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TMI Blog2019 (4) TMI 1054X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee did not match with the records maintained by the Revenue authorities. Since the Ld.Revenue Authorities had not conducted proper enquiries on that regard and had simply brushed aside the documents produced by the assessee, we do not find any merit in the stand of the Ld.Revenue Authorities. Therefore we are of the considered view that the addition made by the Ld.Revenue Authorities for ₹ 4,00,000/- towards the business income of the assessee is not warranted. Penalty u/s 271F - AO rejected the reply filed by the assessee in lieu of the notice issued U/s.142(1) that she had filed the return of income belatedly by admitting income claiming an amount as refund - HELD THAT:- Revenue Authorities has also not verified the claim of the assessee that she had claimed an amount of ₹ 65,719/- as refund. Therefore we are of the considered view that the penalty levied by the Ld.AO invoking the provisions of Section 271F of the Act is not warranted because it is not conclusively proved that the assessee has not filed her return of income. Hence we hereby direct the Ld.AO to delete the penalty levied Addition by estimating the accrued interest on sundry debtors - HE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Commissioner of Income Tax (Appeals)-19, Chennai, dated 28.11.2014 in ITA Nos.326/06-07, 126/11-12 for the assessment years 2004-05 2009-10 passed U/s.250(6) r.w.s. 143(3) of the Act and order of the learned Commissioner of Income Tax(A)(C)-II dated 28.11.2014 in ITA No.22/10-11 for the assessment year 2007-08 passed U/s.250(6) r.w.s. 271F of the Act and common order dated 31.03.2014 in ITA No.66/08-09, 178/09-10 271/10-11 for the assessment years 2006-07 2008-09 passed U/s.250(6) r.w.s. 143(3) of the Act and U/s.250(6) r.w.s. 144 of the Act for the assessment year 2007-08 and order dated 30.09.2014 in ITA No. 13/13-14 for the assessment year 2010-11, passed U/s.250(6) r.w.s. 143(3) of the Act. 2. ITA Nos.226 228/Chny/2015 for the Assessment years 2004-05 2009-10:- The assessee has raised several grounds in her appeal however the crux of the issue is that the Ld.CIT(A) has erroneously upheld the order of Ld.AO who had made addition towards interest earned on pro-notes amounting to ₹ 1,75,200/- ₹ 17,52,000/- for the assessment years 2004-05 2009-10 respectively, interest earned on the advances recorded in the computer of the assessee amounting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Since this Bench of the Tribunal vide order dated 20.03.2019 in ITA No.17/Chny/2014 for the block assessment years 1997-98 to 2002-03 and part of 2003-04 had deleted the addition made on the hands of the assessee towards pro-notes found during the course of search in the premises of the assessee amounting to ₹ 73,00,000/-, the addition made by the Ld.Revenue Authorities by estimating the interest earned on the same do not have any legs to stand. Therefore we hereby direct the Ld.AO to delete the addition made in the hands of the assessee towards interest earned on the advances with respect to the pro-notes amounting to ₹ 1,75,200/- for the assessment year 2004-05 and ₹ 17,52,000/- for the assessment year 2009-10. 2.3 The Ld.AO had made addition towards interest presumed to have been earned by the assessee from the advances recorded in the computer of the assessee which was retrieved during the course of the search though the assessee had claimed that no such advances was extended. The Ld.AO had made such addition of ₹ 9,99,600/- by computing the interest @ 24% on the advances aggregating to ₹ 41,65,000/- for each of the assessment year 2004-05 and 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red in confirming the order of the Ld.AO with respect to the following additions:- Particulars A.Y. 2006-07 Rs. A.Y. 2007-08 Rs. A.Y. 2008-09 Rs. Interest on pro-notes 17,52,000 17,52,000 17,52,000 Interest on advances recorded in computer 9,99,600 9,99,600 9,99,600 Interest on investments in bonds kisan vikas patras 3,600 3,600 3,600 Unexplained cash credit 2,27,000 - - Estimation of business income - 4,00,000 - TOTAL 29,82,200 31,55,200 27,55,200 3.1 Since the facts with respect to the issues of addition made towards interest on pro-notes amounting to ₹ 17,52,000/-, interest on advances amounting to ₹ 9,99,600/-, interest on investment in bonds, kisan vikas patras amounting to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue authorities. Since the Ld.Revenue Authorities had not conducted proper enquiries on that regard and had simply brushed aside the documents produced by the assessee, we do not find any merit in the stand of the Ld.Revenue Authorities. Therefore we are of the considered view that the addition made by the Ld.Revenue Authorities for ₹ 4,00,000/- towards the business income of the assessee is not warranted. Accordingly we hereby direct the Ld.AO to delete the addition made for ₹ 4,00,000/- for the assessment year 2007-08, however treat the amount of ₹ 2,54,470/- as the business income being the admitted amount in the return of income file by the assessee. 4. ITA No.227/Chny/2015, Assessment year 2007-08:- The only ground raised by the assessee in this appeal is that the Ld.CIT(A) has erred in upholding the order of the Ld.AO who had levied penalty of ₹ 5,000/- invoking the provision of Section 271F of the Act. 4.1 Since the assessee did not file her return of income for the assessment year 2007-08 in spite of notice issued U/s.142(1) of the Act on 19.09.2008 and 20.07.2009, the Ld.AO invoked the penal provisions of Section 271F of the Act and le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17,52,000/-, interest on advances amounting to ₹ 9,99,600/- interest on investment in bonds kisan vikas patras amounting to ₹ 3,600/- for the assessment years 2010-11 stands deleted. It is ordered accordingly. 5.2 During the course of scrutiny assessment proceedings, it was observed by the Ld.AO that the assessee had disclosed sundry debtors amounting to ₹ 2,66,60,775/-. Since the assessee had not disclosed interest income from the above sundry debtors and since the assessee was in money lending business, the Ld.AO estimated the accrued interest on the above amount of ₹ 2,66,60,775/- @ 12% per annum which works out to ₹ 31,99,293/- and added to the income of the assessee. 5.2.1 Before the Ld.CIT(A) the Ld.AR had explained that the nature of the business of the assessee is film financing wherein interest is realized only at the time of release of the movies and therefore the assessee has maintained her books in cash system of accounting. It was therefore pleaded that during the relevant assessment year the assessee had not received any interest income and hence the accrued interest was not treated as income. The Ld.CIT(A) rejected the submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.3.1 At the outset we do not find any merit in the orders of the Ld.Revenue Authorities because from the facts of the case there is nothing on record to suggest that the assessee had incurred any expenditure for earning exempt income because no such expenditure appears to be debited to the P L account of the assessee. The assessee is an individual and it appears that she has made the investment based on her own decision without any external or internal aid and from her own interest free funds. In such situation no expenditure could be attributed for making such investment. Moreover there is nothing on record to suggest that the assessee have claimed any expenditure as deduction. When the assessee has not claimed any expenditure there could not have be any expenditure that is attributable towards earning exempt income. Hence the decision of the Hon. Apex Court relied by the Ld.CIT(A) is not applicable to the case of the assessee. Therefore we are of the considered view that no disallowance can be made U/s.14A of the Act or by invoking Rule 8D of the Rules in the case of the assessee. Hence we hereby direct the Ld.AO to delete the addition made for ₹ 92,483/- made in the ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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