TaxTMI 
TaxTMI 
2024 (5) TMI 346
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....dition of Rs. 1,47,00,000/- which has been elaborately discussed by the AO and even scanned copy of cash book was also made part of the assessment order. The AO has afforded the assessee full opportunity to explain the same. Whereas the assessee could not file any documentary evidence whatsoever at the time of assessment proceedings ? (iii) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was right on facts and in law in deleting the addition of Rs. 90,00,000/-in their circumstances where the assessee has remained totally failed to file any evidence before the AO? (iv) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was right on facts and in law in deleting the addition of Rs. 24,000/- observing calculation mistake where as there is none?" 3. The grounds taken by the assessee are as under:- "1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in sustaining the action of Ld. AO in making addition of Rs. 15,04,008/- on account of notional interest u/s 36(1)(iii) of Income Tax Act, 1961 and that too without appreciating the facts and circumstance of the case and without obs....
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....aim of commission expenses of Rs. 1,10,000/- in absence of corroborative documentary evidence. Accordingly the Ld. AO completed the assessment on total income of Rs. 2,90,95,290/- on 26.12.2016 under section 143(3) of the Act. 5. Aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A). During appeal proceedings the assessee requested for admittance of additional evidence under Rule 46A of the Income Tax Rules, 1962 (the "Rules"). It was submitted that clause (c) and (d) of the Rule 46A(1) is attracted in the case of the assessee. The Ld. CIT(A) considered the facts and relying on the decision of Hon'ble Bombay High Court in Prabhavati S. Shah v. CIT (1998) 231 ITR 1 (Bom) and decisions of Hon'ble P & H High Court in Arjun Dass vs. CIT (1975) 112 ITR 480 (P&H) and in CIT vs. Jind Cooperative Sugar Mills (2011) 335 ITR 43 (P&H) admitted the additional evidence submitted by the assessee before him. 6. The Ld. CIT(A) obtained remand report dated 17.08.2018 from the Ld. AO on the documentary evidences filed by the assessee. This is reproduced in para 10 of the appellate order. The Ld. CIT(A) called for rejoinder from the assessee on the remand report which the asses....
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....t to the tune of Rs. 90 Lacs as compared to the sale deed for Rs. 1.75 Crores is concerned, I have examined the sale deed in question dated 10.05.2011 (annexed at page No. 50 and 51 of the paper book). From the same it is evident that the appellant's share in this property is only to the extent of 50%, with the other 50% belonging to one Sh. Anil Nanda. Thus the appellant's share being 50%, the liability for making the payment is also to the extent of 50%, which explains by Rs. 90 Lacs has been paid by the appellant for a property which is jointly bought for Rs. 1.75 Crore. Thus considering the entire evidences and the remand report of the AO I find no reasons to sustain this addition. Consequently, the addition is deleted." 10. As regards the disallowance of interest of Rs. 15,28,008/- under section 36(1)(iii) of the Act, the Ld. CIT(A) confirmed the disallowance to the extent of Rs. 15,04,008/- allowing relief of Rs. 24,000/- being mistake in calculation. He recorded his finding in para 26 of the order as under:- "26. I have carefully considered the facts of the case and gone through the submissions filed by the counsel of the appellant during appellate proceedings tog....
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....- "Held that it was a matter of record that before admitting the additional evidence, the Commissioner (Appeals) obtained a remand report from the Assessing Officer. While submitting his report, the Assessing Officer had had not objected to the admission of the additional evidence, but had merely reiterated the contentions in the assessment orders. It was only after considering the remand report, the Commissioner (Appeals) had admitted the additional evidence. It could not be disputed that this additional evidence was crucial to the disposal of the appeal and had a direct bearing on the quantum of claim made by the assessee. The plea of the assessee which taken before the Assessing Officer remained the same. The Assessing Officer had taken adverse note because of non-production of certain documents to support the plea and it was in these circumstances, the additional evidence was submitted before the Commissioner (Appeals). It could not be said nor was it the case of the revenue that additional evidence was not permissible at all before the first appellate authority. On the contrary, rule 46A of the Income-tax Rules permits the Commissioner (Appeals) to admit additional evidence ....
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....rds purchase of the property. The finding of the Ld. CIT(A) in this regard could not be assailed by the Revenue by bringing on record any adverse material. We, therefore, concur with the view of the Ld. CIT(A) and reject this ground of the Revenue too. 18. Apropos Ground No. (iv): The impugned addition of Rs. 24,000/- which has been deleted by the Ld. CIT(A) is on account of calculation mistake. The Ld. DR could not explain as to how there was no calculation mistake. In this view of the matter, this ground is without any basis and is rejected. 19. In the result, the appeal of the Revenue is dismissed. 20. We now take up the appeal of the assessee. 21. Apropos Ground No. 1: The Ld. AO made the impugned disallowance of interest of Rs. 15,28,008/- (the correct amount as per Ld. CIT(A) is Rs. 15,04,008/-) under section 36(1)(iii) of the Act as he found that the assessee had paid interest of Rs. 26,05,055/- on borrowed funds and claimed deduction thereof whereas he had advanced interest free loans to six parties amounting in all to Rs. 1,27,33,400/- (the correct amount is Rs. 1,25,33,400/-). On appeal by the assessee, the Ld. CIT(A) sustained the said disallowance after giving relie....