TaxTMI 
TaxTMI 
2015 (9) TMI 274
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....f the I. T. Act. 2. The Ld. Commissioner of Income tax (Appeals) is not justified in facts and in law in admitting additional evidences in violation of Rule-46A of the I. T. Rules, and in restricting, on the basis of such additional evidences, the disallowance of interest on bank loan to Rs. 65,090/-, out of total disallowance of Rs. 1,95,470/- made by the Assessing Officer. 3. On the facts and circumstances of the case, the Ld. Commissioner of Income tax (A) ought to have upheld the order of the Assessing Officer. 4. It is, therefore, prayed that the order of the Ld. Commissioner of Income tax (A) may be set-aside and that of the Assessing Officer be restored. 2.1. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as "the Act") was framed vide order dated 09/12/2010. While framing the assessment, the AO made addition of Rs. 24,82,150/- by invoking the provisions of section 68 of the Act as unexplained credit. The AO also made disallowance of bank loan interest of Rs. 1,95,470/- and the addition of Rs. 5,000/- made on account of excess payment made to....
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....val submissions, perused the material available on record and gone through the orders of the authorities below. The ld. CIT(A) has given a finding on fact that the cash withdrawn from the bank account was used for the purpose of redepositing in the same in the bank account. Further, the ld. CIT(A) in para-3.3 has given a finding on fact as under:- "3.3. Decision: I have carefully perused the assessment order and the submissions given by the appellant. The appellant has submitted that the bank account in which the cash has been deposited was on OD facility and the cash deposits were made out of the withdrawals made earlier from the same account. The bank account was omitted to be included in the books of account and only the account with State Bank of Saurashtra was shown in the books of account. A perusal of the bank account show that the bank account has been opened by the appellant on 25/10/2007 and the appellant has initially withdrawn cash from the account and subsequently started depositing the cash n the account again. The A.O. has not considered the fact of withdrawal of cash from the same account and has merely made the addition on the basis of entries of deposit of ca....
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....at this claim is against the earlier claim of receiving cash from one of the partners. In view of these facts, the claim of the appellant regarding deposit of cash of Rs. 3,30,150/- is not accepted and is considered as unexplained cash deposited in bank account. The appellant was also asked to explain the source of expenditure in furnishing the Ice Cream Parlour: It has been submitted by him that he has shown furniture of Rs. 1,59,830/- in the books of accounts. The amount of furniture shown by the appellant is inadequate as it is not possible to furnish any shop with this small amount. It would therefore be reasonable to estimate that a further expenditure of Rs. 2,50,000/- must have been made by him in furnishing the shop. The appellant has submitted that the excess amount of cash withdrawn was used by him for this purpose. The claim of the appellant is examined and it is seen that the appellant has withdrawn an amount of Rs. 27,52,000/- and has deposited cash of Rs. 24,82,150/- which shows that excess cash of Rs. 2,69,850/- was available with the appellant. This cash is accordingly treated as source of investment in furnishing the shop. The appellant will not get any credit of....
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....wals were made for the business purpose. 1t has been pointed out by him that a withdrawal of Rs. 5,00,000/- was made on 31/07/2006 by cash which was utilised for making the purchases. Similarly, an amount of Rs. 1,03,000/- was also withdrawn in cash and utilised for purchases. Similarly, there were other withdrawals of small amount which were also used by the appellant for the purpose of business. The claim of the appellant has been looked into. It is noted from the details made available that not all the funds which were taken out of the loan account of the bank were utilised for the purpose of business. The appellant has given an amount of Rs. 7,01,200/- to its partners for which there is no purpose of business. The other amount has been utilised for business. The appellant has also in the written submission accepted the above fact. Accordingly, the disallowance of interest should be proportionately reduced taking into account the amount not utilised for business. After considering the same, the disallowance is restricted to Rs. 65,090/- (Rs.1,95,470 x 7,01,200/21,05,768). The ground of appeal is accordingly partly allowed." 6.1. The above finding of the ld. CIT(A) is not contr....