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TMI Blog2014 (2) TMI 885X X X X Extracts X X X X X X X X Extracts X X X X ..... general in nature. Ground No.3 Is pertaining to Cash credit. Ground No. 4 is pertaining to disallowance of transport expenditure. Ground No. 5 is disallowance of interest and Ground No. 6 is charging of interest u/s 234B & 234C of the Act, which is consequential in nature. 3. As regards ground No. 3 pertaining to cash credit, the AO noticed that during the previous year relevant to AY, Assessee had claimed receipt of unsecured loan of Rs. 6,85,000/- from one Sri D. Uma Maheswararao. In support of such loan, Assessee had filed a confirmation letter from the said person, wherein it was stated that he had given an amount of Rs. 6,85,000/- to Assessee through cheque dated 26-10-2006. In that letter, though the said person had stated about work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticulars of the organization in which he was working and also the details of salary etc., earned by him, furnished in that confirmation letter, it cannot be accepted that he has actually advanced such amount out of his earnings abroad, during the previous year. In fact, the said person has failed to establish such unsecured loan, claimed to have been given to Assessee. F8urther, the appellant has also failed to establish genuineness of such transaction for an amount of Rs. 6,85,000/-. Under these circumstances, and having regard to the reasons stated by the AO in para 3 of the assessment order, the said addition made by him towards unexplained credit u/s 68 of the Act, in this case is justified. Hence, such addition of Rs. 6,85,000/- is co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowed 10% of such amount i.e. at Rs. 2,91,503/- and added the same to the income of Assessee. 9. Before the CIT(A), the AR of Assessee submitted that Assessee is required to transport rice, the raw material, to his premises, therefore, he needs about 60-70 lorry loads of rice during the process of business activity. It was stated that the transportation charges were paid, based on prevailing market conditions. Stating that such claim made by Assessee is reasonable and his books of account were duly audited, the learned AR contended that the AO was not justified in making the such disallowance. After considering the submissions of Assessee, the CIT(A) restricted the addition to Rs. 1,50,000/- by observing as under: "5.2 I have duly co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble. The CIT(A) restricted the disallowance to Rs. 1,50,000/- on the ground that the disallowance made by the AO is on higher side. As seen from the order of AO there is unaccounted turnover in the case of asessee unearthed in the search. Consequent to that asessee admitted the turnover and aggreed for addition on GP, which the AO accepted. Once addition was made on the basis of GP disallowance of various expenditures should not arise. Therefore, the addition of Rs. 1,50,000/- sustained by CIT(A) is hereby deleted. This ground is allowed. 11. Ground No. 5 is as follows: "The learned CIT(A) erred in confirming the action of the AO in taxing the entire interest from the partnership firm M/s SR Constructions of Rs. 17,07,124/- when the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel placed on record the decision of coordinate bench in the case of G. Venkat Rao and G. Madhava Rao in ITA No. 1075 & 1076/Hyd/2011, order dated 10-07-2012 where on similar set facts additions have been made as interest income received from the firms and the coordinate bench decided as under: "8. With respect to the addition of Rs. 6,06,332/-, the assessee submitted a copy of the return of income for the assessment year 2008-09. The learned counsel for the assessee submitted that there is income for the year under consideration and the profit & loss account does not debit any interest paid to the partners. Even the capital account does not have any credit under the head 'interest'. Interest paid to partners, which has been disallowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee is on higher side. Further stating that such expenditure which was mostly incurred in cash, were not verifiable, he disallowed 10% of such amount i.e. Rs. 5,49,954/- and thus, added the said amount to returned income of Assessee. The CIT(A) restricted the disallowance to Rs. 4,00,000/-. 18. We have considered the issue. Similar issue has been decided by us in AY 2007-08 vide paras 8 to 10 (supra). Following conclusions drawn therein, we set aside the order of CIT(A) and delete the addition sustained by CIT(A) on this count. This ground is allowed. 19. As regards Grounds No. 3 & 4 pertaining to the interest, the AO noted that as per the seized document vide Annexure A/BNR/04, Assessee was paid interest of Rs. 11,19,196/- on his capit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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