Unrecorded interest on post-dated cheques must be confined to the period proved by seized material, not a broader estimate.

Seized material supported an addition for alleged unrecorded interest only to the extent it related to extension of post-dated cheques, not for the broader period from sale deed to encashment. The CIT(A) therefore confined the computation to the extension period, and where that period could not be precisely determined, directed recomputation on an alternative basis after six months from cheque issue. As the facts matched those of the sister concern's case, the restricted approach was upheld and the departmental challenge failed.

---

---

Issues: Whether the addition made on account of alleged interest on post-dated cheques paid outside the books of account was liable to be sustained in full.

Analysis: The seized material was found to establish payment of interest only in relation to extension of post-dated cheques, and not necessarily from the date of sale deed to the date of encashment. The CIT(A) therefore restricted the computation by directing the Assessing Officer to recompute the interest only for the extension period, and alternatively after six months from the date of issue of the post-dated cheques where the exact extension period could not be ascertained. The facts were held to be identical to those in the sister concern's case, where the same approach to recomputation had already been upheld.

Conclusion: The departmental challenge failed and the restricted recomputation directed by the CIT(A) was sustained.

Ratio Decidendi: Where seized material shows payment of interest only for extension of post-dated cheques, the addition cannot be sustained on a broader basis and must be confined to the period actually supported by evidence.

---