TaxTMI 
TaxTMI 
2026 (8) TMI 1021
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....cation. 3. In Ground Nos. 2 to 4, the Department has challenged deletion of addition of Rs. 1,00,67,711/- made on account of allocation of interest expenditure on interest-free loans and advances. 4. Briefly, the facts relating to this issue are, the assessee is an Association of Persons (AOP). For the assessment year under dispute, the assessee filed its return of income on 6.11.2017, declaring income of Rs. 3,32,3,760/-. The return of income so filed by the assessee was selected for scrutiny. In course of assessment proceedings, the Assessing Officer found that during the search and seizure operation carried out in case of Mahendra Tak Group of cases at Udaipur on 21-3-2017, certain information relating to the assessee was found. Ba....
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....t-bearing funds in the form of members' capital amounting to Rs. 43,33,00,709/-. The First Appellate Authority has further observed that out of total interest expenditure of Rs. 1,00,67,711/- disallowed by the Assessing Officer, the assessee had actually debited an amount of Rs. 63,13,547/- towards interest expenses in the profit and loss account. Whereas, during the year it had earned interest income of Rs. 59,59,239/-. It is further evident that an amount of Rs. 37,54,164/- was paid towards bank charges for bank credit limits, bank guarantees, demand drafts and other charges, which cannot be attributed towards interest-free advances. The aforesaid finding of fact recorded by learned First Appellate Authority remains uncontroverted. In any....
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....rd. As could be seen from the observations of the Assessing Officer, only reason for making the disallowance was the low net profit/ loss declared by the assessee. On going through the observations of the Assessing Officer, we have not found any specific deficiency pointed out by him relating to s particular head of expense. Thus, the disallowance has been made purely on ad hoc basis based on general observations that some part of the expenditure is unverifiable. Hence, to take care of possible leakage of revenue, disallowance has to be made. Since the Assessing Officer has failed to pinpoint any specific deficiency either in relation to any particular expenditure or the evidence furnished, we are inclined to uphold the decision of learned ....
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....source explained by the assessee, learned first appellate authority, having found that such deposits were made out of various business receipts, deleted the addition. 14. We have considered rival submissions and perused the materials on record. It is a fact on record that the assessee is engaged in the business of mining, royalty and toll plaza at various locations. Thus, the nature of business carried on by the assessee involves daily collection of cash. Hence, it cannot be denied that the assessee would be having cash availability with it on a day-to-day basis. Undoubtedly, during the period from 9-11-2016 to 30-12-2016, the assessee had deposited cash in old high denomination notes. To explain the source of cash deposit, the assessee ....