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TMI Blog2022 (5) TMI 898X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee in respect of interest free loans taken from 85 farmers, however, did not admit the additional evidence so produced by the assessee under Rule 46A. We deem it appropriate to remand this issue to the Assessing Officer for de novo adjudication after appropriate examination of Shri Nandaram Chavan and after consideration of all the documents as may be filed by the assessee, including the additional evidence filed before the learned CIT(A). The Assessing Officer shall have the liberty to call any person/document for examination, as may be required for complete verification of all facts and adjudication of this issue. Accordingly, issue No. 1 raised in assessee s appeal is partly allowed for statistical purpose. Disallowance of interest claimed under section 24 - assessee availed loan which will be utilised by him for the purpose of developing and renovating the property to be leased out - CIT(A) upheld the disallowance of deduction under section 24(b) of the Act claimed by the assessee in the absence of any documentary evidence to substantiate the claim of major repairs in the aforesaid 5 shops before giving the same on rent - HELD THAT:- In the present case, though th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the learned A.O. Issue no.2 - Interest paid to Vijaya Bank and Claim under section 24(b) under income from let out property." 3. The assessee is an individual and is engaged in the business of retail in books. For the year under consideration, assessee filed his return of income on 03/01/2012 declaring total income of Rs. 78,967. The assessee has shown business income, income from house property and income from other sources. 4. The first issue arising in present appeal is with regard to addition made by the Assessing Officer under section 68 of the Act in respect of cash deposits made by the assessee. 5. The brief facts of the case pertaining to this issue, as emanating from the record are: During the course of assessment proceedings, it was observed from the details on record that assessee has deposited cash of Rs. 34 lakhs in his Dattatray Maharaj Kalambe Sahkari Bank Account and cash of Rs. 15 lakhs in his Deccan Merchant Cooperative Bank Account. The assessee was asked to explain the source of the above cash deposited in his bank accounts. In response, assessee submitted that all the cash deposited in the saving accounts was withdrawn from business loan accounts held w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been utilised by Shri Nandaram Chavan for his personal/business purposes. Further, in respect of other cash deposits also, learned CIT(A) did not agree with the submission of the assessee. In respect of the assessee's submission that each cash loans up to Rs. 20,000 were obtained from 85 farmers was also not accepted by the learned CIT(A). In this regard, the learned CIT(A) noted that these farmers have not given any loan to anybody except to the assessee and all these loan creditors have savings of only to the extent of loans given to the assessee, and no interest has been paid or demanded by these loan creditor farmers. As a result, the learned CIT(A) upheld the addition made under section 68 of the Act. Being aggrieved, the assessee is in appeal before us. 7. During the course of hearing, Shri B.N. Rao, learned Authorised Representative ("learned AR") submitted that the assessee has declared its income from business under section 44AD of the Act as per presumptive taxation and accordingly, offered to taxation 8% of revenue of Rs. 15,45,000 i.e. Rs. 1,23,600 as income under section 44 AD of the Act. The learned AR further submitted that under presumptive taxation, as per section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellate proceedings before the learned CIT(A), in reply to documents filed by the assessee, the Assessing Officer filed detailed remand report. The Assessing Officer submitted that the cash was not withdrawn by the assessee himself but the same was withdrawn by one Shri Nandaram Chavan against bearer cheque on more than one occasions. The Assessing Officer, in the remand report, further pointed out various other discrepancies in the statement of the assessee vis-à-vis the information obtained from the society/bank from where the assessee alleged to have withdrawn the cash. The Assessing Officer also submitted that arranging and submission of loan confirmations for each cash loans up to Rs. 20,000 from 85 farmers and preparation and submission of cash book summary is also a mere afterthought of the assessee. The Assessing Officer further noted that 5 loan creditors whose statement on oath was recorded under section 131 of the Act gave a common reply that they have not given any loan to anybody except to the assessee and that same was only loan given by them during the last 4 to 5 years. In reply to the remand report, the assessee submitted that Shri Nandaram Chavan was his r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nate Bench of the Tribunal in Mehul V Vyas (supra). In the aforesaid decision, the Co-ordinate Bench of the Tribunal, while deleting the addition made under section 68 of the Act in respect of cash deposits in the bank account, observed as under: "8. We have heard the ld. Authorized representatives of both the parties, perused the orders of the lower authorities as well as the material produced before us. We will first deal with the objection raised by the ld. A.R as regards the addition of Rs.10,53,000/- which was made by the A.O under Section 68 of the 'Act', in respect of the cash deposit in the bank account of the assessee. We find substantial force in the contention of the ld. A.R that an addition under Section 68 can only be made where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee either offers no explanation about the nature and source as regards the same, or the explanation offered by him in the opinion of the Assessing Officer is not found to be satisfactory. That before adverting further, we herein reproduce the relevant extract of the aforesaid statutory provision, viz. Section 68, which reads as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of Bhaichand N. Gandhi (surpa) wherein the Hon'ble High Court has held as under: - "As the Tribunal has pointed out, it is fairly well settled that when moneys are deposited in a bank, the relationship that is constituted between the banker and the customer is one of debtor and creditor and not of trustee and beneficiary. Applying this principle, the pass book supplied by the bank to its constituent is only a copy of the constituent's account in the books maintained by the bank. It is not as if the pass book is maintained by the bank as the agent of the constituent, nor can it be said that the pass book is maintained by the bank under the instructions of the constituent. In view of this, the Tribunal was, with respect, justified in holding that the pass book supplied by the bank to the assessee in the present case could not be regarded as a book of the assessee, that is, a book maintained by the assessee or under his instructions. In our view, the Tribunal was justified in the conclusions at which it arrived." We find that the aforesaid view of the Hon'ble jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition of law, we are of the considered view that the addition made by the A.O in respect of the cash deposit of Rs.10,53,000/-(supra) in the bank account of the assessee by invoking Section 68 has to fail for the very reason that as per the judgment of the Hon'ble Bombay High Court in the case of Bhaichand N. Gandhi (supra), a bank pass book or bank statement cannot be considered to be a 'book' maintained by the assessee for any previous year, as understood for the purpose of Section 68 of the Act. Therefore, on this count itself the impugned addition Rs.10,53,000/- deserves to be deleted. 9. Even otherwise, we find that the explanation rendered by the assessee in respect of the nature and source of the cash deposit of Rs.10,53,000/- (supra) in her bank account has been disbelieved by the lower authorities without establishing any credible infirmity or fallacy in the substantial material which was made available on record by the assessee. We are of the considered view that the assessee had not only put forth an explanation in respect of the nature and source of the cash deposit of Rs.10,53,000/- (supra) in her bank account, but rather it remains as a matter of fact t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch credits may be charged to tax as income of the assessee for that particular previous year. It is to be noted here in this case that huge amounts have been credited in the account of the Appellant and he has not explained the nature of the same. The source of the said amount has been discovered by the Assessing Officer from Bank Pass Book. It is to be noted that when the source and nature has been held to have been explained, the said amount has been deleted by the appellate forums. Now the dispute has remained in respect of amount of Rs.9,00,000/- from M/s. Pooja Corporation, Rs.7,00,000/- from M/s. Pooja Enterprises, Rs.24,00,000/- from Shri. Ashok Mehta, Rs.18,00,000/- from Mr. Ajay Shah. No document was produced in respect of these transactions nor the amounts have been confirmed from those persons, who are shown to have lent them. The authorities below have therefore, rightly held that nature of the transaction has not been properly shown by the Appellant." (emphasis supplied) 14. The decision rendered in Arunkumar J. Muchhala (supra) is not only subsequent to the decision rendered by Co-ordinate Bench of the Tribunal in Mehul V Vyas (supra), the said decision is even rende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer for de novo adjudication after appropriate examination of Shri Nandaram Chavan and after consideration of all the documents as may be filed by the assessee, including the additional evidence filed before the learned CIT(A). The Assessing Officer shall have the liberty to call any person/document for examination, as may be required for complete verification of all facts and adjudication of this issue. Accordingly, issue No. 1 raised in assessee's appeal is partly allowed for statistical purpose. 17. The next issue arising in assessee's appeal is with regard to disallowance of interest of Rs. 5,51,376 claimed under section 24 of the Act. 18. The brief facts of the case pertaining to this issue, as emanating from the record are: The assessee owns premises being shop No. 1, 2, 3, 4 and 5 in the building known as Akshar HCS Ltd. situated at plot No. 64, sector 21, Khargar, Navi Mumbai. The assessee took loan from Vijaya Bank towards improving the asset and thereby gave the property to Aditya Birla Retail Limited on rentals and earned rental income of Rs. 7,87,680. The interest paid on such loan at Rs. 6,87,909 was claimed to the extent of income available under head "Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount incurred is towards the improvement of the premises, which fetched the rent of Rs. 7,87,680. 21. On the other hand, learned DR vehemently relied upon the orders passed by the lower authorities. 22. We have considered the rival submissions and perused the material available on record. In the present case, the assessee availed loan of Rs. 52 lakhs from Vijaya Bank. As per the certificate dated 06/01/2015 by Vijaya Bank, the assessee had given a declaration that the said loan will be utilised by him for the purpose of developing and renovating the property to be leased out. In the present case, it is not in dispute that the assessee has given 5 shops on rent to Aditya Birla Retail Limited and earned rental income. It is also not in dispute that on the said loan the assessee has paid interest of Rs. 6,87,909. The learned CIT(A) upheld the disallowance of deduction under section 24(b) of the Act claimed by the assessee in the absence of any documentary evidence to substantiate the claim of major repairs in the aforesaid 5 shops before giving the same on rent. 23. Section 24 of the Act deals with deductions from income from house property. Further, as per section 24(b) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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