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TMI Blog2021 (4) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... Ind bank. The said loan taken from Indus Ind Bank was not disclosed to the income-tax department including repayment made towards said loan. Although, additions made by the AO towards unaccounted repayment of loan was deleted by learned CIT(A), but fact remains that documents found during the course of search clearly indicate that said loan was not disclosed to income tax department . Out of the said loan, the assessee has advanced loan to M/s. Standard Press India Pvt. Ltd. and that company has paid interest for four years to the account of the assessee in the financial year 2011-12 relevant to assessment year 2012-13. The assessee has credited interest received from company to the capital account, but was not offered to tax. The Assessing Officer has assessed interest received from said company in the assessment framed u/s.153C r.w.s 153A on the ground that interest received should be assessed to tax on receipt basis irrespective of the period for which said interest pertains to. Additions made towards interest income is having nexus with incriminating material found during the course of search and marked as annexure NRKRC/loose sheets/S/SNo.1(p.79 to 83). But, whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of the learned CIT(A)-19, Chennai dated 18.01.2019 and pertains to assessment year 2012-13. 2. The assessee has raised the following grounds of appeal:- 1. Learned CIT (A) erred in holding that seized document formed a basis for issuing notice u/s 153C and hence 153C notice was validly issued while he himself admits In para 8 of his order that seized document dt.7-6-2011 belongs to Yennarkay R Chiranjeevirathinam, husband of appellant but not to the appellant and hence in the absence of any seized material linking the appellant, issue or notice u/s 153C and addition of ₹ 48,48,821 made towards difference in interest Income not admitted by appellant is incorrect and learned CIT(A) erred In confirming this addition. 2. Without prejudice to the above as held by the CIT (A), entire loan having been wiped out by appellant in AY 11- 12 Itself , interest on loan of ₹ 50 lakhs availed by appellant and transferred to Co. Standard Press India P Ltd., cannot be assessed in AY 12-13 on accrual basis in the hands of the appellant. 3. Without prejudice to the above the Co.Standard Press India P Ltd., having credited the appellant interest for 4 years at one st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome. Therefore, difference of ₹ 47,28,820/- which was not admitted in the return of income filed in relevant year has been treated as income and added back to the total income. 4. Being aggrieved by the assessment order, the assessee preferred an appeal before learned CIT(A). Before learned CIT(A), the assessee has challenged issue of notice u/s.153C read with section 153(A) on the ground that satisfaction as required under law was not recorded by the Assessing Officer before issue of notice and thus, whole assessment proceedings become vitiated and liable to be quashed. The assessee has also challenged additions made towards loan taken from Indus Ind Bank along with estimated interest on the ground that said loan was repaid on or before 31.03.2011 and hence, no addition can be made for the impugned assessment year only on the basis of closure letter issued by the bank. The assessee has also challenged additions made towards interest income on the ground that additions made by the Assessing Officer is not supported by any incriminating material found during the course of search. Therefore, unless there is nexus between incriminating material and escaped income, no addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search, no additions can be made in the concluded assessment. In this regard, he relied on the decision of the Hon'ble Supreme Court in the case of PCIT Vs. Meeta Gutgutia (2018) 257 Taxman 441 (SC) and also the decision of the ITAT., Chennai in the case of DCIT Vs. Shri R.P.Dharmalingam in ITA No.1103/Chny/2018. 8. The learned DR, on the other hand, submitted that there is no merit in the arguments of the learned AR for the assessee that addition made towards interest income is not supported by any incriminating material found as a result of search, because additions made towards interest received from the company is on account of amount advanced to the company out of loan taken from Indus Ind Bank and further, loan taken from Indus Ind Bank was undisclosed to the income-tax department, which is evident from material found during the course of search. Therefore, there is a live nexus between incriminating material found during the course of search and additions made towards interest income and hence, the Assessing Officer was right in bringing to tax interest income on receipt basis and further, such addition is supported by incriminating material found during the cours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on receipt basis irrespective of the period for which said interest pertains to. 10. We have given our thoughtful consideration to the arguments advanced by the learned counsel for the assessee in light of facts brought out by the Assessing Officer and find that additions made towards interest income is having nexus with incriminating material found during the course of search and marked as annexure NRKRC/loose sheets/S/SNo.1(p.79 to 83). But, whether total interest received from the company is related to incriminating material found as a result of search or only interest received towards Indus Ind Bank loan account is related to said document has to be examined. The assessee has filed details of interest received of ₹ 48,48,820/- out of which a sum of ₹ 36,20,263/- pertains to loan taken from SBI and said loan was disclosed in the regular return of income filed by the assessee. Therefore, interest to the extent of ₹ 36,20,263/- is not having any reference to incriminating material found during the course of search. Hence, no addition could be made to interest received towards loan given out of SBI loan. But, insofar as interest received towards Indus Ind Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X
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