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TMI Blog2024 (2) TMI 1340X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, the Tribunal considered that for a sum of Rs. 12,000/- there was satisfactory explanation given by assessee. ITAT, therefore, modified the additions and reduced it from Rs. 40,000/- to Rs. 28,000/-. Cash credit received from Saurin Patel, the ITAT has accepted the explanation and evidence from assessee that he paid an interest of Rs. 12,600/- in February and August 1986. It has also noted that assessee has obtained fresh credit of Rs. 12,000/- on 3rd December 1986. ITAT, therefore, expressed a view that the interest payment of Rs. 12,600/- was sufficient to explain the sources for the fresh credit of Rs. 12,000/-. As regards cash credit received from Vikram Patel, opening balance of Rs. 1,00,000/- available in this account and interest payment made to the creditor, the ITAT did not find any reason to sustain the addition of Rs. 10,000/-. Interest expenditure debited as interest on securities - ITAT deleted addition by holding that the AO did not show any reason to the conclusion that the expenditure is excessive in nature - The admitted position is that payments have been made by cheques to bank accounts. AO should have considered the vouchers submitted by ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P.C. : 1. By an order pronounced on 9th November 2016, the Income Tax Appellate Tribunal (ITAT) disposed five appeals, i.e., three appeals filed by assessee for Assessment Years 1987-88, 1988-89, 1989-90 and two appeals filed by revenue for Assessment years 1988-89 and 1989-90. 2. Respondent/Assessee, an individual, was carrying on business as sole proprietor in the name and style of M/s B.C. Devidas. Assessee, who was a registered broker of Bombay Stock Exchange, was also engaged in trading in securities and shares. In addition to the profit, assessee also received salary and commission from CIFCO Limited and Food and Inns Limited in which he was a director. 3. Following the allegation of involvement in multi crore securities transactions scam of nineties infamously known as Harshad Mehta Scam, Assessee got labelled as party on 2nd July 1992 under the Special Court's (TORTS) Act, 1992. Assessee was investigated by Central Bureau of Investigation in June 1992 followed by the search and seizure action conducted by the Income Tax Department on 16th October 1992. 4. The assessment was originally completed after the search operations. Both assessee as well as revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of securities of Rs. 3.22 Crore, ignoring its own decision in the assessee's own case for the AY 1987- 88, 1992- 93 1993-94 on similar issues by the receiver of the cash payments viz. M/s Shruti Builders? In our view, the second part in each of these questions are more in the nature of arguments. 6. The first issue relates to Section 68 of the Act towards unexplained cash credits. The CIT(A) confirmed the addition pertaining to four entries as under: (a) Rita Chopra - Rs. 32,100/- (b) Ronak Patel - Rs. 40,000/- (c) Saurin Patel - Rs. 12,000/- (d) Vikram U Patel- Rs. 94,100/- 7. Mr. Chhotaray submitted that in all these cases, assessee failed to furnish confirmation letters from these four parties and, therefore, failed to discharge the onus placed upon him under Section 68 of the Act. Mr. Chhotaray stated that there was a special auditor appointed by the department who has opined that the accounts of assessee were not reliable. Ms Haria immediately responded by saying that for assessment year under consideration there was no special auditor and Mr. Chhotaray is making an incorrect statement. 8. The ITAT has very elaborately dealt wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO, this issue, in our view, does not raise any substantial question of law. 10. On the proposed second question of law relating to interest expenditure of Rs. 47,45,108/- debited as interest on securities during the year relevant to AY 1987-88, this account, i.e., interest on securities was showing a debit balance of Rs. 47.45 lakhs and assessee claimed the same as expenditure. 11. Mr. Chhotaray submitted that the AO noticed that the securities purchased by assessee did not remain with assessee for a long time, i.e., sold within few days. Hence the AO took the view that the interest paid on securities and interest received on securities should have been equal and net interest expenditure could not have been at a high figure of Rs. 47.45 lakhs. In the first round of proceedings, the AO had disallowed the net interest claimed only on the ground that assessee did not furnish the details of interest accounted through journal entries. In the second round, assessee furnished few journal entries for the interest paid on securities. The AO, however, took a view that the interest paid on securities is excessive and non-genuine and accordingly disallowed the claim. In the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee and examined the genuineness of the expenditure with reference to the underlying invoices, bills of payment details, party details etc., and not straightaway come to the conclusion that the expenditure accounted through journal vouchers are bogus without verifying the factors and evidence that necessitated the passing of journal entries. The ITAT, therefore, rightly concluded that passing of entries through journal vouchers are part and parcel of accounting proceedings in any type of business and any expenditure accounted through journal vouchers cannot be doubted on the only reason that they have been accounted through journal vouchers. Nothing prevented the AO to examine the entries with the underlying evidence. 14. The AO has also expressed the view that expenditure incurred was excessive in nature but has not given any reason for coming to this conclusion. The ITAT noted that the AO cannot arrive at the conclusion on certain presumptions and by making general observations. The ITAT has also correctly observed that CIT(A) has simply confirmed the order of the AO without critically examining the same. Therefore, even here no substantial question of law arise. 15. As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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