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TMI Blog2012 (8) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... ash loan paid against the security of cheques. (ii) The CIT(A) has erred in law and on facts in directing to delete the addition of Rs.13,58,921/- made by the Assessing Officer on account of interest accrued on such cash loans paid against security cheques. 4. C.O. No.79/Ahd/2007(A.Y. 2003-04) Effective grounds of C.O. are as under: (Assessment Year 2003-04) (i) As per inventory of seized material total of cheques found is Rs.3,65,15,187/- while material actual total it comes to Rs.3,46,92,919/- this difference is self explained, which CIT(A) erred consider the same. (ii) Learned A.C. of I.T. has erred in law and on facts to add an amount of Rs.1,07,68,632/-(Rs.1,12,68,632-5,00,000/- accepted loan) as income from undisclosed source. Learned CIT(A) has also erred in sustaining addition of Rs.18,22,262/- without any evidence and also Rs.5,00,000/- for the reason that it is as per appellant's confirmation. (iii) Addition made by learned A.C. of I.T. and confirmed by CIT(A) contrary to the Hon'ble CBDT's circular on the issue of confession or disclosure and sustaining such addition by the ld. CIT(A) may be held without jurisdiction. (iv) Learned A.C. has erred in law and on fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... que discounting. The assessee had also given loans against the security of cheques. During the course of search F.D.R. as per annexure E and FD to the Panchanama dated 27th April, 2003 valued Rs.1,25,20,784/- were found. The A.O. had given the reasonable opportunity during the course of assessment proceeding to explain the source of F..Ds. The assessee claimed before the A.O. that these F.Ds were recorded in the books of account. The A.O. noticed that the assessee has introduced cash in his capital account with Savita Enterprises to the extent of Rs.110526115/- on various dates. The introduction of this cash was offered for taxation in original return in A.Y. 2004-05. Besides this, the assessee also offered F.D.R. pertained to A.Y. 2003-04 of Rs.3,70,548/- and Rs.10,85,129/- for A.Y. 2004-05 which was part of disclosure of Rs.2,76,00000/- made in the return of income filed. During the course of search a large number of cheques, undated and post dated, were found valued Rs.3,65,15,181/-. The assessee explained the source of these cheques before the A.O. but same were not tenable to the A.O.. Therefore, he made observation from page 5 to 20 of the assessment order and concluded a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the ld. A.R. submitted the reconciliation which is reproduced as under. I AO WANTED EXPLANATIONS FOR FOLLOWING CHEQUES Annexure Total Amt. Rs. (Para 6,10 of order) Amt. pertain to F.Y. 2002-03 Rs. Amt. Pertain to F.Y. 2003- 04 Rs. Search party Pg. 5 Amt. Rs. D 1,31,93,873 0 1,31,93,873 1,31,87,454 D-1 1,00,45,304 1,00,45,304 0 1,01,38,397 F 12,08,698 0 12,08,698 12,08,698 CQ 95,07,347 6,98,328 88,09,019 16,99,576 CQ-1 73,45,530 5,25,000 68,20,530 73,45,530 CQ-2 24,35,616 0 24,35,616 24,35,616 Sub Total 3,60,15,181 Chq. MM Builders 5,00,000 Total-A 4,37,36,368 1,12,68,632 3,24,67,736 3,65,15,181 II Inventory of cheques prepared by search party Annexure Amt. taken by CIT(A) as per search party Ann.Pg.5 Rs. Correct Amt. Rs. Difference D 1,31,87,454 1,32,09,864 22,410 D-1 1,01,38,307 1,00,45,314 (92,993) F 12,08,698 12,08,698 0 CQ 16,99,576 12,49,395 (4,50,181) CQ-1 73,45,530 65,44,530 (8,01,000) CQ-2 24,35,616 24,35,118 (498) Cha. MM Builders 5,00,000 5,00,000 0 Total-B 3,65,15,181 3,51,92,919 13,22,262 III Discrepancies Annexure Nature of Discrepanci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13,58,921/- on account of interest accrued on such cash loan. The brief facts as mentioned above, the A.O. observed on page nos. 20 & 21 that assessee has admitted interest @ 25% per annum and charge the interest on loan given out. On some cheques the date were not mentioned. Hence, the date of search was taken as the date of cheque for working out the interest. After considering the assessee's reply, he worked out interest for A.Y. 03-04 at Rs. 19,39,486/- and same was added in the income of the assessee. 12. Being aggrieved by the order of the A.O., the assessee filed first appeal before CIT (A)-II, Ahmedabad, who had passed order on 22.12.2006 in para no. 4.2 the CIT(A) reduced the quantum addition from Rs. 1,12,68,832/- to Rs. 23,22,262/-. In para no.5 of CIT(A) order, he directed to the A.O. to calculate interest on Rs. 23,22,262/- and allowed the appeal partially. 13. Now Revenue is before us on this issue, the Revenue as well as assessee filed detailed reply on this issue which is being considered in ground no. 3 for A.Y. 04-05 in subsequent paras. Coming to the assessee's C.O. No.79/Ahd/2007 for A.Y.03- 04. 14. The ground nos. 1 to 4 of C.O. are revolving around ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extent lady members and family members are expected to hold gold ornaments as Stridhan. Thus to the extent of limits stated in Circular there is no reason to consider ornaments as unexplained. This view is supported by various decisions referred to by the appellant which includes decision of ITAT Ahmedabad in thecase of Manial S. Dav. Further appellant's wife has in her books reflected purchase of ornaments of Rs.4,52,542/- which is appreciated by the A.O. also. In view of this position following explanation or ornaments has to be considered: Particulars Grams Value-Rs. Jewellery found 3920.66 17,96,826/- Less: Jewellery to be considered as Explained as per Board Circular 1850.00 9,65,400/- Balance 2070.66 8,31,426/- Less: Jewellery purchased reflected in accounts 870.27 4,52,542/- Difference considered in disclosure 1200.39 3,78,884 In view of the above position the addition made is not justified and is deleted." 17. Aggrieved by the order of ld. CIT(A), revenue is in appeal before us. At the time of hearing the ld. D.R. vehemently supported the order of the A.O. and the ld. Counsel for the assessee, on the other hand, relied on the order of ld. CIT(A) and rei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand, partly relied on the order of theCIT(A) and ITAT decision in ITA No.2656/Ahd/2009 for A.Y. 2006- 07, dated 28th July, 2011 in assessee's own case on addition made on account of notional interest. The Hon'ble ITAT decided as under:- "After hearing both the parties and perusing the record, we find that a search and seizure operation under section 132 of the Act was carried out by the Revenue at the residential and business premises of the assessee. During this search operation assessee made a disclosure of Rs.2.76 crores for the block period from 1998-99 to 2004-05 out of which an amount of Rs.1.41 crores pertained to Asst. Year 2004-05 which is not in dispute. This disclosure made by the assessee has alsobeen accepted by the Revenue and the taxes due have been paid by the assessee. The fact that against the disclosure of Rs.1.41 crores made for Asst. Year 2004-05 the assessee has shown recovery of Rs.51.81 lacs during the year under appeal in respect of the business cheques found during the search and against which loans were admitted to have been advanced to various parties by the assessee has also been accepted by the AO. The only dispute before us that assessee has not sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd also gone through the 'B' Bench decision (supra) in assessee's case for A.Y. 2006-07. The A.O. had not brought on record any evidence to substantiate that the assessee had charged interest on cash loan. There was disclosure on account of cash loan by the assessee at Rs.1.41 crore for the block period. The A.O. has presumed date for calculation of interest as date of search. It appears that there was no noting on seized material about charging of interest and no evidence had been gathered by the A.O. from the loanee. In absence of any conclusive evidence, the addition cannot be sustained. The A.O. made addition on conjuncture and surmises. Therefore, Revenue's appeals in A.Y. 03-04 & 04-05 on this issue, are dismissed. Now we take up assessee's appeal ITA No. 868/Ahd/2007 for A.Y.2004-05. 24. The first ground of the assessee was addition of Rs.7 lakhs unaccounted cash. The A.O. observed that during the course of search total cash of Rs.19,71,700/- was found out of this Rs.1650000/- was seized. The assessee admitted u/s 132(4) of the I.T. Act that Rs.7 lakhs was unaccounted. Accordingly, the A.O. made addition of Rs.7 lakhs in the income of the assessee. 25. Being aggrieved by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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