TaxTMI 
TaxTMI 
2021 (5) TMI 173
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....s and in law in making assessment at an income of Rs. 89,92,097/- as against income of Rs. 9,94,900/- declared by the assessee. 4(i) On the facts and circumstances of the case, the learned AO has erred both on facts and in law in making addition of an amount of Rs. 67,60,138/- on account of interest, invoking the provision of Section 40(a)(ia) of the Act. (ii) The learned AO has erred in invoking Section 40(a)(ia) despite the fact that the interest income has not been claimed by the assessee as expenditure and therefore the payment is not exigible to provision of tax deduction at source. (iii) That the provision of Section 40(a)(ia) has been invoked misinterpreting the facts of the case. (iv) That the Ld. AO has erred both in law and facts of the case in applying proviso to section 44AB treating the interest income as income from profession ignoring the fact that at the most Rs. 1139862 can be treated as interest under the head 'income from profession'. 5(i) On the facts and circumstances of the case, the learned AO has erred both on facts and in law in making addition of an amount of Rs. 97,200/- being the difference in interest....
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....come from other sources. AO on the basis of information received from different companies u/s 133 (6) of the Act qua the confirmation of interest payment to the assessee and noticed a difference of Rs. 81,05,112/-. Assessee satisfactorily explained the difference of Rs. 1,07,328/- but failed to provide any justification for Rs. 97,200/- and consequently, AO made addition thereof to the total income of the assessee. Consequently, AO framed assessment at the total income of Rs. 89,92,097/- as against returned income of Rs. 9,94,900/-. 4. Assessee carried the matter before the ld. CIT (A) by way of filing appeal who has dismissed the appeal. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeal. 5. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. GROUNDS NO.1, 2, & 3 6. Grounds No.1, 2 & 3 are general in nature and do not require any adjudication. GROUND NO.4 7. This ground pertains to addition of Rs. 67,60,138/- made by the AO on account of intere....
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....lant in the Return of Income. Even the refund arising due to this has been claimed by the appellant in the Return of Income. • No interest payment either by cash or by cheque has been made by the appellant to the HUF and this has not been shown even payable to the HUF in the Return of Income. • Appellant has accepted this fact that only notional payment of interest has been shown in the Return of Income which is against the accounting principal and the provisions of Income Tax Act. The appellant being a Chartered Accountant by profession is fully aware about the Income Tax Laws and accounting system. Despite this, such transactions have been claimed which is not allowable under the Act. • The investments to the tune of Rs. 21,85,Ol,767 /- is related to earning of interest income has neither been disclosed in the Return of Income of the appellant nor in the Return of Income of HUF. Even the asset and liability has also not been shown by the appellant in the Return of Income despite the submission made by the appellant that the investment in movable properties are made in the name and PAN of the appellant but the funds were provided and accounte....
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....will be very easy to make self-serving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents. 13 .......Science has not yet invented any instrument to test the reliability of the evidence placed before a court or tribunal. Therefore, the courts and Tribunals have to judge the evidence before them by applying the test of human probabilities." In the case of Sumati Dayal 214 ITR 801 Hon'ble Supreme Court has again given the importance of human probability and held that "The majority opinion after considering surrounding circumstances and applying the test of human probabilities had rightly concl....
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.... Assessing Officer has also made the addition of Rs. 97,200/- on the ground that u/s 133(6) information from different companies were obtained regarding the confirmation of interest payment to the appellant and there is a difference of Rs. 2,05,112/- in the interest receipts and the interest declared by the appellant during the year as per detailed discussion made by the Assessing Officer in the assessment order mentioned supra in Para 4.1. However, the Assessing Officer was satisfied about the explanation of the appellant regarding the difference of Rs. 107328/- which was accepted. As the appellant could not give any justification for Rs. 97,200/- the addition of this amount was made by the Assessing Officer. 6.15 During the course of appellate proceedings, the appellant has submitted that these additions have been made on the basis of 26AS details and there might be some reconciliation difference. However, the appellant has totally failed to support his claim that the figure taken by the Assessing Officer as per the details given by the Assessing Officer of the amount of interest shown in a chart in para 5.1 supra is wrong. The contention of the Assessing Officer that th....
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....Officer to conduct proper scrutiny of the material, given the fact that the two appellate authorities viz. Commissioner (Appeals) and Tribunal are also forums for fact-finding, in the event of Assessing Officer failing to discharge his functions properly, the obligation to conduct proper inquiry on facts would naturally shift to the door of the said appellate authority. For such purposes, one only need to point out one step in the procedure in appeal as prescribed in section 250 wherein, besides it being obligatory for the right of hearing to be afforded not only to the assessee but also the Assessing Officer, the first appellate authority is given the liberty to make, or cause to be made, 'further inquiry', in terms of sub-section (4). [Para 38] However, I am restricting myself to give any decision on the professional income declared by the appellant in the Return of Income which is not a subject matter of appeal. Besides this, the claim of the appellant made regarding non deduction of TDS and not auditing the books of accounts has become academic in the light of the fact that the entire interest income should be taxed under the head 'Income From Other Sources....
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....business" the business of chartered accountant/auditor etc. under the Code 601, there is no business activity of the assessee as a chartered accountant, the interest income should have come under the head "Income from other sources", as observed by ld. CIT (A). 13. Not only this, assessee and HUF have shown unsecured loan from each other to the tune of Rs. 87,84,829/- but return of income is not depicting any such unsecured loan from any family member and HUF rather in the return of income amount of Rs. 1,05,46,600/- is shown under the head "Deposits, loans & advances" on the assets side by the assessee and not in the liability side. Furthermore, total funds provided by VP & Sons HUF were Rs. 6,97,15,071/- for the total investment made of Rs. 7,85,00,000/-, the amount of Rs. 6,97,15,071/- is not appearing in the liability side of the return of income of the assessee nor he has shown any amount under the head "investment" or "current assets" relating to the interest income of Rs. 79,00,000/-. Moreover, when it is categoric case of the assessee that he has made entire investment of HUF in its own name being a senior citizen to attract more interest then such amount was required....
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....se it is not business income of the assessee being a chartered accountant. In these circumstances, ld. CIT (A) has rightly observed that the amount of Rs. 67,60,138/- is not to be made addition to the income of the assessee by invoking the provisions contained u/s 40(a)(ia) of the Act rather it is to be treated as income of the assessee from other sources 18. So, in view of the matter, we are of the considered view that ld. CIT (A) has rightly arrived at the decision that entire transaction of the assessee having been reflected in the return of income who being a chartered accountant was supposed to come up with clean hands, is a colourable device to evade the tax and the entire interest income of Rs. 79,00,000/- has been rightly taxed under the head "income from other sources" in the hands of the assessee. Consequently, ground no.4 is determined against the assessee. GROUND NO.5 19. AO has made separate addition of Rs. 97,200/- on the basis of information received u/s 133(6) of the Act from different companies qua confirmation of interest payment to the assessee and there was a difference of Rs. 2,05,112/- in the interest received and the interest declared by the asses....