Ganesh Hari Gadgil, Sangli V. ITO,Cent., Kolhapur

ITA 254/PUN/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49837 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 18-02-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K AMBASTHA
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Search and seizure; Loose papers; Notional interest; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI I.C. SUDHIR (JM) AND SHRI D. KARUNAKARA RAO (AM) ITA NO. 254/PN/2009 (ASSTT. YEAR : 2006-07) GANESH HARI GADGIL . APPELLANT 56/57, SARASWATI NAGAR, BEHIND GUEST HOUSE, SANGLI V . INCOME - TAX OFFICER, CENTRAL, KOLHAPUR . RESPONDENT ITA NO. 258/PN/2009 (ASSTT. YEAR : 2006-07) VASUDEV DHANANJAY GADGIL 1/44, RAJWADA VASAHAT, SANGLI PAN: NOT AVAILABLE .. APPELL ANT V. INCOME - TAX OFFICER, CENTRAL, KOLHAPUR . RESPONDENT APPELLANTS BY : SHRI SUNIL PATHAK RESPONDENTS BY : SHRI. S.K. AMBASTHA ORDER PER I.C. SUDHIR, JM ITA NO. 254/PN/2009 THE FIRST APPELLATE ORDER HAS BEEN QUESTIONED BY THE ASSESSEE ON THE FOLLOWING GROUNDS : 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) (CIT (A)) ERRED IN CONFIRMING THE ADDITION TO INCOME OF THE APPELLANT AMOUNTING TO RS.6,60,802/- MADE BY THE AO ON ACCOUNT OF NOTIONAL INTEREST ON ADVANCE OF RS.13,45,000/- TO MR. PRASHANT SHAH, WHICH WAS NEIT HER RECEIVABLE NOR RECEIVED BY THE APPELLANT. ITA . NO 254 & 258/PN/2009 GANESH H GADGIL ETC.,.. A.Y 2006-07 PAGE 2 OF 10 2 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ADV ANCE OF RS. 13,45,000/- GIVEN BY THE APPELLANT TO MR. PRASHANT SHAH WAS ADVANCE / LOAN WITH INTEREST AND THAT THE APPELLANT HAD ACTUALLY E ARNED / RECEIVED INTEREST AMOUNTING TO RS. 6,60,802/- FROM MR. PRASHANT SHAH. 3. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE TRANSACTION ENTERED INTO BETWEEN THE APPELLANT AND THE OTHER PARTY WAS PURCHASE OF PLOT AND ADVANCE WAS GIVEN TOWARDS PURCHASE OF THE PLOT AS EVIDENCED BY THE AGREEMENT TO SALE, COPY OF WHICH WAS SEIZED IN THE COURSE OF SEARCH AND THE ACTUAL SALE IS COMPLETED AS EVIDENCED BY THE SALE D EED / CONVEYANCE AND THAT THIS CLEARLY SHOWS THE INTENTIONS OF THE PARTI ES. 4. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT TH E ADVANCE TO MR. PRASHANT SHAH WAS AGAINST PURCHASE OF PLOT, THE AGR EEMENT FOR WHICH WAS ENTERED INTO BY THE APPELLANT WITH HIM LONG BACK ON 26-03-2002 AND COPY OF WHICH WAS FOUND AND SEIZED AT THE TIME OF SEARCH ON 26-10-2005. 5. THE LEARNED CIT(A) ERRED IN IGNORING THE FACT TH AT THE APPELLANT HAS ACTUALLY PURCHASED THE PLOT AS PER THE SAID AGREEME NT BY DEED OF SALE DTD. 05-04-2008, A COPY OF WHICH WAS SUBMITTED TO CIT(A) IN THE COURSE OF HEARING. 6. THE LEARNED CIT(A) ERRED IN IGNORING THE AFFIDA VIT FROM MR.PRASHANT SHAH EXPLAINING THE TRANSACTION, WHICH WAS SUBMITTE D IN THE COURSE OF HEARING BEFORE THE CIT(A). 7. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE LOOSE PAPERS BEARING NO. 84, 85 AND 86 ARE MERELY CALCULATIONS MADE BY T HE APPELLANT TO KNOW AND COMPARE THE COST OF THE PLOT INCLUDING INTEREST AND THAT NO INTEREST WAS ACTUALLY RECEIVED OR RECEIVABLE BY THE APPELLANT A ND THAT EXCEPT THE NOTINGS ON THE LOOSE PAPERS, NO OTHER MATERIAL WAS FOUND SU BSTANTIATING THE ADDITION AND THAT THOSE PAPERS ARE RATHER DUMB DOCUMENTS. 8. THE ADDITION OF RS. 6,60,802/- MADE ON ACCOUNT O F INTEREST ON ADVANCES TO MR. PRASHANT SHAH BE DELETED. WITHOUT PREJUDICE TO THE ABOVE, 9. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDIT ION OF THE ENTIRE AMOUNT OF RS. 6,60,802/- ON ACCOUNT OF INTEREST WHE REAS THE INTEREST FOR ONE YEAR ON ADVANCE OF RS.13,45,000/- AT 18% WORKS OUT TO ONLY RS.2,42,100/-. ITA . NO 254 & 258/PN/2009 GANESH H GADGIL ETC.,.. A.Y 2006-07 PAGE 2 OF 10 3 10. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT IN ANY CASE INTEREST ASSESSABLE FOR THE ASSESSMENT YEAR 2006-07 CAN NOT BE MORE THAN RS.2,42,100/- (MORE THAN FOR ONE YEAR) AND THAT THE ENTIRE AMOUNT OF INTEREST WHICH COVERS PERIOD MORE THAN ONE YEAR CAN NOT BE A SSESSED IN ONE YEAR. 11. THE LEARNED CIT(A) OUGHT TO HAVE RESTRICTED TH E ADDITION ON ACCOUNT OF INTEREST TO RS. 2,42,100/-. 2. IN THESE GROUNDS, THE ISSUE INVOLVED IS AS TO W HETHER LD CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS. 6,60,802/- MADE BY THE A.O ON ACCOUNT OF NOTIONAL INTEREST ON ADVANCE OF RS. 13,45,000/- TO MR. PRASH ANT SHAH. 3. THE RELEVANT FACTS ARE THAT THE ASSESSEE WAS SUB JECTED TO SEARCH AND SEIZURE OPERATION, DURING WHICH, CERTAIN PAPERS WERE FOUND (REFERRED TO AS PAGE NOS. 84 TO 86 OF LOOSE PAPER BUNDLE). THESE PAPERS CONTAINED NOTINGS OF CERTAIN AMOUNT ADVANCED TO PREETAM AGENCY, PROP. SHRI . PRASHAN T SHAH. A COPY OF AN AGREEMENT WITH PREETAM AGENCY WAS ALSO FOUND (PAGE NO. 102 AND 115 OF THE BUNDLE). ON THE BASIS OF THESE SEIZED PAPERS, A.O. CAME TO THE CONCLUSION THAT THE AMOUNT ADVANCED BY THE ASSESSEE TO PREETAM AGENCY C ARRIED INTEREST RATE OF 18 %. THE INTEREST ON ADVANCE WAS, HOWEVER, NOT OFFERED F OR TAX BY THE ASSESSEE IN HIS REGULAR RETURN OF INCOME. THE LD CIT(A) HAS UPHELD THIS ACTION OF THE A.O, AGAINST WHICH, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD. A.R. REITERATED THE SUBMISSIONS MADE BEF ORE THE AUTHORITIES BELOW WITH EMPHASIS ON THE PLEA THAT THE CALCULATION OF INTEREST WAS MADE ON THE SEIZED LOOSE PAPER FOR ITS OWN COSTING PURPOSE AND ACTUALL Y INTEREST WAS NEITHER DEMANDED NOR RECEIVED. THE ADVANCE AMOUNT WAS GIVEN TO PR ASHANT SHAH OVER A SPERIOD OF TIME. THE PURCHASE OF PLOT COULD NOT, HOWEVER, BE COMPLETED DUE TO CERTAIN RESTRICTION IN THE URBAN LAND CEILING ACT. THE DI FFICULTIES WAS REMOVED AND THE ASSESSEE HAD ACTUALLY PURCHASED THE PLOT OF LAND F ROM SHRI PRASHANT SHAH BY WAY OF FINAL CONVEYANCE EXECUTED ON 7 TH APRIL 2008. THE FINAL CONSIDERATION WAS OF RS. 35,00,000/-. THE ASSESSEE HAD SUBMITTED THE AFFIDAV IT GIVEN BY SHRI PRASHANT SHAH ITA . NO 254 & 258/PN/2009 GANESH H GADGIL ETC.,.. A.Y 2006-07 PAGE 2 OF 10 4 CONFIRMING THESE FACTS. THERE IS NO EVIDENCE TO PR OVE THAT THE ASSESSEE HAD RECEIVED INTEREST ON THE ADVANCES. HE SUBMITTED FU RTHER THAT THE SECOND AGREEMENT WHICH IS FINAL AGREEMENT OF SALE IN THE YEAR 2008 ( AT ITS PAGE NUMBERS 4 & 5) CONTAINED STATEMENT SHOWING THE AMOUNT RECEIVED AS CONSIDERATION ALONG WITH THE DATE AND CHEQUE NUMBER OF THE AMOUNT RECEIVED. TH E STATEMENT SHOWS THAT THE AMOUNT WAS RECEIVED PARTYWISE FOR THE TRANSACTION. THERE WERE 3 PARTIES INCLUDING ASSESSEE AND 2 OTHER FAMILY MEMBERS, WHO HAVE PURC HASED THE PLOT FOR THE TOTAL CONSIDERATION OF RS. 35,00,000/-. IT IS EVIDENT FR OM THE STATEMENTS THAT THE ADVANCES WHICH WERE GIVEN TO SHRI PRASHANT SHAH AT THE TIME OF ORIGINAL AGREEMENT AND SUBSEQUENTLY IN THE YEAR 2001, 2002 AND 2003 HA VE BEEN ADJUSTED AGAINST THE FINAL CONSIDERATION WITH THE PROPERTY. THE LD. A.R. PLACED RELIANCE ON THE FOLLOWING DECISIONS : I) SHRI MAHAVIR NAGARI SAHAKARI PAT SANSTHA LTD. (2 002) 744 TTJ (PUNE) 793. II) P.R. MATRANI V/S. CIT (2006), 287 ITR 209 (SC). 5. THE LD. D.R., ON THE OTHER HAND, TRIED TO JUSTIF Y THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT SUFFICIENT EVIDENCE WAS T HERE FOUND DURING THE COURSE OF SEARCH TO SUGGEST THAT THE ASSESSEE WAS PAID INTERE ST BY THE SELLER ON THE ADVANCE MADE BY THE ASSESSEE TO THE SELLER OUT OF THE AGREE D CONSIDERATION AMOUNT FOR THE SALE. HE SUBMITTED THAT THERE WAS SUFFICIENT GAP BETWEEN THE ADVANCE MADE AND EXECUTION OF SALE DEED OF THE PROPERTY AND GENERAL PRESUMPTION IS AGAINST THE ASSESSEE THAT HE WAS PAID INTEREST ON THE ADVANCE L YING WITH THE SELLER WHICH IS ALSO SUPPORTED BY THE CALCULATION MADE BY THE ASSESSEE F OUND DURING THE COURSE OF SEARCH AND SEIZURE OPERATION CONDUCTED ON THE PRE MISES OF THE ASSESSEE WHICH HAS BEEN REFERRED AS PAGE NOS. 84 TO 86 OF THE LOOSE PA PER BUNDLE. IN THESE PAPERS, NOTINGS OF CERTAIN AMOUNTS ADVANCED TO PREETAM AGE NCY, PROP. SHRI PRASHANT SHAH HAVE BEEN MADE ON THE BASIS OF THOSE SEIZED PAPERS. THE A.O. WORKED OUT THE INTEREST PAID BY THE SELLER TO THE ASSESSEE AT THE RATE OF 18% ON THE AMOUNT ADVANCED. SINCE THE INTEREST OF ADVANCE WAS NOT OF FERED FOR TAX BY THE ASSESSEE IN ITA . NO 254 & 258/PN/2009 GANESH H GADGIL ETC.,.. A.Y 2006-07 PAGE 2 OF 10 5 THE REGULAR RETURN OF ITS INCOME, HENCE THE A.O WAS JUSTIFIED IN MAKING THE ADDITION OF THAT AMOUNT IN THE INCOME OF THE ASSESSEE. 6. CONSIDERING THE ABOVE SUBMISSIONS, ESPECIALLY HAVIN G GONE THROUGH THE DECISIONS RELIED UPON BY THE LD. A.R., WE FIND THAT THE HONBLE SUPREME COURT IN THE CASE OF P.R. MATRANI V/S. CIT (SUPRA) HAS BEEN PL EASED TO HOLD THAT PRESUMPTION U/S. 132 (4A) IS AVAILABLE ONLY IN REGARD TO THE PR OCEEDINGS FOR SEARCH AND SEIZURE U/S. 132 AND IS NOT AVAILABLE FOR FRAMING THE REGUL AR ASSESSMENT. THE HONBLE SUPREME COURT HAS HELD THAT PRESUMPTION UNDER SUB-S ECTION (4A) OF SECTION 132 IS A REBUTTABLE PRESUMPTION. UNLIKE SECTION 132(4), IT HAS NOT PROVIDED THAT THE PRESUMPTION U/S. 132(4A) WOULD BE AVAILABLE WHILE F RAMING THE REGULAR ASSESSMENT FOR THAT MATTER IN ANY OTHER PROCEEDINGS UNDER THE ACT EXCEPT U/S. 278D. IT HAS BEEN FURTHER HELD THAT SECTION 132 BEING A COMPLETE CODE IN ITSELF CANNOT INTRUDE INTO ANY OTHER PROVISION OF THE ACT AND VICE VERSA. THOUGH PRESUMPTION U/S. 132(4A) IS NOT AVAILABLE TO THE AUTHORITY WHILE FR AMING THE REGULAR ASSESSMENT BUT SEIZED MATERIAL CAN BE USED AS A PIECE OF EVIDENCE IN OTHER PROCEEDINGS UNDER THE ACT, HELD THE HONBLE SUPREME COURT. IN THE PRESE NT CASE BEFORE US, THERE IS NO DENIAL THAT THE DOCUMENT REFERRED AS PAGE NOS. 84 TO 86 OF LOOSE PAPER BUNDLE DO PERTAIN TO THE ASSESSEE. THUS, PRESUMPTION IS AGAIN ST THE ASSESSEE THAT NOTINGS ON THOSE DOCUMENTS REGARDING AMOUNT ADVANCED TO PREETA M AGENCY AND WORKING OF INTEREST AT THE RATE OF 18% ON THOSE ADVANCE ARE RE LATED TO THE ASSESSEE. BUT AT THE SAME TIME, ASSESSEE IS AT LIBERTY TO REBUT THE SAME AND IN THAT CASE, THE ONUS WILL SHIFT ON A.O TO ESTABLISH THE ALLEGATION MADE BY T HE A.O. IN THE PRESENT CASE, THE CONTENTION OF THE ASSESSEE BEFORE THE AUTHORITIES B ELOW REMAINED THAT INTEREST NOTED ON THOSE SEIZED PAPERS AGAINST THE AMOUNT ADVANCED BY THE ASSESSEE TO THE SELLER WAS ONLY WORKING OF THE COST AS THE AGREEMENT TO SA LE INITIALLY ENTERED INTO ON 26.3.2002 FOR THE SALE CONSIDERATION OF RS. 30,00,0 00/- COULD NOT MATERIALISE DUE TO VARIOUS REASONS. THE SELLER DEMANDED TO INCREASE C ONSIDERATION FROM RS. 30 LAKH TO 35 LAKH AND THE ASSESSEE AGREED TO PAY MORE THAN CO NSIDERATION ONLY TO ENSURE THAT ITA . NO 254 & 258/PN/2009 GANESH H GADGIL ETC.,.. A.Y 2006-07 PAGE 2 OF 10 6 THE DEAL IS COMPLETED WITHOUT ANY DELAY. ACCORDING LY, ACTUAL CONVEYANCE OF THE PROPERTY WAS COMPLETED ONLY ON 5 TH APRIL 2008. THE ADVANCES MADE BY THE ASSESSEE ON DIFFERENT DATES WERE TOWARDS PURCHASE OF PLOT. NO INTEREST WAS AGREED TO BE PAID NOR ANY INTEREST WAS RECEIVED FROM MR. PRASHANT SHA H BY ANY OF THE ASSESSEES. IT WAS THUS CONTENDED THAT ADDITION MADE BY A.O ON ACC OUNT OF NOTIONAL INTEREST ON ADVANCES MADE TO MR. PRASHANT SHAH WAS NOT JUSTIFIE D. THE SAID MR. PRASHANT SHAH HAS CONFIRMED THAT NO INTEREST IS PAYABLE OR PAID BY HIM TO ANY OF THE ASSESSEES AND THAT THE ADVANCES WERE ON ACCOUNT OF SALE OF PL OT. AN AFFIDAVIT OF MR. PRASHANT SHAH CONFIRMING THESE FACTS HAS BEEN PLACED ON RECO RD. NO OTHER EVIDENCE WAS FOUND BY THE A.O NOR HIS ALLEGATION IS SUPPORTED BY ANY EVIDENCE OTHER THAN THE MERE CALCULATION SHEETS. WE DO NOT FIND REASON TO DISBELIEVE THESE CONTENTIONS IN ABSENCE OF ANY CORROBORATORY EVIDENCE IN SUPPORT TO THE ALLEGATION MADE BY THE A.O THAT SOME INTEREST (ON ADVANCES MADE BY THE ASSESS EE TO THE SELLER) WAS RECEIVED BY THE ASSESSEE FROM THE SELLER. ON HIS AFFIDAVIT, THE SELLER SHRI PRASHANT SHAH HAS ALSO CONFIRMED THIS FACT THAT NO INTEREST WAS PAYA BLE OR PAID BY HIM TO ANY OF THE ASSESSEES WHICH HAS BEEN REMAINED UN-REBUTTED BY TH E A.O. UNDER THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE A.O WAS NOT JUSTIFIED IN MAKING THE ADDITION OF INTEREST AMOUNT AGAINST THE INCOME OF T HE ASSESSEE ON THE PRESUMPTION THAT THE SAME WAS RECEIVED BY THE ASSESSEE FROM TH E SELLER ON HIS ADVANCES MADE TO HIM TOWARDS CONSIDERATION FOR PURCHASING OF THE PROPERTY. THE A.O IS, ACCORDINGLY, DIRECTED TO DELETE THE ADDITION OF RS. 6,60,802/. THE GROUNDS 1 TO 8 ARE THUS DECIDED IN FAVOUR OF THE ASSESSEE. GROUNDS NO. 9 TO 11 7. THESE GROUNDS ARE ALTERNATIVE GROUNDS TO THE ABO VE GROUNDS WHEREIN ACTION OF THE LD CIT(A) HAS BEEN QUESTIONNED WITH THIS CO NTENTION THAT HE HAS FAILED TO APPRECIATE THAT IN ANY CASE, INTEREST ASSESSABLE F OR THE A.Y. 2006-07 CANNOT BE MORE THAN RS.2,42,100/- AND THAT THE ENTIRE AMOUNT OF INTEREST WHICH COVERS PERIOD MORE THAN ONE YEAR CANNOT BE ASSESSED IN ONE YEAR. IN VIEW OF OUR FINDING ON THE ITA . NO 254 & 258/PN/2009 GANESH H GADGIL ETC.,.. A.Y 2006-07 PAGE 2 OF 10 7 MAIN GROUNDS 1 TO 8, THESE ALTERNATIVE GROUNDS 9 TO 11 DO NOT SURIVIVE. THESE ARE REJECTED AS SUCH. 8. IN RESULT, APPEAL IS PARTLY ALLOWED. ITA NO. 258/PN/2009 9. THE FIRST APPELLATE ORDER SHAS BEEN QUESTIONED O N THE FOLLOWING GROUNDS : 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) (CIT (A)) ERRED IN CONFIRMING THE ADDITION TO INCOME OF THE APPELLANT AMOUNTING TO RS.5,98,620/- MADE BY THE AO ON ACCOUNT OF NOTIONAL INTEREST ON ADVANCE OF RS.9,15,500/- TO MR. PRASHANT SHAH, WHICH WAS NEITH ER RECEIVABLE NOR RECEIVED BY THE APPELLANT. 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ADV ANCE OF RS.9,15,500/- GIVEN BY THE APPELLANT TO MR. PRASHANT SHAH WAS AD VANCE / LOAN WITH INTEREST AND THAT THE APPELLANT HAD ACTUALLY EARNED / RECEIV ED INTEREST AMOUNTING TO RS. 5,98,620/- FROM MR. PRASHANT SHAH. 3. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE TRANSACTION ENTERED INTO BETWEEN THE APPELLANT AND THE OTHER PARTY WAS PURCHASE OF PLOT AND ADVANCE WAS GIVEN TOWARDS PURCHASE OF THE PLOT AS EVIDENCED BY THE AGREEMENT TO SALE, COPY OF WHICH WAS SEIZED IN THE COURSE OF SEARCH AND THE ACTUAL SALE IS COMPLETED AS EVIDENCED BY THE SALE D EED / CONVEYANCE AND THAT THIS CLEARLY SHOWS THE INTENTIONS OF THE PARTI ES. 4. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT TH E ADVANCE TO MR. PRASHANT SHAH WAS AGAINST PURCHASE OF PLOT, THE AGR EEMENT FOR WHICH WAS ENTERED INTO BY THE APPELLANT WITH HIM LONG BACK ON 26-03-2002 AND COPY OF WHICH WAS FOUND AND SEIZED AT THE TIME OF SEARCH ON 26-10-2005. 5. THE LEARNED CIT(A) ERRED IN IGNORING THE FACT TH AT THE APPELLANT HAS ACTUALLY PURCHASED THE PLOT AS PER THE SAID AGREEME NT BY DEED OF SALE DTD. 05-04-2008, A COPY OF WHICH WAS SUBMITTED TO CIT(A) IN THE COURSE OF HEARING. ITA . NO 254 & 258/PN/2009 GANESH H GADGIL ETC.,.. A.Y 2006-07 PAGE 2 OF 10 8 6. THE LEARNED CIT(A) ERRED IN IGNORING THE AFFIDA VIT FROM MR.PRASHANT SHAH EXPLAINING THE TRANSACTION, WHICH WAS SUBMITTE D IN THE COURSE OF HEARING BEFORE THE CIT(A). 7. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE LOOSE PAPERS BEARING NO. 84, 85 AND 86 ARE MERELY CALCULATIONS MADE BY T HE APPELLANT TO KNOW AND COMPARE THE COST OF THE PLOT INCLUDING INTEREST AND THAT NO INTEREST WAS ACTUALLY RECEIVED OR RECEIVABLE BY THE APPELLANT A ND THAT EXCEPT THE NOTINGS ON THE LOOSE PAPERS, NO OTHER MATERIAL WAS FOUND SU BSTANTIATING THE ADDITION AND THAT THOSE PAPERS ARE RATHER DUMB DOCUMENTS. 8. THE ADDITION OF RS. 5,98,620/- MADE ON ACCOUNT O F INTEREST ON ADVANCES TO MR. PRASHANT SHAH BE DELETED. WITHOUT PREJUDICE TO THE ABOVE, 9. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDIT ION OF THE ENTIRE AMOUNT OF RS. 5,98,620/- ON ACCOUNT OF INTEREST WHE REAS THE INTEREST FOR ONE YEAR ON ADVANCE OF RS.9,15,500/- AT 18% WORKS OUT T O ONLY RS.1,64,790/-. 10. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT IN ANY CASE INTEREST ASSESSABLE FOR THE ASSESSMENT YEAR 2006-07 CAN NOT BE MORE THAN RS.1,64,790/- (MORE THAN FOR ONE YEAR) AND THAT THE ENTIRE AMOUNT OF INTEREST WHICH COVERS PERIOD MORE THAN ONE YEAR CAN NOT BE A SSESSED IN ONE YEAR. 11. THE LEARNED CIT(A) OUGHT TO HAVE RESTRICTED TH E ADDITION ON ACCOUNT OF INTEREST TO RS. 1,64,790/-. GROUND NOS. 1 TO 8 10. SIMILAR FACTS ARE THERE AS NARRATED IN THE CASE OF SHRI GANESH H. GADGIL HEREINABOVE IN ITA NO. 254/PN/2009. THE PRESENT AS SESSEE HAD PURCHASED THE PLOT IN QUESTION FROM SHRI PRASHANT SHAH I.E. PROP. OF PREETAM AGENCY ALONGWITH SHRI GANESH H. GADGIL AND DHANANJAY GADGIL ALIYAS SUDHIR H. GADGIL. THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THE FACTS OF THE CASE O F SHRI GANESH H. GADGIL. WE HAVE ALREADY DEALT WITH IT HEREINABOVE IN ITA NO. 254/P N/2009; THAT ONLY DIFFERENCE WITH ALL THE THREE PARTIES I.E. PURCHASERS INCLUDING TH E PRESENT ASSESSEE IS THAT THEY HAD PAID DIFFERENT AMOUNT OF THE AGREED CONSIDERATION F OR PURCHASING OF THE PLOT FROM THE SELLER. ACCORDINGLY, DIFFERENT AMOUNT ON THE B ASIS OF ADVANCES PAID BY THEM HAS ITA . NO 254 & 258/PN/2009 GANESH H GADGIL ETC.,.. A.Y 2006-07 PAGE 2 OF 10 9 BEEN WORKED OUT WITH THIS PRESUMPTION THAT THE ASSE SSEE MIGHT HAVE RECEIVED INTEREST ON THE ADVANCE MADE BY HIM TO THE SELLER ON THE BASIS OF SOME NOTINGS ON SOME LOOSE PAPERS SEIZED DURING THE COURSE OF SEAR CH PROCEEDINGS. THE OBJECTION OF THE ASSESSEE BEFORE THE AUTHORITIES BELOW REMAIN ED THAT THOSE WORKINGS WERE ONLY A CALCULATION OF COST OF THE PROPERTY AND NO I NTEREST ON ADVANCE WAS PAID OR PAYABLE TO THE ASSESSEE NOR ANY AGREEMENT TO THIS EFFECT WAS ENTERED INTO BETWEEN THEM AND THE SELLER. THE SELLER ALSO CONFIRMED THE SAME ON HIS AFFIDAVIT WHICH REMAINED UN-REBUTTED BY THE DEPARTMENT. THE DEPART MENT COULD ALSO NOT ESTABLISH THE ALLEGATION BY FURNISHING ANY CORROBORATORY EVI DENCE IN SUPPORT. 11. UNDER THE ABOVE CIRCUMSTANCES, WHICH ARE AKIN T O THE FACTS AND CIRCUMSTANCES IN THE CASE OF GANESH H. GADGIL, WE FOLLOWING OUR DECISION IN THE CASE OF SHRI GANESH H. GADGIL HEREINABOVE DECIDE TH AT THE A.O WAS NOT JUSTIFIED IN MAKING THE ADDITION ON ACCOUNT OF WORKING OF NOTION AL INTEREST ON ADVANCE UNDER THE PRESUMPTION ON THE BASIS OF DOCUMENTS SEIZED B UT UNCORROBORATED, THAT THE ASSESSEE MIGHT HAVE RECEIVED INTEREST ON THE ADVANC E PAID BY HIM TO THE SELLER. WE, ACCORDINGLY, DIRECT THE A.O TO DELETE THE ADDITION IN QUESTION. GROUND NOS. 1 TO 8 ARE ACCORDINGLY ALLOWED. GROUND NOS. 9 TO 11 12. THESE ARE ALTERNATIVE GROUNDS AS ALREADY DISCUS SED HEREINABOVE IN THE CASE OF SHRI GANESH H. GADGIL. IN THESE ALTERNATIVE GRO UNDS, THE CONTENTION OF THE ASSESSEE IS THAT THE LD CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF THE ENTIRE AMOUNT OF RS. 5,98,620/- ON ACCOUNT OF INTE REST WHEREAS THE INTEREST FOR ONE YEAR ON ADVANCE OF RS. 9,15,500/- AT THE RATE OF 18 % WORKS OUT ONLY RS.1,64,790/-. SINCE WE HAVE ALREADY DECIDED MAIN GROUND NOS. 1 TO 8 IN FAVOUR OF THE ASSESSEE, THESE ALTERNATIVE GROUNDS DO NOT STAND. THE SAME ARE DISMISSED AS SUCH. ITA . NO 254 & 258/PN/2009 GANESH H GADGIL ETC.,.. A.Y 2006-07 PAGE 2 OF 10 10 13. THE APPEAL IS ACCORDINGLY PARTLY ALLOWED. 14. IN SUMMARY, BOTH THE APPEALS ARE PARTLY ALLOWE D. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 22ND J UNE 2011. SD/- SD/- ( D. KARUNAKARA RAO ) ACCOUNTANT MEMBER ( I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 22ND JUNE, 2011 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT I/II, KOLHAPUR / CIT (CENTRAL), PUNE 4. THE CIT(A)- KOLHAPUR 5. THE D.R. B BENCH, PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE