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TMI Blog1979 (7) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... The learned AAC agreed that the net profit rate of 15 per cent applied by the ITO was quite correct. 6. The assessee is alleged to have borrowed some funds for carrying out the contract work. On such loans, interest of Rs. 10,914 was paid. The assessee claimed this payment of interest. The authorities below disallowed the claim because in the case of the assessee, net profit rate was allowed. 7. Before the Tribunal, the first contention of the assessee's counsel was that the building material amounting to Rs. 1,95,982 was supplied by the Department at fixed rates in view of cl. 33 of the contract agreement. On such supplies, there could be no profit to the assessee. Even the control over such material remained with the Department. Thus, it was submitted that while applying net profit rate, the cost of the building material should be excluded from the total receipts. Reliance was placed on the decision of the Hon'ble Supreme Court in the case of Brij Bhushanlal Parduman Kumar etc. vs. CIT, Haryana, Himachal Pradesh and New Delhi-III (1978) 115 ITR 524. 8. The learned Departmental Representative supported the order of AAC. 9. We have heard the parties and perused the entire e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall calculate the net profit accordingly. 13. The other contention of the learned counsel for the assessee was that the assessee had to borrow loans from third parties for carrying out the contract. Such loans were held to be genuine. The assessee had to make payment of interest of Rs. 10,940. So, this payment of interest should be allowed. 14. The learned Departmental Representative contended that in the present case, net profit has been applied, and as such, the payment of interest may, not be allowed separately. 15. In our opinion, the contention of the assessee could hardly be accepted. The loans in question were borrowed for the purpose of carrying on the business. After considering all such facts, and the past history, the Department applied net profit rate. The Tribunal also applied net profit rate. Under the circumstances, separate claim for payment of interest of Rs. 10,914 could not be allowed. Accordingly, this claim is disallowed. 16. The other contention of the learned counsel for the assessee was that the authorities below were wrong in coming to the conclusion that the cash credit of Rs. 10,000 in the name of Shri Kundanlal was not genuine, from the books o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t he did not advance the sum of Rs. 10,000. According to the learned counsel, if the entire facts and circumstances are taken into consideration in their entirety, it would be clear that the cash credit of Rs. 10,000 was genuine. The learned counsel also relied on the written note submitted before the Tribunal. 18. According to the ld. Departmental Representative, it was for the assessee to show that the cash credit of Rs. 10,000 in the name of Shri Kundanlal is genuine. Shri Kundanlal himself stated that he did not advance the loan. There is no other evidence on record to establish the genuineness of the loan. Under the circumstances, the ld. AAC was quite correct in holding that the cash credit of Rs. 10,000 was not genuine. 19. We have heard the parties and perused the entire evidence on record. Normally, when a creditor denies to have advanced loan, it is presumed that the cash credit is not genuine. But, the facts of this case are quite strange. While appreciating the statement of Shri Kundanlal, the entire facts will have to be appreciated. The copy of the statement of Shri Kundanlal is on the paper book. From his statement, it is clear that he used to have sufficient cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the outstanding balance in the account of Nebhandas and Sons on 11th Dec., 1970 further balance was Rs. 5,000 for which a cheque of Rs. 5,000 received on 10th June, 1971 but the same was not encashed and this amount is still outstanding along with interest for 15 months at Rs. 1,125 and this amount of interest was duly offered by him in his assessment for asst. yr. 1972-73 for which hearing was fixed on 31st Dec., 1971. Thus, on the basis of these facts, there can be no manner of doubt about the so-called credit of Rs. 10,000 appearing in the books of appellant this year in the name of Shri Kundanlal and accordingly, it is held that this credit has remained unexplained and hence they were rightly added to the assessable income of the appellant in terms of s. 68 of the Act." Thus, the learned AAC concluded that the payment of Rs. 3,382 paid by the assessee was given to Shri Devi Dayal against his sum of Rs. 5,000. This conclusion is not correct. The cheque was received by Shri Kundanlal on 28th Dec., 1971. The payment was received by him on 1st Jan., 1972. This conclusion of the learned AAC is not supported by the statement of Shri Kundanlal. Shri Kundanlal stated that the su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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