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TMI Blog2021 (2) TMI 325X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition of interest of ₹ 2 lacs is hereby directed to be deleted. - Decided in favour of assessee. - ITA No. 924/JP/2019 - - - Dated:- 27-1-2021 - Shri Sandeep Gosain, JM And Shri Vikram Singh Yadav, AM For the Assessee : Sh. Manish Agarwal (CA) For the Revenue : Shri Amrish Baidi (CIT) ORDER PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of ld. CIT(A)-4, Jaipur dated 10.05.2019 wherein the assessee has taken the following ground of appeal:- 1. On facts and in the circumstances of the matter the Ld. CIT(A) has erred in upholding the addition of ₹ 25,00,000/- made by ld. AO by alleging the same to be undisclosed advances made by the appellant to M/s Columbus Overseas LLP, over and above the advances shown in the books of the appellant, arbitrarily without considering the explanations/ clarifications adduced by the appellant. Appellant prays such addition confirmed merely on basis of surmises deserves to be deleted. 1.1 That the Ld.CIT(A) has further erred in upholding the said addition solely on the basis of Annexure 'A' of exhibit-4 at page no. 159 seized during search operation, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Against the said findings, the assessee is now in appeal before us. 3. During the course of hearing, the ld. AR submitted that in Ground No. 1 to 1.1, the appellant has challenged the action of ld. CIT(A) in upholding the addition of ₹ 25,00,000/- made by ld. AO by alleging the same to be undisclosed cash loans advanced by the assesse, without bringing any evidence on record and by ignoring the submissions made by the assessee by solely relying on the unfounded observations of ld. AO. 4. It was submitted that the assessee had during both the assessment as well as appellate proceedings placed on record various documents/ evidences to prove that the impugned paper/document was a rough paper on which only memorandum notings were made for the sake of memory and to take control over the amount financed by various family members, apparently for administrative purposes. During the course of assessment proceedings, as explained above, it was submitted that this page contains the details of total amount advanced by various family members, reference of brokers, amount advanced, person to whom advanced and the person who has made the advance and in whose books the same was recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Kuamr Agarwal (HUF) to Shri Ram Enterprises is 25.08.2016 which is presumed as the date of advance by ld. AO whereas the DATE OF SEARCH is 28.07.2016 . The other future dates mentioned on the impugned page are 13/08/16 and 10/08/16. Now presuming these future dates mentioned on the paper as the date on which particular advanced was made in cash, is beyond any comprehension. It only shows that Ld. AO was bent upon in treating such advance to be given in cash out of unaccounted sources and making addition, despite the fact that these advances are from regular banking channel and duly recorded in the returns filed. The irony of arbitrariness of the department could also be seen from the action of AO who not only alleged the said transaction as unrecorded cash advance but had gone one step further and made the additions of the amount stated against such future dates in the hands of respective lenders who are the members of the appellant HUF. 7. It was further submitted that the date 27/07/16 is mentioned against as many as 8 parties and if the hypothesis of the ld. AO is applied to the impugned paper it would lead to conclusion that crores of rupees was advanced by the group to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontention of the assesse is fortified that the dates noted are the dates on which tentative repayment of the loans already advanced was expected or when the rollover of advance or interest is payable. It is further emphasized, that the dates of repayment were only probable dates on which the loans may be repaid by the parties as per prevailing market system of advancing the money. However, generally the repayment of such unsecured loans so advanced is extended on the request of the parties and the interest cycle keeps rolling. 9. It was submitted that application of ld. AO s theory would result in vague interpretation of a page that was nothing but a rough paper prepared for memoranda purpose and all the entries found noted were duly recorded in the books of accounts of respective person. Further, it is nearly impossible by any stretch of imagination to imply that a person might have noted down future dates on which it might advance loan that too in cash through a particular broker and also noted the specific name of the family member as a lender despite the well known fact if any unaccounted cash advances are given then they would be given by the group / family as a whole and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preponderance of probability is applied to weigh the evidences of either side and draw a conclusion in favour of a party which has more favourable factors in his side. The conclusions have to be drawn on the basis of certain admitted facts and materials and not on the basis of presumption of facts that might go against assessee. Once nothing has been proved against the assessee with aid of any direct material especially when various rounds of investigation have been carried out, then nothing can be implicated against the assessee. 13. Reliance was also placed on the decision of the Delhi Bench of the Tribunal in the case of Nestle India Ltd. vs Deputy Commissioner Of Income Tax (2007) 111 TTJ Delhi 498 wherein the Hon ble bench deleted the disallowance made by the AO on the basis of assumptions/ suspicions. 14. It was submitted that it is settled position of law that assessment proceedings under the Act, being quasi-judicial proceedings, the assessment of any particular year must be based not on mere suspicion, bare guess and probabilities but on legitimate material from which reasonable inference of income having been earned/investment made during the accounting year cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per month on the loans alleged as being advanced in cash and further not recorded such interest in the books of accounts. 17. In this regard, it was submitted that the AO further on his own assumptions alleged that the assessee has also earned interest on the same which has not been recorded in the books of account. Since the assessee has charge interest rate @ ₹ 1.25 per hundred per month in respect of the loan advanced through cheque. Hence the interest rate for cash loan would be reasonable at @ ₹ 1.00 per hundred per month considering the fact that cash loan are being advanced at lower rate compare to the rate applied on loan through cheque. Accordingly, the interest for 8 month from 27-07-2016 to 31- 03-2017 is computed at ₹ 2,00,000/- which is added back to the total income of the assessee as undisclosed interest income which has resulted into total addition of ₹ 27,00,000/- (25,00,000/- plus ₹ 2,00,000/-). It was submitted that this ground is consequential in nature as the same is dependent on the addition being made in respect of cash loan of ₹ 25,00,000/- alleged to having being advanced in cash. 18. On merits, it was submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 25,00,000/- which was advance to M/s Columbus Overseas LLP on 14.08.2015. This fact also verified from the perusal of ledger account of the Columbus Overseas LLP wherein the loan of ₹ 25,00,000/- is still outstanding as on 01-12-2017 which is again contrary to the claim of the assessee that date mentioned on impounded paper i.e. 27-07-2016 is tentative date of repayment. It was submitted that the claim of the assessee that the transaction of ₹ 25,00,000/- dated 27-07-2016 is pertains to the tentative date of repayment of loan by M/s Columbus Overseas LLP is contrary to the finding in case of Smt. Pooja Agarwal whose name also mentioned in the aforesaid paper. In the case of Smt. Pooja Agarwal/Garg the date on the aforesaid paper has been mentioned as 25-07-2016 and in the regular books of accounts it is found that the loan was given on 25-07-2016 itself. Further in another case of Shri Chandra Prakash Agarwal the date of loan of ₹ 5,00,000/- and 30,00,000/- advance to Kanha Devi and Prateek Kothari respectively has been mentioned 03-11-2015 and 29-06-2016 respectively and in the regular books of accounts it is found that the loan was given on these dates its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same seized paper relating to Pooja Agarwal and Chandra Prakash Agarwal and found that the dates mentioned in the seized paper reflects the date of advancement of loan and which also matches with the respective assessee s books of accounts and thus, other entries in the said seized paper also relates to advancement of loan and not the date of repayment or tentative date of repayment of loan. The assessee has however submitted that the seized papers contains in total 18 entries and where other entries are also analyzed, it would be clear that a general analogy cannot be drawn that all such entries relates to date of advancement of loan rather each entries need to be look into given its peculiarity and specifics of the transaction. Our reference was drawn to entry dated 13.08.2016 relating to Rajendra Kumar Bardiya, entry dated 25.08.2016 relating to Shri Ram Enterprises and entry dated 10.08.2016 relating to Leading Infrastructure and it was submitted that search was conducted on 28.07.2016 and therefore, date of these entries cannot by any stretch of imagination be taken as date of advancement of loan. Similarly, our reference was drawn to eight other entries relating to vario ..... X X X X Extracts X X X X X X X X Extracts X X X X
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