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2021 (12) TMI 1206 - AT - Income TaxAssessment u/s 153A - Addition of interest income - CIT-A deleted the addition - HELD THAT - We find force in the submissions of the ld. AR that the interest income added by the AO without any incriminating material being found during the search for the FY 2008-09 to 2011-12 are not sustainable. No new facts and circumstances of the case has been put forth by the ld. CIT-DR. The ld. CIT(A) has passed a well speaking order discussing all the material facts and circumstances as well as legal proposition of law, therefore, considering the totality of the facts and circumstances, we do not find any reason to interfere or deviate from the findings so recorded by the ld. CIT(A), accordingly, we uphold the same. - Decided against revenue.
Issues Involved:
1. Deletion of addition made by the AO on account of interest received by the assessee. 2. Verification and validity of document B/4. 3. Adequacy of inquiry conducted by the AO. 4. Applicability of CBDT Circular No. 17/2019 regarding monetary limits. 5. Restoration of the AO's order by the ITAT. Issue-wise Detailed Analysis: 1. Deletion of Addition Made by the AO on Account of Interest Received by the Assessee: The Revenue contested the deletion of ?5,93,707/- made by the AO on account of interest received by the assessee at 36% p.a. as per the seized document B/4. The CIT(A) deleted this addition, concluding that the primary documents B/1 and B/2, which showed interest rates of 12% to 15% annually, were more reliable than the unverifiable B/4 document. The ITAT upheld the CIT(A)'s decision, emphasizing that the AO's assumption of additional interest income based on B/4 was unjustified, especially when no other incriminating documents were found. 2. Verification and Validity of Document B/4: The CIT(A) and ITAT both noted that document B/4, which indicated an interest rate of 3% per month, was not verified by the AO. The CIT(A) emphasized the necessity of verifying the contents of any document to avoid arbitrariness. The ITAT agreed, stating that the AO failed to cross-check the authenticity of B/4 before using it to allege suppression of income. The primary evidence in the form of B/1 and B/2, which showed lower interest rates, was deemed more credible. 3. Adequacy of Inquiry Conducted by the AO: The Revenue argued for setting aside the matter for adequate inquiry, citing a precedent where the ITAT ensured effective inquiry when the AO failed to do so. However, the ITAT found that the AO did not conduct any independent inquiry to substantiate the claims made based on B/4. The ITAT referenced judgments that no estimation could be made without incriminating material, supporting the CIT(A)'s decision to delete the addition. 4. Applicability of CBDT Circular No. 17/2019 Regarding Monetary Limits: The Revenue submitted that the monetary limit of CBDT Circular No. 17/2019 did not apply as prosecution under sections 276CC and 276(1) of the IT Act was filed. However, this issue was not elaborated upon in the judgment, as the primary focus remained on the validity of the addition based on B/4 and the adequacy of the AO's inquiry. 5. Restoration of the AO's Order by the ITAT: The Revenue prayed for the restoration of the AO's order. However, the ITAT upheld the CIT(A)'s decision, finding no reason to interfere with the findings. The ITAT agreed that the addition was based on extrapolation without any incriminating material, which was against the principles of law. Conclusion: The ITAT dismissed the appeals of the Revenue, upholding the CIT(A)'s deletion of the addition made by the AO. The ITAT emphasized the importance of primary evidence and proper verification of documents, ruling that the AO's assumptions based on the unverifiable B/4 document were unjustified. The decision was applied mutatis mutandis to the appeals for the subsequent assessment years, resulting in the dismissal of all appeals.
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