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of <h1>Tax Appeal: Reduction in Unaccounted Investments & Interest</h1> <h3>Dinesh Kumar Choudhary Versus ITO, Mandsaur</h3> Dinesh Kumar Choudhary Versus ITO, Mandsaur - TMI Issues Involved:1. Addition of Rs. 7,15,900 for unaccounted investments in promissory notes.2. Addition of Rs. 99,848 on account of interest on promissory notes.3. Addition of Rs. 1,37,864 for unaccounted purchases.Issue-Wise Detailed Analysis:1. Addition of Rs. 7,15,900 for Unaccounted Investments in Promissory Notes:The primary issue revolves around the addition of Rs. 7,15,900 for alleged unaccounted investments in promissory notes found during a survey conducted under section 133A of the Income Tax Act. The assessee contended that these promissory notes were actually sundry debtors from sales not realized in time. However, the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] did not accept this explanation, leading to the addition.The Tribunal noted that the assessee failed to link the promissory notes with sundry debtors through credible evidence such as bills or statements. The Tribunal also observed that the assessee had a history of money lending alongside his retail business. The Tribunal partially allowed the appeal by deleting Rs. 5,41,770 from the addition, recognizing it as explained investment, but confirmed the remaining addition of Rs. 1,74,730 as unaccounted investment in the money lending business.2. Addition of Rs. 99,848 on Account of Interest on Promissory Notes:The second issue concerns the addition of Rs. 99,848 as interest income on the promissory notes. The assessee argued that he followed a receipt basis for interest income and had already declared Rs. 20,000 in his return. The Tribunal accepted the assessee's contention for a set-off and reduced the addition to Rs. 79,848, thus partly allowing the appeal on this ground.3. Addition of Rs. 1,37,864 for Unaccounted Purchases:The third issue pertains to the addition of Rs. 1,37,864 for unaccounted purchases based on documents seized during the survey. The assessee claimed that he followed the provisions of section 44AF, which prescribes a presumptive income scheme for retail traders, and thus no separate addition for unaccounted purchases should be made.The Tribunal analyzed the financial statements and noted discrepancies in the closing stock and purchases, which indicated that the assessee was engaged in off-record sales. The Tribunal upheld the CIT(A)'s decision, confirming the addition of Rs. 1,37,864 for unaccounted purchases.Conclusion:The Tribunal's decision resulted in a partial allowance of the appeal. The addition of Rs. 7,15,900 for unaccounted investments in promissory notes was reduced to Rs. 1,74,730, and the addition of Rs. 99,848 for interest was reduced to Rs. 79,848. However, the addition of Rs. 1,37,864 for unaccounted purchases was confirmed in full. The order was pronounced in the open court on 02.08.2018.
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