TaxTMI 
TaxTMI 
2021 (2) TMI 424
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....on despite opportunities being the identity, credibility and genuineness of the so called lenders of the funds. 2. On the facts and in the circumstances of the case, tile Ld. CIT(A) erred in deleting the addition of Rs. 2,03,610/- made by Assessing Officer on account of unaccounted interest income and also erred in presumptively holding that the interest was received by lenders despite the fact that the lenders themselves have not given confirmation of providing such loans and have not been produced during the assessment proceedings by the assessee. 3. The brief facts of the case as culled out from the records are that the assessee is a Hindu Undivided Family deriving income from profit and gains from business and profession income from other sources. The appellant filed its Income Tax Return on 11.02.2012 declaring total income of Rs. 4,66,890/-. A search u/s 132 of the Act was conducted in the cases of MRJ group on 23.03.2018 and the assessee being one of the main concerns of this group was also covered. Case selected u/s 147 of the Act on the reason that appellant had given loan to various parties in cash. In response to the notices u/s 142(1)/143(2) of the Act asses....
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....rage to the tune of Rs. 4 crores in three individual accounts which have been accepted during the search assessment. Ld. CIT(A) has accepted assessee's claim by confirming the addition for brokerage of Rs. 2,70,100/-. As regards the deletion of addition of interest income of Rs. 2,03,610/- Ld. Counsel for the assessee placed reliance on the finding of Ld. CIT(A). 7. We have heard rival contentions and perused the records placed before us and gone through the finding of Ld. CIT(A) as well as the submissions made by Ld. Counsel for the assessee. 8. As regards Ground No.1 through which the revenue has challenged the finding of Ld. CIT(A) deleting the addition of Rs. 1,85,72,100/- out of the total addition made by Ld. A.O u/s 69 of the Act at Rs. 1,86,00,000/-. we observe that during the course of search carried out u/s 132of the Act on 23.03.2018 at MRJ group which included the assessee also being main concern of the group and various documents were seized. The statements given by the assessee during the course of search proceedings also matches with the return of income filed during the assessment year under appeal in which it is claimed to have carried out the business of f....
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.... does not find the same acceptable and stated that the assessee failed to produce any kind of confirmations from the persons who has given loans and the assessee failed to produce the parties for examination on oath. Further, the AO observed that the assessee has earned interest income of Rs. 2,03,610/- from various parties in cash and therefore required the assessee to explain these transactions. The assessee in reply submitted that it has been acting as a finance broker and the entire interest amount of Rs. 2,03,310/- has been paid to lender by the beneficiary through account payee cheques and no cash transaction has ever materialized. The AO after considering reply of the assessee stated that according to the loose papers the assessee has been receiving part of the interest in cash and part through cheques. 4.2.1 The appellant during the course of appellate proceedings submitted that the appellant is a finance broker and earning brokerage income on arrangement of loans on behalf of lender and borrowers. During the course of search, statement of Shri Dilip Jain was recorded on oath on 16.05.2018, wherein he has clearly stated that he has been arranging ....
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....in the form of PDCs (post Dated Cheques). 4.23 The appellant has also maintained diary/register which also contains details of loan which did not materialized. The details of cheques as mentioned in impugned loose papers (BS-28) ate post dated cheques taken by the appellant from the borrower and if the transaction is materialized the same were recorded in hundi papers and were also used in repaying loan. The appellant before the AO and before me has filed copy of ledger account reflecting name of borrowers and brokerage earned. The appellant has also submitted confirmation of some of the borrowers to whom funds were arranged by the appellant. 4.2.4 After considering the entire facts interalia submissions of the appellant I reached to the conclusion that the appellant from day one i.e. from the date of search till the completion of assessment proceedings has clearly explained the manner in which brokerage is earned by the appellant. Further, appellant in support has filed copies of ledger account of Shri Virchand Narsi (01.04.2010 to 31.03.2012), M/s Sachin Cotton Fibers (01.04.2009 to 31.03.2012), M/s Maa kamla Cotton lridustries (01.04.2009 to 31.03.2013), Navin ....
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....e, now the ball lies in the court of AO to prove that the claim of appellant is false. 4.2.5 Nevertheless, no independent enquiry was carried out by the AO either from the concerned lender/borrower or from the banks whose names are mentioned in the seized diary. In few of the cases the appellant has even provided PAN no of the lender/borrower. The AO has also stated that in the case of 'Pradeep Cotton Corporation' sum of Rs. 9 lacs has been borrowed for two months for which 1% per month is to be received by cheque and 0.3% in cash similarly in the case of Shri Ashok Kumar Mohanlal loan of Rs. 3 lacs has been given for 5 months @ 1.5% per month out of which 0.50% is to be received in cash. I find it utmost important to quote the decision of Hon'ble ITAT Mumbai in the case of Biren V Savla vs ACIT Central-ll (2006) 155 Taxman 270 (Mum) wherein it has been held that:- Section 69 of the Income-tax Act, 1961 - Unexplained investments _ Assessment years 1993-94 to 1995-96 - Search and seizure operation under section 132 led to seizure of certain incriminating documents including A-2iA-4 diaries and A-3 and A-5 diaries _ While revenue accepted transactions record....
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....oceedings has filed confirmations and ledger account of few of the individuals/firms/companies. Since the appellant failed to furnish confirmations and other evidences of all the lenders/borrowers, in support of his contention, investment of money of the appellant cannot be ruled out and therefore, profit earned by appellant from its investment should be charged to tax. Thus, in view of the above discussion and case laws cited, the addition made by the AO amounting to Rs. 27,900/- (0.15% of Rs. 1,86,00,000/-) is Confirmed and appellant will get a relief of Rs. 1,85,72,100/-. 11. We find that the decision of the co-ordinate bench in the case of Biren V Savla vs ACIT Central-II (2006) 155 Taxman 270 (Mum) and the decision of Coordinate Bench of Chandigarh in the case of ACIT vs V.Kishore Lal Balwant Rai [2007] 17 SOT 380 (CHD.) are squarely applicable on the facts of the assessee which has been reproduced in the finding of Ld. CIT(A) stated above. On perusal of the above finding and the judicial precedents referred herein above and also considering the fact that the assessee's business is confined to that of finance broker and this business is consistently been followed since many....
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.... received by the lender and not by the appellant. Thus, the AO was not justified in making additions on assumption and presumption basis and therefore, the additions made by the AO amounting to Rs. 2,03,610/- is Deleted. Therefore, appeal on these grounds is partly allowed. 14. Ld. Departmental Representative failed to rebut the finding of Ld. CIT(A) by placing any material in its favour and thus we find no reason to interfere in the finding of Ld. CIT(A) deleting the addition of Rs. 2,03,610/- and the same stands confirmed. Ground No.2 of Revenue's appeal is dismissed. 15. In the result Revenue's appeal is dismissed. The order pronounced in the open Court on 09.02.2021. ============= Document 1 पà¥à¤°.०६. पया आप अपने Finance Broking sewice की mode of operandy समà¤à¤¾à¤‡à¤ ? Anance brokenge की receipt की दूरी पà¥à¤°à¤•à¥à¤°à¤¿à¤¯à¤¾ समसà¥à¤¯à¤¾ हो ? उतà¥à¤¤à¤°- इस finance Breking sewvice मेà¤....