2015 (6) TMI 889 - AT - Income Tax

Tribunal upholds decision to delete accrued interest addition, emphasizes substantial evidence in tax assessments.

The Tribunal dismissed all Revenue appeals against the CIT(A)'s decision to delete the addition of accrued interest of Rs. 5,79,000. The Tribunal upheld ... Addition of accrued interest - seized paper clearly indicates computation of accrued interest at per 12% at prevailing market rate on outstanding balance as on that particular date on investment made by the assessee -CIT(A) deleted the addition - Held that:- CIT(A) while deleting the addition has given a finding that the document found at the time of search is a third party document which is neither in the handwriting of the Assessee nor bears her signature and its inference has to be taken as stated by the person who possessed the document. He has further observed that if anything is to be inferred contrary to what is stated in the document it is Department’s onus to prove what it alleges. Before us, Revenue has not brought any material to controvert the findings of ld. CIT(A) or pointed to any fallacy in his observations. - Decided against revenue. Issues Involved:Appeals filed by Revenue against CIT(A) order for A.Ys. 1999-2000 to 2005-06. Dispute over addition of accrued interest amounting to Rs. 5,79,000 based on seized documents. Whether interest actually accrued or not.Analysis:Issue 1: Appeals by Revenue against CIT(A) orderThe Revenue filed 7 appeals against the CIT(A) order for various assessment years. The Revenue contended that the facts and circumstances of all cases were similar, except for the assessment years and amounts, and requested that all appeals be heard together. The Tribunal proceeded to dispose of all appeals collectively for convenience.Issue 2: Addition of Accrued InterestDuring a search operation, details of sarafi transactions were found, indicating that a certain individual advanced Rs. 50 lakh to another individual before February 1996, with interest charged at 12%. The Assessing Officer (AO) concluded that the interest income of Rs. 5,79,000 accrued and added it to the individual's income. However, the CIT(A) deleted this addition based on disputed inferences and statements. The document seized was a third-party document, not in the individual's handwriting, and the AO failed to prove the allegations against the individual. The Tribunal upheld the CIT(A)'s decision, stating that the Revenue provided no material to challenge the findings, leading to the dismissal of the Revenue's appeal.Conclusion:The Tribunal dismissed all appeals by the Revenue, upholding the CIT(A)'s decision to delete the addition of accrued interest. The judgment emphasized the importance of providing substantial evidence to support allegations and highlighted the significance of considering the source and authenticity of seized documents in tax assessments.