2016 (6) TMI 697 - HC - Income Tax

Addition on account of interest income on alleged advances treating the same as accrued interest -ITAT deleted the addition - Held that - The entire issue is based on appreciation of evidence on record. On the basis of the available material, the Tribunal found no justification for sustaining the addition. In fact, there was no reliable material for making the additions. Issue being predominantly in the realm of appreciation of evidence, no interference is called for - Decided against revenue

Summary

Issues:
Challenge to ITAT judgment on addition of interest income on alleged advances treated as accrued interest.

Analysis:
The High Court considered the challenge to the ITAT judgment regarding the addition of interest income on alleged advances treated as accrued interest. The Assessing Officer had calculated the rate of return at 18% based on seized documents during a search. The AO rejected the assessee's explanation that the documents were rough jottings with no evidence of earned interest. The Tribunal, however, deleted the interest addition, stating that the seized paper only contained amounts and dates with no clear evidence. The assessee's statement under section 132(4) was also considered, where the assessee mentioned the papers were related to land transactions and not in his handwriting. The Tribunal found no conclusive evidence linking the entries to the assessee or family members, giving the benefit of doubt to the assessee. The High Court noted that the issue hinged on the appreciation of evidence, with no substantial material to support the addition. Consequently, the Court upheld the Tribunal's decision, dismissing the Tax Appeal as no question of law arose from the findings.

This analysis highlights the key aspects of the case, including the Assessing Officer's calculation based on seized documents, the Tribunal's decision to delete the interest addition, and the High Court's affirmation of the Tribunal's judgment based on the lack of substantial evidence. The Court emphasized the importance of corroborative evidence and the burden of proof on the Revenue to establish taxability, ultimately leading to the dismissal of the appeal.