TMI Blog1997 (11) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount of loan as under: Date S.Y. Amount (Rs.) 01-09-85 2041 5,00,000 02-08-86 2042 5,00,000 18-09-86 2043 2,00,000 . . 12,00,000 According to the AO the assessee had not accounted for the aforesaid amounts in the regular books of accounts. On being asked to explain the stand regarding the said promissory notes the assessee submitted that the disputed amount was not borrowed from Shri B.M. Patel, but was taken against banakhat money for the sale of property of their family members. It was also the contention of the assessee that the amount so received was not an income because no sale deed was executed and registered in favour of Shri B.M. Patel and ultimately no income has arisen to the assessee's family members or any of their business firm. It was specifically claimed that Shri B.M. Patel had already offered the disputed amount for taxation and had also paid the due tax thereon. It was also claimed that the partners of the assessee-firm belonged to a reputed family of Muslim and financially well off and they are under moral obligation to help the needy people of their commu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where direct and positive evidences of earning of income are not available, one has to go by the principle of pre-ponderance of probabilities. It is difficult to believe that a businessman would keep idle a huge amount of Rs. 5 lacs to Rs. 12 lacs. The preponderance of probability is that such funds must have been utilised for business. The argument of the learned counsel for the appellant that no evidence to this effect was found during the course of search does not prove the point. If there was no evidence found for the utilisation of these funds in business, there was also no evidence found of such funds having been utilised for the welfare of needy persons of the community to which the partners of the firm belong. Therefore, a reasonable view has to be taken according to which it is justifiable to presume that a prudent businessman would not keep his funds idle but would utilise it for business. I would, therefore, hold that the AO was fully justified in estimating income from utilisation of borrowed funds. Now coming to the quantum, from the details of capital employed and net profit earned, filed before me I have found that no profit earned by the appellant firm on the ut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, think it fair and reasonable that the net profit on the utilisation of borrowed funds should be taken at 10 per cent only." The learned counsel placed reliance on the following decisions: (1) Rajmohan Shaha Ors. vs. CIT (1964) 52 ITR 231 (Assam); and (2) Kishanchand Chelaram vs. CIT (1980) 19 CTR (SC) 360 : (1980) 125 ITR 713 (SC) The learned counsel for the assessee also submitted that the CIT(A) was not justified in holding that grounds of appeal relating to charging of interest under ss. 139(8) and 217 of the Act were only consequential. According to the learned counsel, the CIT(A) should have decided the issue regarding the chargeability of such interests under ss. 139(8) and 217 of the Act, rather treating the same as consequential. According to the learned counsel, the assessee's stand from the very beginning was that in the present case no interest was chargeable under these sections. He also relied on the following decisions: (1) CIT vs. Multi-metals Ltd. (1990) 88 CTR (Raj) 1 : (1991) 187 ITR 98 (Raj); (2) Modi Industries Ltd. Ors. vs. CIT (1995) 128 CTR (SC) 361 : (1995) 216 ITR 759 (SC); and (3) CIT vs. Bharat Machinery Hardware Mart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake a pure guesswork and make an assessment without reference to any evidence or material at all. There must be something more than the bare suspicion to support the assessment. In the instant case the AO made the addition on the basis of pure guesswork without bringing out any material on record in justifying the amounts of additions and which action of the AO has been confirmed by the CIT(A) without bringing the facts of the case. The CIT(A) was also not correct in estimating the income of assessee @ 12 per cent per annum on the amounts so received by the assessee from Shri B.M. Patel. The estimate of CIT(A) is also without any, basis. Such additions are not tenable. 8. In the case of Rajmohan Shaha Ors. vs. CIT the facts of the case before the Hon'ble Assam High Court were that the assessee was a firm with head office at Agartala and purchasing centre at Calcutta. During the course of the assessment it was discovered that various sums were remitted from Agartala to Calcutta and these remittances were not shown in the accounts books. The ITO held that the assessee was carrying on an undisclosed business having turnover of Rs. 4 lacs and remitted the income from such undisclo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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