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TMI Blog2020 (11) TMI 927X X X X Extracts X X X X X X X X Extracts X X X X ..... e case. With regard to the loans from four people, while the ld. DR argued that even the copy of the bank statement has not been furnished by the assessee thus failing to discharge the primary onus in the case of the loans received from various parties, we find from the paper book, the relevant documents proving identity, genuineness and creditworthiness of the loaners. All the bank statements of the loan parties have been duly submitted before the AO. The revenue has not disputed the presence of the primary documents before the ld. CIT(A) at this juncture. Hence, it can be held that the assessee has discharged the primary onus to prove the loans whereas the revenue has not acted upon such evidences filed by the assessee to bring anything contra. The addition has been made without conducting any enquiry on the grounds that the assessee has not filed the primary documents necessary to prove the genuineness of the loans, the observation of which, we find contrary to the facts on record. Hence, the addition made on account of the loans from the above parties is directed to be deleted. Disallowance of Interest - AO held that the assessee has advanced to various parties and n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny primary, secondary or corroborative evidences, no addition can be made based on the impounded document. The revenue could not even prove with certainty to whom the document belongs nor tested the hand writing on the document either by the way of statement or by the way of forensics. Hence, keeping in view the entire gamut of events peculiar to the facts of this case, we hereby hold that no addition is warranted in the hands of the assessee for the instant year. Estimation of GP - Having heard the arguments and keeping in view the market averages, the GP is reduced to 25% from 35% on the sale of scrap and from 15% to 10% on the sale of other electronic goods. The AO is hereby directed to re-compute the taxable income taking into consideration the revised GP rate. - ITA No. 2448/Del/2017, CO No. 146/Del/2017 - - - Dated:- 10-8-2020 - Ms. Sushma Chowla, Vice President And Dr. B. R. R. Kumar, Accountant Member For the Assessee : Sh. Gautam Jain, Adv. For the Revenue : Sh. Jagdish Singh Dahiya, Sr. DRn ORDER DR. B.R.R. KUMAR, MEMBER (A) 1. The present appeal has been filed by the revenue against the order of the ld. CIT(A), Hisar dated 24.01.2017. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an income at ₹ 2,41,147 on 12.09.2012, which was processed u/s. 143(1) of the Income Tax Act, 1961. Later on, the case was selected for scrutiny through CASS. A survey u/s. 133A of the Act was carried out at the business premises of the assessee on 02.09.2014. The impounded material has been duly examined while completing the assessment proceedings. The AO has brought to tax, the alleged unexplained investments based on the impounded material. The ld. CIT(A) has deleted the addition which were based on such material on the grounds that no separate addition is warranted when the profits of the assessee are estimated taken into consideration the gross profit of the year. Aggrieved the revenue filed appeal before the Tribunal and the assessee has filed Cross Objection. 5. Ground No. 1: Investment from Undisclosed Source - Comprehensive, dealt in detail in other grounds. Ground No. 2: Unsecured Loans 6. The AO observed that the assessee has received the following loans during the year: S. No. Name of the Party Amount brought to tax as income Principal Interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s have duly confirmed the transactions no adverse reference can be drawn. In addition, the ld. AR relied on the following judgments: Addl. CIT vs Hanuman Agarwal 151 ITR 150 (Pat) Mather Platt (India) Ltd. vs CIT 168 ITR 493 (Cal) Addl. CIT Bihar vs Bahri Bros P. Ltd. 154 ITR 244 (Pat) Nemi Chand Kothari vs. CIT 136 Taxman 213 (Gau) Labh Chand Bohra vs. ITO 219 CTR 571 (Raj) 12. Heard the arguments of both the parties and perused the material available on record. We find that the decision of the ld. CIT(A), that no separate addition on account of unsecured loans is warranted as the income of the assessee has been estimated for the year is found to be on incorrect interpretation of the ratio laid down by the Hon'ble Courts. The ld. CIT(A) misread the judgments and combined, transplanted, bamboozled herself in considering the items of P L account with that of balance sheet items interchangeable. The case laws referred pertains to purchases, disallowances u/s. 40A(3) and on account of expenses on trading account. Extrapolation of judgments rendered in connection with the items of trading account cannot be extended to the addition of unsecured loa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in respect of interest paid on secured loan received from the bank as the entire borrowed money stood represented by stock at the close of the year and therefore, disallowance made to this extent was absolutely untenable and there can be no ground for diversion of money raised from the bank for non business purposes. It was argued that the disallowance was made on assumption that advances have been made by the assessee for non business purposes and therefore, interest claimed as business expenditure has been disallowed on presumptive basis is absolutely uncalled for and therefore, untenable. It was submitted that as regards interest paid on unsecured loan of ₹ 5,84,432/-, the submission of the assessee was that such interest has been paid on unsecured loans aggregating to ₹ 63,51,020/- from 25 parties. It was submitted that the aforesaid loan raised stood invested in the form of stock and advances paid to the suppliers and sundry creditors and hence, no disallowance was called for. It was submitted that out of the aforesaid loans of ₹ 63,51,020/- loan aggregating to ₹ 52,51,020/- had been raised in the earlier years and a respect of which, interest has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 90,23,720/-. It was argued that an amount of ₹ 65,23,720/- has been shown in the balance sheet of the assessee under the head loans and advances for the assessment year 2012-13. There is no dispute that this is a financial transaction involving receipt of money either on cash basis or mercantile basis. 20. Heard. Since, the advance of ₹ 65,23,720/- has been duly reflected in the balance sheet, no addition on this account is required. That leaves us with the question whether the interest accrued on this amount can be brought to tax or not. We find that the assessee has been following mercantile system of accounting and the fact of advance given to M/s. S.K. Traders is not in dispute. Hence, in tune with the accounting procedure and as per the impounded document, the interest @3% per annum stands accrued to the assessee on the advance of ₹ 65,23,720/- which the assessee omitted to show as interest receipt. Hence, we confirm interest @ 3% on the principle amount of ₹ 65,23,720/-. The principle amount of ₹ 65,23,720/- stands reflected in the name of M/s. S.K. Traders, in the regular books of accounts of the assessee, hence, we hold that no addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paper and the AO has mislead himself to treat one side of entries as the unexplained investment of the assessee. He was also argued that the document do not belong to the assessee hence no addition in the hands of the assessee is warranted. 23. On the other hand, the ld. DR argued that the regular flow of the accounts and the exactness of the figures will reveal that this is not a dumb document and that this document is a custodian of the business transactions and the investments of the assessee. It was argued that the onus is on the assessee to prove that the document which was found at the premises of the assessee doesn't belong to them. It was argued that the noting of Rohtak Road jagah on the document proves the investment at Rohtak Road. Regarding the other entries, he argued that they also pertain to the purchase of property and the payments made on different dates for acquisition of such property. He argued that the addition has been rightly made hence needs to be confirmed. 24. Heard the arguments of both the parties and perused the material available on record. 25. We find that the amount of ₹ 55,72,043/- being the transactions on both sides of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he most could be a comprehensive sheet containing the transactions of the assessee over a period of three years. In such circumstances, the revenue has to brought on record, the sum and substance of such transactions mentioned on the document. We have specifically asked the revenue as to the statement recorded on the date of survey and the reply of the assessee pertaining to these transactions on the date of survey. We find no mention of statement recorded at the time of survey either on the assessment order or in the order of the ld. CIT(A). No statement recorded at the time of the survey has been produced even before us as to what the transactions pertain to. No enquiries have been conducted by the revenue to substantiate to unexplained investments. The figures pertaining to three different years cannot be brought to taxation without proving as to what type of transactions the document signifies. Hence, in the absence of any primary, secondary or corroborative evidences, no addition can be made based on the impounded document. The revenue could not even prove with certainty to whom the document belongs nor tested the hand writing on the document either by the way of stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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