TaxTMI 
TaxTMI 
2014 (12) TMI 796
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....eal before us and Assessee has also filed a CO. The initial grounds raised by the Revenue were later on concised vide their letter dated 05-04-2013 and the revised concise ground reads as under: "1. The Ld. CIT(A) has erred in law and on facts in deleting addition of Rs. 60,000/- on account of NSC maturity relevant to AY 2007-08 treated as unexplained investment u/s 69 of the IT Act. The Ld CIT(A) also erred in law in allowing additional evidence without giving proper opportunity of hearing heard to the AO in violation of Rule 46A of the IT Rules. 2. The Ld. ClT(A) has erred in law and facts in allowing relief of Rs. 3,42,934/- out of addition of Rs. 4,07,238/- made by the AO on account of interest income from various SB A/cs of the assessee. 3. The Ld.CIT(A) has erred in law and facts in allowing relief of Rs. 10,40,000/- out of addition of Rs. 12,18,981/- made by the AO on account of interest of HDFC bonds. 4 The Ld CIT(A) has erred in law and on facts in deleting addition of Rs. 4,84,434/-on account of accrued interest income u/s 64(ii) of the IT Act. 5. The Ld. CIT(A) has erred in law and on facts in deleting addition of Rs. 19,22,500/- pm account of interest received from....
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....lant's total income. However, as the source of investment is established, the addition for the amount of original investment of Rs. 60,000/- is not justified. The interest element of Rs. 54,072/- is rightly taxed. Thus the appellant gets relief for Rs. 60,000/- and this ground is partly allowed." 6. Aggrieved by the aforesaid order of Ld. CIT(A), Revenue is now in appeal before us. 7. Before us Ld. DR pointed to the findings of AO and supported his order. Ld. AR on the other hand reiterated the submissions made before AO and Ld. CIT(A). He further submitted that in the year under consideration the interest for the year can only be subjected to tax and not interest of earlier years. 8. We have heard the rival submission and perused the material on record. We find that Ld. CIT(A) while granting partial relief to the assessee has given a finding that the amount was invested by cheque from the bank account maintained with Federal Bank and thus the source of investment has been established. With respect to taxing of interest of 54,072/- he has noted that such interest was not reflected in assessee's return of income of earlier years. He therefore considered the interest to have been ....
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.... no reason to interfere with order of Ld. CIT(A) and thus this ground of Revenue is dismissed. 14. Ground No. 3 is with respect to deletion of addition on account of interest of HDFC bonds. 15. During the course of assessment proceedings, AO noticed that Assessee had invested in bonds of HDFC bearing rate of interest at 8%. Assessee was asked to furnish the details of interest accrued on HDFC bonds which AO noted was not furnished by the assessee. He accordingly worked out the accrued interest at Rs. 12,81,981/- and added to the income. Aggrieved by the order of AO, Assesssee carried the matter before ld. CIT(A) who granted partial relief to the assessee by holding as under: "6.3 I have gone through the facts of the case, assessment order and submission made by the appellant. It is noticed that the appellant had given specific explanation that he held RBI bonds on which interest was offered for tax at Rs. 10,40, 000/-. It is further noticed that as explained by the assesses the Government of India authorized HDFC to issue bonds and accordingly the assessee had made investment in Government bonds with HDFC as above. It is noticed that the assessee has offered for tax only simple ....
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....ds. As per calculation made by the AO, interest accrued on HDFC bonds to his wife was Rs. 11,72,234/-. AO was of the view that assessee had transferred the funds without adequate consideration and therefore provisions of section 64(2) were applicable. He thereafter applying the provisions of section 64(2) considered the differential interest (11,72,234/ - 6,87,500/-) as income of the assessee u/s. 64(2) of the Act. Aggrieved by the order of AO, Assessee carried the matter before Ld. CIT(A) who deleted the addition by holding as under:- "7.3 I have considered the facts of the case, assessment order and the submission made by the appellant. On consideration of the facts of the case and provisions of section 64 along with explanation 3 thereto, I am of the opinion that the addition made by the A.O. was not within the purview of section 64(ii) which has been invoked by the A.O. Even section 64(iv) also is not applicable on plain reading of the provisions of the said section read with Explanation 3 thereto. The investment in bond is not envisaged as per explanation 3 for the purpose of clubbing section. Accordingly the addition made by the A.O. is deleted." 21. Aggrieved by the order ....