TaxTMI 
TaxTMI 
2015 (2) TMI 105
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....e of its group companies on 15.11.2007, the assessee company belonged to the said group. On the basis of the post search enquiries made, it was established that the group company BPTP were following a business model as a part of which only part payments of the sale consideration in respect of the land purchased were paid at the time of execution of sale deed and the payments of balance sale consideration were invariably made through post dated cheques (PDCs) and for the intervening period (i.e. period between the date of sale deed and the date of encashment of PDCs), interest was paid in cash to the vendors of the land by the vendee company on monthly basis @ 1.25% p.m. According to the AO this cash payment of interest by the vendee company was not accounted for by the assessee in its books of account. The contention of the assessee before the AO was that no search warrant had been issued in the name of the assessee and hence documents recovered from the third party which did not belong to the assessee could not be used for reopening the completed assessment. The assessee also submitted to the AO as under: "..... we explain the modalities of issuing post dated cheques with....
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....gs Ltd. (1997) 224 ITR 724 (SC) (v) SBI Vs Mula Sahakari Sakar Karkhana Ltd. reported in 132 Comp Cases 565 (SC)..... Kindly note that as explained above, the consideration for delay in payment is already considered in the sale price agreed. The post dated cheques are also mentioned at the time of executing sale deeds in the form of receipts issued as attached which clearly shows that both the parties have agreed to payment through post dated cheques. We would like to point out that payment under a bilateral agreement depends entirely upon commercial understanding between buyer and seller and the same cannot be questioned by the assessing officer. In our case the farmers have clearly agreed for accepting payments through post dated cheques. Hence, there is no question of payment of any interest." 4. The AO did not find merit in the submissions of the assessee and made the addition of Rs. 20,05,346/- by observing in paras 2.6 and 2.7 of the assessment order dated 28.12.2010 as under: "2.6 So keeping in view the business model/modus operandi of the BPTP Group, as is clear from the seized material as already discussed supra, it is proved beyond any iota of doubt that the a....
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....ch proves that interest is paid from the date of sale to date of encashment of post dated cheques. However, there is concrete evidence in form of seized material to show that interest is paid and received by seller on the extension of PDCs as discussed above while analyzing the seized document. Therefore, in my view where ever the date of PDCs are extended interest is paid @ 15% per annum in cash out of Books of accounts which are evident from seized material. Therefore, interest on PDCs to the extent of extension period appears to quite reasonable and logical. Accordingly, interest on PDCs either as sale consideration or additional payment may be recomputed to the extent of extended period of PDCs by the AO and to that extent addition is confirmed. The above formula will apply to all group companies under the management of BPTP i.e. (M/s BPTP and Associate companies) including the appellant company as evidence is found in respect of various companies of BPTP and some seized paper could not be related to specific company. Therefore, it is proper to apply this formula for all companies under the common management of BPTP Group, head by Shri Kabul Chawla. All these companies are clos....
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....ies of BPTP Group to which the assessee belongs. In the said case vide order dated 31.10.2014 the ITAT Bench 'C', New Delhi in ITA Nos. 1674/Del/2013 & 1765/Del/2013 for the assessment year 2008-09 observed in para 5 as under: "5. We have heard the arguments of both the sides and perused relevant material placed before us. At the outset, the ground raised by the Revenue is misconceived because learned CIT(A) has not deleted the addition of Rs. 5,06,625/- but has only directed to recalculate the interest. We have carefully gone through the order of the learned CIT(A) and also the submissions of both the parties and we do not find any infirmity in the order of the learned CIT(A). After examining the loose papers seized at the time of search at the assessee's premises, it was noticed that interest is paid on the PDCs only during the period of extension of PDCs and, therefore, he directed the Assessing Officer to recompute the interest on PDCs at the time of extension of the PDCs. He has further observed that if it is not possible to work out the extension of PDCs in each case, then the Assessing Officer is directed to recompute interest on PDCs after six months from the date of iss....