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TMI Blog2016 (7) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... pawning business which the Assessing Officer has determined at ₹ 8,24,263/-. We also agree with the Assessing Officer that the income from pawning business can be reinvested in the pawning business in the subsequent year. CIT(A), while deciding the second ground, has reduced the income from interest of the pawning business determined by Assessing Officer at ₹ 8,24,263/- to ₹ 2,55,634/-. However, while considering the availability of funds for investment in the pawning business, he considered the income from interest as determined by the Assessing Officer. In our opinion, when he has reduced the interest income from pawning business, the funds available for investment in the pawning business would be the interest income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the investment in pawning business during the year at ₹ 3,92,506/- and also in holding that this unaccounted investment has been invested out of interest income earned during the year. Whereas, contrary to his own observation, the interest income during the year has been computed at ₹ 2,55,634/-. This observation of the ld.CIT(A) is irrational as the interest income of ₹ 2,55,634/-, in no way defend the investment of ₹ 3,92,506/-. 3. That the judgments relied upon by the ld.CIT(A) are distinguishable. The ratio of the judgment of Hon ble High Court of Madhya Pradesh, in the case of CIT vs. Bajranglal Dwarka Prasad (220 ITR 649) is applicable in this case in which the identical issue has been addressed. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... timated against the pawing of silver/gold ornaments can be unexplained investment and relevant to only assessment year 1992-93. It would not be prudent to infer that total loan amount advanced to 2009 persons and estimated at ₹ 39,25,062/- could be unexplained investment, particularly when it has not been disputed by the AO that the assessee was in the money lending business since last 35 years. It is abundantly clear from the assessment order that the AO did not make any enquiry from any of the person who pledged/mortgaged their ornaments against loan taken from the appellant, despite the fact that a list of 2009 persons with addresses was available with him. This vital inquiry could have been helpful in ascertaining at least the loa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at least look into the background behind the direction of ld.CIT(Appeals) against taxing the entire investment only in one year. It remains an undisputed fact that the unclaimed articles would also not generate any interest income. Thus, the estimation of interest income at ₹ 8,24,263/- by considering the entire investment made in one year and that to as income generating is against the basic business principles of pawning. When the AO has estimated interest income of ₹ 8,24,263/- for the year under appeal (subject to adjudication), it cannot be inferred that the appellant had not been earning any interest income in earlier years. Going by the standard adopted by the AO for estimating interest income at ₹ 8,24,263/- i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was investments made by the assessee; that such investments were not recorded in the books of account maintained by the assessee; and that, such investments had been made in the financial year immediately preceding the assessment year in question. Therefore, the AO has utterly failed to discharge the primary burden that lay on him. At the relevant time when the assessments were made, the block period for search assessment consisted of 10 years and even the provisions of section 149 of the Act provided for reopening of last 10 assessment years. When the appellant had been engaged in the business of pawning for over last 35 years (a fact not denied by the AO), it would not be in any dispute to reasonably infer and spread the unaccounted inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the pawning business cannot be attributable to one year. Thereafter, the CIT(A) did not sustain the addition of ₹ 3,92,506/- also on the ground that it was made out of the income from pawning business which the Assessing Officer has determined at ₹ 8,24,263/-. We also agree with the Assessing Officer that the income from pawning business can be reinvested in the pawning business in the subsequent year. The CIT(A), while deciding the second ground, has reduced the income from interest of the pawning business determined by Assessing Officer at ₹ 8,24,263/- to ₹ 2,55,634/-. However, while considering the availability of funds for investment in the pawning business, he considered the income from interest as determin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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