TMI Blog2003 (7) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of seized material. The contention of the assessee before the AO was that he was charging the interest at 18 per cent and there was nothing to show that higher rate of interest has been charged. It was sated that there were only one or two slips, which indicated rate of interest at 24 per cent. The AO observed that in the course of search, large number of slips were found tagged with the pawned, jewellery showing names of the pawnees, advances made and interest charged. According to him, the paper slips tagged clearly indicated rate of interest at 2 per cent per month, the AO cited the names of five persons and again the names of three persons in the case of another sister-concern M/s Subhash Chander Sons carrying on the same business. The assessee also produced one pawnee before the AO in support of his claim. However, the AO was of the view that the market rate of interest ranged from 2 per cent to 3 per cent per month. She also relied upon a case of Shri Om Parkash and others, Nawanshashr. She, therefore, estimated the rate of interest at 24 per cent per annum and made the addition of Rs. 1,64,573. 4. Aggrieved by the order of the AO., the assessee carried the matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a relief of Rs. 82,236." Now, the Department as well as the assessee are in appeal. 5. The grievance of the assessee is that the CIT(A) was not justified in estimating the rate of interest at 21 per cent as against 18 per cent applied by the assessee, while the Department is aggrieved against the action of the CIT(A) in reducing the rate of interest from 24 per cent to 21 per cent. 6. The learned Departmental Representative while supporting the order of the AO vehemently argued that in the slips found during the course of search, rate of interest was mentioned as 2 per month, therefore, the AO was justified in estimating the interest by applying the rate of interest at 24 per cent per annum. He further submitted that the learned CIT(A) has reduced the rate of interest without bringing out any material on record. He, therefore, submitted that the order the CIT(A) may be set aside. 7. Shri Sadhir Sehgal, Advocate, the learned counsel for the assessee, while appearing for the assessee, argued that the assessee is maintaining regular books of accounts where 18 per cent rate of interest has been recorded and no defects in such maintenance of books had been noticed as mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2-1993 1,000 Nil - 10. Kulwinder Kaur 23-6-1994 1,000 Nil - 11. Surjit Singh 23-9-93 1,000 Nil 2% 12. Sukhwinder Singh 29-1-1994 600 Nil 2% 13. Joginder Kaur 25-6-1994 800 1.5% - 14. Som Lal 6-1-1994 1,000 2.0% 2% 15. Prem 2-7-1994 1,500 2.0% - 16. Lachhoo 15-6-1993 1,500 1.5% 2% 17. Mohan Singh 28-6-1993 1,200 Nil 2% 18. Kala Ram 25-6-1994 1,000 1.5% Second Chart 1. Harbhajan Singh 8-4-1994 1,200 2% - 2. Sheru Ram 23-11-1993 700 1% 2% 3. Sohan Lal 12-8-1993 1,000 1.5% 2% 4. Satya 25-3-1994 2,500 1.5% - 5. Santokh Singh 28-3-1994 500 1.5% - 6. Manohar Lal 18-5-1992 1,600 Nil - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st at 21 per cent. On the contrary, the stand of the assessee was supported by documentary evidence. It is also relevant to point out that the AO estimated the rate of interest at 2 per cent per month on the basis of only four slips. However, in majority of the slips, the rate of interest was either 1.5 per cent or nil, which fact is evident from the above charts. Thus, considering the entire documentary evidence, we are of the view that the claim of the assessee is justified. We accordingly direct the AO to accept the claim of the assessee as regards to the rate of interest shown at 18 per cent per annum instead of 21 per cent per annum applied by the CIT(A). 8.1 In view of the above discussion, we allow the appeal of the assessee and dismiss the appeal of the Department on his issue. 9. There is yet another issue in the Departmental appeal, which relates to the deletion of addition of Rs. 1,83,992 on account of foreign gifts. 9.1 During the course of assessment proceedings, the AO noticed that there was credit entry of Rs. 1,83,922 on 3rd Aug., 1993, in the savings bank account No. 1621 of the assessee with the Canara Bank. The assessee stated that the entry was on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting to Rs. 1,10,590" but there is no evidence on record which could prove the aforesaid contentions of the AO It is an admitted fact that the assessee received the gifts from Sh. Balbir Singh through drafts of Rs. 70,000 and Rs. 40,590.25 credited on 9th Jan., 1991 and 18t March, 1991, respectively in the account of the assessee. In this regard the assessee filed two certificates from the Canara Bank, Noormahal, dt. 7th March, 1992, certifying that the aforesaid amount was the proceeds of foreign inward remittance received by way of drafts which clearly establishes that the assessee received the gift from Sh. Balbir Singh, N.R.I. who vide affidavit admitted that the gifts were given to the assessee and in the affidavit the source of the gift was also disclosed. When all the particulars were submitted and explained to the AO there was no justification in making the addition merely on the ground that the assessee failed to produce the donor who was residing abroad. The Tribunal, Chandigarh Bench in the case of R.K. Syal vs. Asstt. CIT (2000) 66 TTJ (Chd) 656 held "that the assessee having produced affidavits of NRI donors affirming the gifts, addition amounts representing gifts coul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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