1976 (6) TMI 43

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....found that the assessee has disclosed losses in the trading account. He wanted to examine the purchases of the assessee and consequently the Income-tax Officer asked the assessee to produce the vouchers. The assessee produced the books of accounts, but did not produce the vouchers and consequently, the Income-tax Officer did not accept the book results and added Rs. 5,000 during the asst. years 1968-69 and 1969-70 and Rs. 2,500 during the asst. year 1970-71. 2. On appeal the Appellate Asstt. Commissioner again asked the assessee to produce the vouchers. The assessee claimed that he produced the books of accounts and vouchers and the same were examined by the Appellate Asstt. Commissioner and he did not find any fault with it. However, th....

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....ll the vouchers of the assessee. But at the same time from the order of the Appellate Asstt. Commissioner, it is also clear that he confirmed the addition to cover up the possible leakages and he did not find any defect with the books of accounts of the assessee, and the vouchers. As the assessee has produced the books of accounts and vouchers and no defect was pointed out, the additions could not be sustained. Accordingly, the additions are deleted. 5. The next objection of the assessee is about the addition of Rs. 3,000 being cash credit during the asstt. year 1968-69 and the disallowance of interest thereon. The Income-tax Officer found a cash credit of Rs. 3,000 in the name of Smt. Sumitra Devi. No confirmation letter was filed befor....

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....e has recorded the statement of the lady. If her statement is read as a whole, it is clear that she accepted that she advanced a loan of Rs. 3,000 to the assessee on interest. She withdrew the amount when she needed it for the marriage of her daughter. From the statement of the lady the genuineness of the loan is proved. Consequently, we delete the addition of Rs. 3,000 and we allow interest paid thereon. 8. The next objection of the assessee is about disallowance of interest of Rs. 4,000, 4,400 and Rs. 4,000 in three years respectively. The assessee was constructing a building. He borrowed funds for the purpose of his business, but, however, the admitted fact is that the fund so borrowed was diverted in part for the purpose of the const....