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TMI Blog2015 (7) TMI 761X X X X Extracts X X X X X X X X Extracts X X X X ..... objection, we heard both together and disposing of the same by this common order. 2. Sh. P. Radhakrishnan, the Ld. Departmental Representative, submitted that the first issue arises for consideration is with regard to disallowance of proportionate interest on the funds diverted for non-business purpose. The Ld. D.R. submitted that the Assessing Officer found that the assessee has diverted the borrowed funds for non-business purpose by making interest-free deposits to various persons. According to the Ld. D.R., the interest payment was calculated @ 16% in respect of the funds which were diverted. The CIT(Appeals), however, restricted the disallowance to Rs. 62,315/- instead of Rs. 7,56,800/-. According to the Ld. D.R., the CIT(Appeals) ough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the funds available with him, then there is no question of disallowance. The availability of funds to the extent of Rs. 15,27,009/- including the current year's profit of Rs. 3,85,910/- is not in dispute. The opening balance as on 1.4.2006 was Rs. 11,40,100/-. Therefore, the CIT(Appeals) found that to the extent of Rs. 11,40,100/-, there is no question of making any disallowance. In respect of the remaining portion, the CIT(Appeals) found that the interest has to be charged only at 11.5% when the assessee is paying interest at 11.5% on the borrowed funds. This Tribunal is of the considered opinion that the interest has to be considered only at 11.5% and not at 16%. Therefore, the CIT(Appeals) has rightly restricted at Rs. 62,315/-. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the details of account payee demand draft were not produced before the Assessing Officer. The assessee has produced additional evidence before the CIT(Appeals) and therefore, the Assessing Officer had no occasion to consider the same. Therefore, there was a clear violation of Rule 46A of Income-tax Rules, 1962. 7. On the contrary, Shri V. Jagadisan, the Ld. representative for the assessee, submitted that the assessee is a partner in M/s Spectrum Maruthi Spares. In fact, M/s Khanna Brothers and M/s Khanna & Co. gave Rs. 25,000/- each to the assessee. However, this cheque was issued in the name of M/s Spectrum Maruthi Spares. The assessee being one of the partners of the firm, the CIT(Appeals) found that the genuineness of the receipt wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has received the funds through account payee demand draft. The only contention of the Ld. D.R. is that the details were produced before the CIT(Appeals). However, he has not taken any specific ground with regard to violation of Rule 46A. The fact remains that the Assessing Officer made an addition of Rs. 2,00,000/- and the CIT(Appeals) found that the payment was made through DD and therefore, there is no question of any addition. In those circumstances, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly, the same is confirmed. 10. Now coming to the addition of Rs. 8,50,000/-, the Ld. D.R. submitted that the assessee has not admitted in the return of income the expenditure of Rs. 8, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve considered the rival submissions on either side and perused the relevant material on record. It is not in dispute that the Tribunal has fixed unaccounted sales at Rs. 28,00,369/- in the case of M/s Spectrum Maruthi Spares. If that is true, the assessee is entitled for Rs. 14,00,185/-. Therefore, the CIT(Appeals) has rightly allowed the claim of the assessee. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly, the same is confirmed. 13. In the result, the appeal of the Revenue is dismissed. 14. In view of the above discussion, this Tribunal do not find any merit in the cross-objection filed by the assessee. Accordingly, the cross-objection also stands dismissed. Order pronounced on 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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