Sri B Seenaiah, Hyderabad V. DCIT., Central Circle-6, Hyderabad

ITA 1726/HYD/2013

• Counselvise Citation: 172622514 RSA 2013
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 16-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Notional interest
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NOS. 1726, 1727, 1728, 1729 & 1730/HYD/2013 A.YRS. : 2006-07, 2007-08, 2008-09, 2009-10 & 2010-11 SRI B. SEENAIAH, HYDERABAD PAN ADAPB6173G DY. COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE 6, HYDERABAD. (APPELLANT) (RESPONDENT) AND ITA NOS. 1735, 1736, 1737, 1738 & 1739/HYD/2013 A.YRS. : 2006-07, 2007-08, 2008-09, 2009-10 & 2010-11 SMT B. SUJATHA, HYDERABAD PAN ADKPB3551A DY. COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE 6, HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI D.V. ANJANEYULU/ SMT. P. PRAVALLIKA REVENUE BY SHRI SOLGY JOSE T. KOTTARAM DATE OF HEARING 05-06-2014 DATE OF PRONOUNCEMENT 01-08-2014 O R D E R PER BENCH: THESE APPEALS FILED BY TWO DIFFERENT ASSESSEES ARE DIRECTED AGAINST SEPARATE ORDERS DATED 16/09/2013 OF CIT(A )-I, HYDERABAD FOR THE ASSESSMENT YEARS 2006-07 TO 2010-11. SINCE IDENTICAL ISSUES ARE INVOLVED IN THESE APPEALS, THEY WERE CLUBBED AN D HEARD TOGETHER, THEREFORE, A COMMON ORDER IS PASSED FOR THE SAKE OF CONVENIENCE. 2 ITA NOS. 1726 TO 1730/H/13 & 1735 TO 1739/HYD/13 SRI B. SEENAIAH & SMT. B. SUJATHA ITA NOS. 1726 TO 1730/HYD/2013 IN CASE OF SRI B. SE ENAIAH 2. THE ONLY DISPUTE IN THESE SET OF APPEALS OF THE ASSESSEE IS IN RESPECT OF ASSESSMENT OF ACCRUED INTEREST ON INVEST MENT OF RS. 88,50,000/- MADE BY THE ASSESSEE WITH M/S AMERESWAR A AGROTECH LTD. FACTS BEING IDENTICAL WE WILL DEAL WITH THE FA CTS AS INVOLVED IN ITA NO. 1726/HYD/2013 FOR AY 2006-07. 3. BRIEFLY THE FACTS ARE, ASSESSEE AN INDIVIDUAL IS THE DIRECTOR OF SEVERAL COMPANIES. FOR THE IMPUGNED ASSESSMENT YEAR ASSESSEE HAD ORIGINALLY FILED HIS RETURN OF INCOME ON 31/07/2006 DECLARING TOTAL INCOME OF RS. 87,63,933/- BESIDES AGRICULTURAL INCO ME OF RS. 70,000/-. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN CAS E OF THE ASSESSEE ON 20/08/2009 DURING WHICH, AS ALLEGED BY THE DEPARTMENT, SEVERAL INCRIMINATING MATERIALS WERE FOUND AND SEIZ ED. CONSEQUENT UPON SEARCH AND SEIZURE OPERATION NOTICE U/S 153A O F THE ACT WAS ISSUED TO THE ASSESSEE CALLING FOR RETURN OF INCOME . IN RESPONSE TO THE SAID NOTICE ASSESSEE FILED A RETURN OF INCOME ON 18 /01/2011 DECLARING INCOME OF RS. 34,23,887/- AND AGRICULTURAL INCOME O F RS. 70,000/-. DURING THE ASSESSMENT PROCEEDING, THE ASSESSING OFF ICER NOTICED THAT AMONGST THE SEIZED MATERIAL IS A PROMISSORY NOTE DT . 28/03/2006 GIVEN BY THE CHAIRMAN OF M/S AMARESWARA AGRITECH LT D. TO THE ASSESSEE FOR RS. 88,50,000/-. FURTHER, HE NOTED THA T ANOTHER SEIZED DOCUMENT IS BOARDS RESOLUTION DT. 23/03/2006 AUTHO RIZING THE CHAIRMAN TO OBTAIN UNSECURED LOAN FROM THE ASSESSEE FOR BUSINESS PURPOSE. ANOTHER PROMISSORY NOTE EXECUTED BY THE CH AIRMAN ON 27/03/2009 IN FAVOUR OF ASSESSEE FOR RS. 1,36,29,00 0/- WAS ALSO SEIZED WHICH INDICATED INTEREST CHARGED @ 18% FOR THREE YEARS. HOWEVER, AS THE ASSESSEE HAS NOT SHOWN ANY INTEREST INCOME, ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN TH E REASON FOR SUCH NON DISCLOSURE. IN HIS REPLY ASSESSEE STATED THAT A MOUNT OF RS. 88,50,000/- AS MENTIONED IN THE PROMISSORY NOTE DT. 28/03/2006 WAS GIVEN TO M/S AMERESWARA AGRITECH LTD AS SHARE APPLI CATION MONEY BUT 3 ITA NOS. 1726 TO 1730/H/13 & 1735 TO 1739/HYD/13 SRI B. SEENAIAH & SMT. B. SUJATHA AS SHARES WERE NOT ALLOTTED, TO SECURE HIS MONEY AS SESSEE HAS OBTAINED THE PROMISSORY NOTE FROM THE COMPANY. IT W AS STATED THAT ASSESSEE HAS NEITHER RECEIVED ANY MONEY FROM THE CO MPANY NOR SHARES HAVE BEEN ALLOTTED TO HIM SO FAR. THE COMPA NY ALSO IN RESPONSE TO QUERY MADE BY THE ASSESSING OFFICER STA TED THAT THEY HAVE TREATED THE AMOUNT RECEIVED FROM ASSESSEE AS U NSECURED LOAN FOR AY 2006-07 AND 2007-08 AND THEREAFTER AS SHARE APPLICATION MONEY. HOWEVER, THE ASSESSING OFFICER TOTALLY DISBE LIEVED THE EXPLANATION OF THE ASSESSEE. THE ASSESSING OFFICER WAS OF THE VIEW THAT FIRST PROMISSORY NOTE DT. 28/03/2006 CLEARLY S HOWS THAT ASSESSEE HAS LENT MONEY TO M/S AMARESWARA AGRITECH LTD. WHER EAS THE SECOND PROMISSORY NOTE DT. 27/03/2009 FOR RS. 1,36,29,000/ - SHOWS THAT ASSESSEE HAS CHARGED INTEREST OF RS. 47,79,000/- ON THE CAPITAL OF RS. 88,50,000/- @ 18% FOR THREE YEARS. FURTHER, MENTIO NING THAT ASSESSEE HAS BEEN FOLLOWING MERCANTILE SYSTEM OF AC COUNTING, THE ASSESSING OFFICER HELD THAT INTEREST INCOME HAS TO BE BROUGHT TO TAX ON ACCRUAL BASIS FROM AY 2006-07 TO 2010-11. ACCORD INGLY, THE ASSESSING OFFICER COMPUTED THE ASSESSMENT FOR THE A FORESAID ASSESSMENT YEARS BY BRINGING INTEREST INCOME TO TAX ON ACCRUAL BASIS. 4. BEING AGGRIEVED OF ASSESSMENT ORDER SO PASSED, A SSESSEE PREFERRED APPEAL BEFORE THE CIT(A). THE CIT(A) CONF IRMED THE ADDITION BY HOLDING AS UNDER: 7.0 I HAVE GONE THROUGH THE FACTS OF THE CASE AND T HE SUBMISSIONS OF THE APPELLANT. THE CONTENTION OF THE APPELLANT THAT AS AN ABUNDANT PRECAUTION AND SECURITY, HE REN EWED THE UNSECURED LOAN BY WAY OF PRO-NOTE IS CAREFULLY CONS IDERED. IT IF IS ONLY TO HAVE SOME SECURITY FOR THE LOAN ADVANCED , THE APPELLANT WOULD HAVE ASKED FOR THE PRO-NOTE FOR RS. 88,50,000/- BUT WHY DID HE OBTAIN THE PROMISSORY NOTE ALONG WIT H INTEREST ACCRUED I.E., RS. 88,50,000/- + RS. 47,79,000 (RS. 88,50,000 X 18% X 3 YEARS) UNLESS HE HAS A RIGHT TO RECEIVE INT EREST ON THE AMOUNT WHICH WAS ADVANCED AS UNSECURED LOAN ON 28/0 3/2006. IT MUST HAVE BEEN AGREED THAT M/S AMARESWARA AGRITE CH LTD. WOULD PAY INTEREST ON THE UNSECURED LOAN AND THAT I S THE REASON THE APPELLANT HAS REQUESTED FOR A PROMISSORY NOTE F OR AN AMOUNT OF RS. 88,50,000/- ADVANCED AS UNSECURED LOA N ALONG 4 ITA NOS. 1726 TO 1730/H/13 & 1735 TO 1739/HYD/13 SRI B. SEENAIAH & SMT. B. SUJATHA WITH INTEREST ACCRUED ON IT FOR RS. 47,79,000/-. OT HERWISE, WHY WOULD M/S AMARESWARA AGRITECH LTD. AGREED FOR ISSUI NG THE PROMISSORY NOTE ALONG WITH THE INTEREST ACCRUED? TH AT IS WHY THE SECOND PRO-NOTE WAS DRAWN WITH THE INITIAL LOAN ALONG WITH INTEREST ACCRUED OVER 3 YEARS WHICH WORKED OUT TO R S. 1,36,29,000/-. IT IS INTERESTING TO NOTE THAT THE O RIGINAL PROMISSORY NOTE WAS DATED 28/03/2006 AND THE SECOND ONE IS DATED 2703/2009 I.E., EXACTLY 3 YEARS. IT IS NOT A COINCIDENCE BUT AN EVIDENCE REFLECTING THE TRUTH BEHIND THE TRANSAC TION. 7.1 IT MAY BE NOTED THAT BOTH THE PARTIES ARE RELAT ED AND THE CONFIRMATION FROM M/S AMARESWARA AGRITECH LTD. THAT THEY HAVE NOT PAID INTEREST IS ONLY A SELF-SERVING DOCUMENT A ND CANNOT BE RELIED. EVEN THE CONFIRMATION FILED BY M/S AMARESWA RA AGRITECH LTD. THAT IT CONVERTED THE UNSECURED LOAN INTO THE SHARE APPLICATION MONEY IS NOT SUPPORTED BY ANY DOCUMENTA RY EVIDENCES SUCH AS ANNUAL REPORT AS SUBMITTED TO THE ROC. THE APPELLANT MAY CONTEND THAT THE SAME WAS NOT CALLED FOR. WHEN THE ASSESSING OFFICER ASKED M/S AMARESWARA AGRITECH LTD. ABOUT BOARD RESOLUTION, THE COMPANY SHOULD HAVE FIL ED ALL RELEVANT DOCUMENTS ALONG WITH THE CONFIRMATION LETT ER. IT IS NOT FOR THE ASSESSING OFFICER TO ASK WHAT OTHER SUPPORT ING DOCUMENTS TO FILE, IT IS UP TO THE CONFIRMING PARTY TO SUBMIT ALL RELATING DOCUMENTS IN SUPPORT OF THE CONFIRMATIONS IT HAS FILED. 7.2 THE JUDICIAL PRONOUNCEMENT IN THE CASE OF SUMAT I DAYAL VS. CIT, 214 ITR 80 (SC) IS SQUARELY APPLICABLE IN THE INSTANT CASE IN WHICH IT WAS HELD THAT THE TEST OF HUMAN PR OBABILITY AND CIRCUMSTANTIAL EVIDENCE HAS TO BE KEPT IN MIND WHIL E DECIDING THE GENUINENESS OF A TRANSACTION. IN THE INSTANT CA SE, THE APPELLANT HAS RENEWED THE SECOND PROMISSORY NOTE CH ARGING INTEREST @ 18% FLATLY FOR 3 YEARS WHICH IS ENOUGH T O CONCLUDE THAT INTEREST HAS BEEN EARNED BY THE APPELLANT EVER Y YEAR. MOREOVER, THE INTEREST IS NOT NOTIONAL INTEREST BUT REAL INCOME RECEIVABLE BY THE APPELLANT AS PER THE DISCUSSION A BOVE. 5. REITERATING THE STAND TAKEN BEFORE THE DEPARTMEN TAL AUTHORITIES, LEARNED AR SUBMITTED, THE PROMISSORY NOTES WERE OBT AINED FROM THE COMPANY ONLY FOR SECURITY PURPOSE THOUGH, ACTUALLY ASSESSEE HAS INVESTED THE AMOUNT TOWARDS SHARE APPLICATION MONEY . IT WAS SUBMITTED, DURING THE POST SEARCH PROCEEDING THE AS SESSEE HAS CATEGORICALLY STATED THAT NO INTEREST WAS RECEIVED FROM THE COMPANY. LD. AR SUBMITTED, DURING ASSESSMENT PROCEEDING THE ASSESSING OFFICER HAS CONDUCTED INQUIRY WITH THE COMPANY AND THE COMPANY HAD CONFIRMED BEFORE THE ASSESSING OFFICER THAT THE AMO UNT ADVANCED BY 5 ITA NOS. 1726 TO 1730/H/13 & 1735 TO 1739/HYD/13 SRI B. SEENAIAH & SMT. B. SUJATHA THE ASSESSEE WAS CONVERTED TO SHARE APPLICATION MON EY IN MARCH, 2008 AND ULTIMATELY 8,50,000/- SHARES OF FACE VALUE OF RS. 10 EACH WAS ALLOTTED TO THE ASSESSEE ON 30/03/2013. IN THIS CONTEXT, LEARNED AR DREW OUR ATTENTION TO BOARD RESOLUTION DT. 10/03 /2008 AND 30/03/2013 AND COMPANYS CONFIRMATION DT. 22/10/201 1 AND 23/10/2011. LD. AR SUBMITTED THAT IGNORING ALL THES E EVIDENCES ASSESSING OFFICER SIMPLY CANNOT RELY UPON THE SEIZE D PROMISSORY NOTES AND CONCLUDE THAT INTEREST INCOME HAS ACCRUED TO THE ASSESSEE. IT WAS SUBMITTED IT IS THE DUTY OF THE ASSESSING OF FICER TO ASCERTAIN WHETHER INCOME HAS REALLY ACCRUED TO THE ASSESSEE O R IT IS HYPOTHETICAL. IN SUPPORT OF SUCH CONTENTION, LEARNE D AR RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN CASE OF CI T VS. EXCEL INDUSTRIES LTD., 358 ITR 295 AND DECISION OF HONBL E JHARKHAND HIGH COURT IN CASE OF SANJAY RUNGTA VS. CIT, 99 DTR 18. 6. THE LEARNED DR STRONGLY SUPPORTING THE VIEW OF T HE CIT(A) AND ASSESSING OFFICER SUBMITTED THAT PROMISSORY NOTES S EIZED FROM THE ASSESSEE CLEARLY SHOW CHARGING OF INTEREST @ 18% FO R THREE YEARS. AS THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACC OUNTING INTEREST HAS ACCRUED ON THE AMOUNT ADVANCED BY THE ASSESSEE. LD. DR SUBMITTED THAT CHARGING OF INTEREST IS PROVED FROM THE SECOND PROMISSORY NOTE DT. 27/08/2009 AS THE INTEREST AMOU NT HAS BEEN QUANTIFIED AND ADDED TO THE PRINCIPAL. HE SUBMITTED THAT THE SUBSEQUENT EVENTS LIKE BOARD RESOLUTION AND CONFIRM ATIONS FROM THE COMPANY ARE ONLY AFTERTHOUGHT TO GIVE A COLOUR TO T HE AMOUNT ADVANCED AS SHARE APPLICATION MONEY. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE MATERIALS ON RECORD AS WELL AS ORDERS PASSED BY THE REVENUE AUTHORITIES. WE HAVE ALSO EXAMINED THE DECISIONS RE LIED UPON BY THE LEARNED AR. UNDISPUTEDLY, THE PROMISSORY NOTES DT. 28/03/2006 AND 27/08/2009 WERE SEIZED FROM THE POSSESSION OF THE A SSESSEE. THERE IS ALSO NO DISPUTE TO THE FACT THAT ASSESSEE HAS AD VANCED RS. 6 ITA NOS. 1726 TO 1730/H/13 & 1735 TO 1739/HYD/13 SRI B. SEENAIAH & SMT. B. SUJATHA 88,50,000/- TO M/S AMARESWARA AGRITECH LTD. WHILE T HE PROMISSORY NOTES ISSUED BY THE COMPANY INDICATE THAT AMOUNT WA S ADVANCED WITH INTEREST RATE OF 18% PER ANNUM, IT IS THE CLAIM OF THE ASSESSEE THAT IT WAS ADVANCED TOWARDS SHARE APPLICATION MONEY AND TH E PROMISSORY NOTES WERE OBTAINED ONLY AS A SAFETY MEASURE SINCE COMPANY HAS NOT ALLOTTED SHARES TO THE ASSESSEE. HOWEVER, AS CAN B E SEEN FROM THE FACTS ON RECORD, THE COMPANY IN RESPONSE TO QUERY M ADE BY THE ASSESSING OFFICER HAS CONFIRMED THAT AMOUNT RECEIVE D FROM THE ASSESSEE WAS TREATED AS UNSECURED LOAN FOR AY 2006- 07 AND 2007-08 AND CONVERTED TO SHARE APPLICATION MONEY FROM AY 20 08-09 PURSUANCE TO BOARD RESOLUTION DT. 10/03/2008. BALAN CE SHEET OF THE COMPANY AS ON 31/03/2009, A COPY OF WHICH IS AT PAG E 41 OF ASSESSEES PAPER BOOK, DOES INDICATE THAT AMOUNT RE CEIVED FROM THE ASSESSEE HAS BEEN SHOWN AS SHARE APPLICATION MONEY. IT IS ALSO A FACT THAT ASSESSEE HAS BROUGHT TO THE NOTICE OF LEA RNED CIT(A) THAT SHARES WERE ALLOTTED TO THE ASSESSEE ON 30/03/2013 BY PLACING ON RECORD THE BOARD RESOLUTION. THEREFORE, IF THE AMOU NT ADVANCED BY THE ASSESSEE WAS CONVERTED TO SHARE APPLICATION MONEY I N MARCH 2008 AND ULTIMATELY SHARES WERE ALLOTTED TO THE ASSESSEE , THEN THE AMOUNT CANNOT BE TREATED AS UNSECURED LOAN POST CONVERSION TO SHARE APPLICATION MONEY, CONSEQUENTIALLY THERE CANNOT BE ANY ACCRUED INTEREST ON SUCH AMOUNT. HOWEVER, SO FAR AS ASSESSM ENT YEARS 2006- 07 AND 2007-08 ARE CONCERNED, AS PER COMPANYS OWN ADMISSION THE AMOUNT ADVANCED BY THE ASSESSEE WAS TREATED AS UNSE CURED LOAN IN ITS BOOKS OF ACCOUNT. ASSESSING OFFICER HAS ALSO R EFERRED TO BOARD RESOLUTION DT. 23/03/2006 WHICH AUTHORIZED THE CHAI RMAN TO RAISE UNSECURED LOAN FROM THE ASSESSEE. THEREFORE, BOARD RESOLUTION AUTHORIZING RAISING UNSECURED LOAN FROM ASSESSEE, T REATMENT OF AMOUNT ADVANCED AS UNSECURED LOAN IN THE BOOKS OF T HE COMPANY AND PROMISSORY NOTE DT. 28/03/2006 CLEARLY ESTABLISHES THE INTENTION OF THE PARTIES AND THE FACT THAT THE AMOUNT ADVANCED BY TH E ASSESSEE INITIALLY WAS INTENDED TO BE UNSECURED LOAN ONLY T ILL ITS CONVERSION TO SHARE APPLICATION MONEY IN MARCH, 2008. CONSIDERED IN THE AFORESAID 7 ITA NOS. 1726 TO 1730/H/13 & 1735 TO 1739/HYD/13 SRI B. SEENAIAH & SMT. B. SUJATHA FACTUAL BACKDROP INTEREST HAS ACCRUED TO THE ASSESS EE FOR THE PERIOD AMOUNT ADVANCED WAS TREATED AS UNSECURED LOAN IN TH E BOOKS OF THE COMPANY IRRESPECTIVE OF THE FACT WHETHER INTEREST W AS ACTUALLY PAID BY THE COMPANY TO ASSESSEE OR NOT. SO FAR AS THE DECIS IONS RELIED UPON BY THE LEARNED AR ARE CONCERNED, THOUGH WE RESPECT FULLY AGREE WITH THE PRINCIPLES LAID DOWN THEREIN BUT THEY ARE RENDE RED IN THE CONTEXT OF THE PECULIAR FACTS INVOLVED THEREIN, HENCE, CANN OT BE MADE APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN VIE W OF THE AFORESAID, WE DIRECT THE ASSESSING OFFICER TO VERIFY THE BOOKS OF ACCOUNT OF M/S AMARESWARA AGROTECH PVT. LTD. TO ASCERTAIN THE DATE ON WHICH UNSECURED LOAN GIVEN BY THE ASSESSEE WAS CONVERTED TO SHARE APPLICATION MONEY AND ACCORDINGLY ASSESS THE INTERE ST INCOME TILL SUCH FY. 8. AS THE ISSUE IS MATERIALLY IDENTICAL IN ITA NOS. 1727 TO 1730/HYD/2013 FOR AYS 2007-08 TO 2010-11, FOLLOWING THE DECISION IN ITA NO. 1726/HYD/13 FOR AY 2006-07 (SUPRA), WE REMI T THE ISSUE IN THESE APPEALS ALSO TO THE FILE OF THE AO WITH IDENT ICAL DIRECTIONS. 9. IN THE RESULT, ASSESSEES APPEALS ARE ALLOWED FO R STATISTICAL PURPOSES. ITA NO.1735 TO 1739/HYD/13 IN CASE OF SMT B. SUJATHA 10. THE FIRST COMMON ISSUE IN ALL THESE APPEALS OF THE ASSESSEE AS RAISED IN GROUND NO.1 TO 4 ARE IDENTICAL TO THE ISS UE DECIDED IN ITA NO.1726 TO 1730/HYD/13 (SUPRA). THEREFORE, FOLLOWI NG OUR DECISION THEREIN, WE DIRECT THE AO TO DECIDE THE ISSUE AFRES H IN ACCORDANCE WITH THE DIRECTIONS GIVEN IN ITA NO. 1726 TO 1730/ HYD/13. 11. THE NEXT COMMON ISSUE IN ALL THESE APPEALS IS I N RESPECT OF DISALLOWANCE OF DEDUCTION CLAIMED TOWARDS INTEREST ON BORROWED CAPITAL U/S 24 OF THE ACT. 8 ITA NOS. 1726 TO 1730/H/13 & 1735 TO 1739/HYD/13 SRI B. SEENAIAH & SMT. B. SUJATHA 12. BRIEFLY THE FACTS ARE, IN COURSE OF THE ASSESSM ENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS ADMITTED INCOM E FROM HOUSE PROPERTY AND HAS CLAIMED DEDUCTION OF INTEREST ON B ORROWED CAPITAL U/S 24(B) OF DIFFERENT AMOUNTS IN DIFFERENT ASSESSM ENT YEARS. AS NOTED BY THE AO IN THE ASSESSMENT ORDER, THE INTERE ST CLAIMED BY THE ASSESSEE WAS GOING UP EVERY YEAR INSTEAD OF THE GEN ERAL TREND OF DIMINISHING OVER THE YEARS. THE AO THEREFORE ASKED THE ASSESSEE TO SUBSTANTIATE HER CLAIM. IN REPLY, IT WAS STATED B Y THE ASSESSEE THAT LOAN WAS TAKEN FROM ONE SRI P. CHANDRASHEKHARAIAH, NELLORE LONG BEFORE. IT WAS STATED THAT AS THE ASSESSEE WAS NOT ABLE TO PAY THE PRINCIPAL AMOUNT REGULARLY THE INTEREST COMPONENT I S INCREASING YEAR BY YEAR ON COMPOUNDING BASIS. IT WAS FURTHER STATE D THAT EVEN THE INTEREST IS NOT PAID REGULARLY AND IS ONLY PROVIDED IN THE BOOKS. THE AO HOWEVER WAS NOT CONVINCED WITH THE EXPLANATION O F THE ASSESSEE. BY OBSERVING THAT THE ASSESSEES CLAIM IS NOT SUPPO RTED BY ANY EVIDENCE/PROOF, THE CLAIM OF DEDUCTION WAS DISALLOW ED. ACCORDINGLY, DEDUCTION CLAIMED TOWARDS INTEREST PAYMENT IN EACH OF THE IMPUGNED ASSESSMENT YEAR WAS ADDED TO THE INCOME OF THE ASSE SSEE. 13. BEING AGGRIEVED OF SUCH ADDITION, THE ASSESSEE PREFERRED APPEALS BEFORE THE CIT (A). THE CIT(A) ALSO CONFI RMED THE ADDITIONS MADE WITH THE FOLLOWING OBSERVATIONS: 8.1 DURING THE COURSE OF APPELLATE PROCEEDINGS, THE AR OF THE APPELLANT HAS NOT FILED ANY DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CLAIM BUT SIMPLY STATED THAT THE AO WITHOUT MAK ING PROPER ENQUIRY HAS DISALLOWED THE INTEREST U/S 24. 8.2 IT MAY BE NOTED THAT THE APPELLANT HAS NOT FILE D ANY CONFIRMATION FROM THE LENDER OF THE LOAN EITHER DUR ING THE ASSESSMENT PROCEEDINGS OR APPELLATE PROCEEDINGS. TH EREFORE, THE INTEREST CLAIMED AS PAYABLE IS RIGHTLY DISALLOW ED BY THE AO. IN VIEW OF THE ABOVE DISCUSSION, INTEREST CLAIMED U /S 24 DISALLOWED AND ADDED FOR ASSESSMENT YEARS 2006-07 T O 2010-11 IS HEREBY CONFIRMED. 9 ITA NOS. 1726 TO 1730/H/13 & 1735 TO 1739/HYD/13 SRI B. SEENAIAH & SMT. B. SUJATHA 14. WE HAVE HEARD THE PARTIES AND PERUSED THE MATE RIAL ON RECORD AS WELL AS ORDERS OF THE REVENUE AUTHORITIES. AS C AN BE SEEN FROM THE ASSESSMENT ORDER AS WELL AS ORDER OF THE CIT (A), T HE CLAIM OF DEDUCTION TOWARDS INTEREST PAYMENT WAS DISALLOWED P RIMARILY FOR THE REASON THAT THE ASSESSEE COULD NOT SUBSTANTIATE SUC H CLAIM BY PRODUCING DOCUMENTARY EVIDENCE/PROOF. HOWEVER, IT IS THE CONTENTION OF THE LEARNED AR BEFORE US THAT SUCH INTEREST PA YMENT WAS ALLOWED IN THE PREVIOUS YEARS ON THE SAME SET OF FACTS. TH EREFORE, THERE IS NO REASON WHY IT SHOULD BE DISALLOWED IN THE SUBSEQUEN T YEAR. AFTER CONSIDERING THE SUBMISSIONS OF THE PARTIES, WE ARE INCLINED TO REMIT THE MATTER BACK TO THE FILE OF THE AO FOR EXAMINING IT AFRESH. THE AO IS DIRECTED TO VERIFY WHETHER SIMILAR CLAIM MADE IN EARLIER ASSESSMENT YEAR WAS ALLOWED. THE ASSESSEE IS ALSO DIRECTED T O FURNISH DOCUMENTARY EVIDENCE, IF ANY, TO SUBSTANTIATE HER C LAIM. IF ON VERIFICATION ASSESSEES CLAIM IS FOUND TO BE CORREC T THEN DEDUCTION CLAIMED HAS TO BE ALLOWED. HENCE, THIS GROUND OF T HE ASSESSEE FOR ALL ASSESSMENT YEARS IS CONSIDERED TO BE ALLOWED FOR ST ATISTICAL PURPOSES. 15. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 16. TO SUM UP, ALL THE APPEALS UNDER CONSIDERATION ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 01/08/2014. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JU DICIAL MEMBER HYDERABAD, DATED: 1 ST AUGUST, 2014 KV 10 ITA NOS. 1726 TO 1730/H/13 & 1735 TO 1739/HYD/13 SRI B. SEENAIAH & SMT. B. SUJATHA COPY TO:- 1) SRI B. SEENAIAH & 2 SMT. B. SUJATHA C/O M/S ANJ ANEYULU & CO., CAS., 30, BHAGYALAKSHMI NAGAR, GANDHI NAGAR, HYDERABAD 500 080 3) DCIT, CENTRAL CIRCLE 6, HYDERABAD. 4) CIT(A)-I, HYDERABAD. 5) THE CIT(CENTRAL), HYDERABAD 5)THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDER ABAD.