addition, and noting that the material on which the AO relied was factually incorrect for arriving at a finding that the assessee had taken cash loan of Rs.3,88,35,500/- during the year. The ld.CIT(A) thereafter held that since the assessee himself had admitted taking cash loan of Rs.1.25 crores from private financiers, which had not been reflected in his books of accounts, and the address of the financiers also could not be provided by him, and these cash loans were repaid in cash also, he upheld the addition to the extent of Rs.1.25 crores. Accordingly, the appeal of the assessee was partly allowed. 5. Aggrieved by the same the Revenue has filed appeal before us challenging the order of the Ld.CIT(A) both on account of condoning the delay in filing appeal as also restricting the addition to Rs. 1.25 Crs as opposed to Rs. 3.88 Crs added by the AO. 6. We shall first deal with the ground raised by the Revenue relating to condonation of delay by the ld.CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal No. 1(a) (b), raised by the Revenue are accordingly dismissed. 10. Ground No.2 (a)(b)(c)raised by the Revenue relating to the merits of the case read as under: a) On the facts and circumstances of the case, the Ld.CIT(A) erred in restricting the addition on account of cash loans to the extent of Rs.1.25 crore out of Rs.3,88,35,500/-. b) On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in restricting the addition on account of cash loans to the extent of Rs.1.25 crore, which is contradictory to his finding of accepting the contention of the assessee that the jottings at page no.96 are the details of the interest paid/payable because as per rate of interest @ 1.5%, the cash loan taken would come to Rs.2,58,90,333/-. c) On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in restricting the addition on account of cash loans to the extent of Rs.1.25 crore out of Rs.3.88,35,500/-, without appreciating that even on considering the alternative facts i.e. interest paid / payable as on February 2003 is Rs.3,52,300/- and as per rate of interest @ 1.5%, the total cash loan would come to Rs.2,34,86,666/- as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Rs. 4,000 H.R. Vithlani Rs. 2,250 SanabhaiLaxmanbhai Rs. 4,300 MathurbhaiShivabhai Rs. 1,000 BhikhibenSomabhai Rs. 150 Dilipbhai Upadhyay Rs. 1,400 P.P. Upadyay Rs. 1,000 Kukoo Samuel Rs. 600 K.K. Chokshi (Padra) Rs. 2,000 R.C. Patel Rs. 5,000 A.K. Ray Rs. 4,000 Urvi R. Soni Rs. 7,000 Amrish Patel Rs. 9,000 Saurabh Trading Rs.22,000 C.J. Velhai Rs.22,840 Nayan C. Patel Rs. 2,500 MeenabenThakar Rs. 13,000 P.K. Roy Rs. 6,620 R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principal amount, but reflected the interest amount. He noted that there were different columns in page no.96 having narration with 10th, 14th, 17th, quarterly etc. and such entries could not be attributed to the principal amounts, since they are given for a period of few months to year. He noted that some narrations suggested monthly or quarterly interest due to various parties which was clear from the word quarterly mentioned therein. He further noted various other papers and cheques, referred to by the AO on page no.3 of his order, containing the details of interest payable by cheque, payable by cash and the previous outstanding available. He therefore held that the details which were maintained by the assessee related only to partywise interest payment for various months. Accordingly, he held that documents page no.96, Annexure-2 did not represent details of cash loans taken by the assessee, but in fact represented details of interest payable by the assessee, and further that the figure in the said documents could not be rounded off with two 0s . He therefore held that the peak cash loans of Rs.3.88 crores, added on the basis of page no.96 Annexure-2 was not sustainable in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of principal amounts as the principal amounts are generally given for a period of few months to a year. The notings suggests that monthly / quarterly interest was due to various parties on the dates mentioned against their respective names. The word 'quarterly1 also suggests that the figures relate to interest payments. It appears that all these due dates were related to payment of interest to the respective parties. Further, there are many other loose papers like page No. 199 of Annexure-VII as on April 2004, page No.201 of Annexure-VII as on March 2004, page No.19 of Annexure-ll as on January 2004 which have been discussed in assessment order on page No.3. On all these loose papers, details of interest payable by cheque, interest payable by cash and previous outstanding are available. Therefore, it is clear that appellant was maintaining the details of party-wise interest payments for various months. Further, other examples have also been given by appellant in the submissions on the remand report to prove that the figures on page No.96 were related to interest only. Such e.g. are discussed in the case of depositors named P. K. Roy, P. P. Upadyay, Meenaben Thakar etc. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Coming to the issue of the peak loan of Rs.2.34 crores taken by the AO as on Feb.2003, our attention was drawn to the order and the finding of the AO in this regard at para-5 of the order as under: From the amount of cash interest The impounded loose papers from the office of Harshad Shukla, contain names of the persons from whom advances were obtained by him, and details of payments of interest in cash and in cheque to these persons. Such details are on pages 87,90,96,97,99 and 100 of Annexure A-4. The details on Page No. 90 shows that payment of interest due in cash and in cheque, for the month of January, 2004 and over due interest. This page is listed in Annexure 2. Total interest payable by cheque and in cash is shown at Rs. 70,093 and Rs. 2,63,897/-respectively. The previous outstanding interest is shown at Rs. 3,15,668/-. Obviously, the amount of interest of Rs. 2,63,897/- payable in cash, is on the cash advances obtained by Harshad Shukla on various dates. Similar working is appearing on Pages 96, (for December, 2002) and on page 100 (for February, 2003). The page 96 is listed in Annexure 3. Shri. Harshad Shukla was asked to explain the deposits and int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due to the reason that he could not pay interest during the last few years, and such unpaid interest has been added to the principal, periodically. Shri Shukla could not produce any necessary evidence on his contention, nor he could identify all the persons mentioned in the list. In reply to question No. 40 in te statement recorded on 28/04/2005, he could not furnish the addresses of these person, except in the cases of a few. He also could not furnish the details of loans obtained from these persons, from time to time. In the circumstances, there is no alternative, but ot estimate the principal amount of cash loan taken by him, on the basis of his initial statement, and as well as on the basis of interest rate. From the interest working, he total cash interest for January, 2004 as per page 90 of Annexure II is Rs. 2,63,897. Hence the principal amount at the rate of 1.50% would be = Rs. 1,75,93,133/-. The above is the position as on 01/01/2004. As per page nos.99 and 100 of the Annexure II which is the position I February, 2003 the total cash interest is = Rs.2,72,550+Rs.79,750/- totaling to Rs.3,52,300/-. The principal amount at the rate of 1.50% would be = Rs.2,34,86, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said loose paper would reveal that certain dates which mentioned in the first column of the said loose paper, these are nothing but due date of payment of interest of the loans borrowed by the appellant from various parties. The amounts stated by the said loose paper pertain to amounts received by cheque as well as by cash. The amounts stated on the said loose paper are interest payments payable by the apepllant and not the loan amounts as contemplated by the Learned Assessing Officer in her Assessment Order. The Learned Assessing Officer has grossly erred in holding that the total amount stated on the said loose papers pertains to amount borrowed by the appellant, from various person, names of whom have been stated in the said loose paper. It may be submitted here that the various columns on the said loose paper included following details namely: i) Name of the Depositor ii) Due Date iii) Previous Outstanding iv) By Cheque v) By Cash vi) Total The previous outstanding amount pertains to the interest due as on 6.12.2002 interest payable for the period till 6.12.2002 which includes payment by cheque as well as by cash. A perusal of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition of Rs.3,88,35,500/- made by the Learned Assessing Officer. In respect of the amount of Rs.22,500/- purported to have been received by the appellant from Saurabh Trading Company it is stated that the said amount of Rs.22500/- pertains to the interest payment payable to Hasmukhbhai Shah against 1 2 and not against Saurabh Trading Company as stated by the Learned Assessing Officer in the assessment order. The said amount of Rs.7500/- and Rs.15000/- pertains to the interest payments due to Hasmukhbhai Shah (at sr.no.40) aggregating to Rs.22500/-. The total borrowings from Hasmukhbhai Shah was Rs.9,00,000/- on the interest due to 2.5% p.m. for which the interest amount works out to Rs.7500/- and Rs. 150007- respectively the borrowings of Rs.3,00,0007- and Rs.6,00,000/- respectively. The particulars of cheque stated in the said loose papers do not pertains to the amounts borrowed but the same pertains to the interest payments paid by cheque and by cash. The contention of the appellant can also be substantiated from the entry at Sr,No.53 which pertains to an amount of Rs.50000/-borrowed from Shri J.N. Besana op an interest rate of 2.5% p.m. which works out to Rs. 1250/- p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d therefore be deleted. 20. The ld.counsel for the assessee pointed out that it was demonstrated to the ld.CIT(A) that the rate of monthly interest paid by the assessee was around 2.5% and on the said basis cash loan taken by the assessee worked out to 1.06 crores and not 2.34 crores as worked out by the AO. He pointed out that the figures of these cash loans was less than that admitted by the assessee of having taken at 1.25 crores and addition upheld by the ld.CIT(A) of Rs.1.25 crores, therefore was justified. 21. We have heard rival contentions and have gone through the orders of the authorities below, and also the documents referred to before us. 22. Grievance of the Revenue in this ground is that the ld.CIT(A) ought to have restricted addition made on account of cash loans taken and repaid by the assessee worked out on the basis of documents found during the search, to an amount of Rs.2.34 crores being cash loan as on Feb. 2003 as opposed to the ld.CIT(A) restricting it to Rs.1.25 crores, as admitted by the assessee in his statement recorded during the search. The contention of the Revenue being that while the AO had taken peak of two figures of cash loans wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of loans taken with the amount reflected in the audited balance sheets of these companies. Similarly the assessee had pointed out that figures represented in page no.96 of Annexure- 2 represented interest paid on various cash/cheques loans taken at therate of 2.5% on an average. The assessee therefore, we find, had suitably demonstrated with evidence to the Ld.CIT(A) that the document Annexure II page 96 represented details of interest paid on loans taken by the assessee and the rate of interest so paid was 2-2.5%. The ld.CIT(A), we have noted, found merit in the contentions of the assessee that figures mentioned in the said documents represented interest amount and not the cash loans, which finding has not been challenged by the Revenue before us. Since it is an admitted fact that Annexure II page 96 represented details of interest paid by assessee on various cash and cheque loans taken, which the assessee had suitably demonstrated as paid @ 2.5 %,the cash loans of Rs. 2.34 Crs worked out by the AO by taking interest rate of 1.5% , we hold, have been rightly rejected by the Ld.CIT(A). 25. Further, we find that the AO had applied rate of 1.5% on the basis of one instance only; t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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