Shri Mahesh Mittal, Indore V. The ACIT 2(1), Indore

ITA 92/IND/2014

• Counselvise Citation: 9222714 RSA 2014
• Duration Of Justice: 1 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 06-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: S N AGRAWAL
• Keywords: Search and seizure; Loose papers; Notional interest; Bogus loan

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER ITA NOS. 92/IND/2014 A.Y. 2007-08 SHRI MAHESH MITTAL INDORE PAN ACVPM 4802-B ::: APPELLANT VS ASSTT. COMMR. OF INCOME TAX OFFICER 2(1) INDORE ::: RESPONDENT ITA NOS. 93/IND/2014 A.Y. 2007-08 SHRI PRAVIN MITTAL INDORE PAN AFCPM 4586R ::: APPELLANT VS ASSTT. COMMR. OF INCOME TAX OFFICER 2(1) INDORE ::: RESPONDENT ` APPELLANT BY SHRI S.N. AGRAWAL AND SHRI PANKAJ MOGRA RESPONDENT BY SHRI R.A. VERMA DATE OF HEARING 13 . 5 .2015 DATE OF PRONOUNCEMENT 1 5 . 5 .2015 2 O R D E R PER SHRI B.C. MEENA, AM A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT. BOTH THE ASSESSEES SURRENDERED UNACCOUNTED ADVANCES O F RS. 60 LACS EACH ON THE BASIS OF LOOSE PAPERS SEIZED DU RING THE SEARCH OPERATION BUT DID NOT DISCLOSE THE ACCRUED INTEREST THEREON. 2. IN THESE APPEALS THE COMMON ISSUE INVOLVED IS WITH REGARD TO ADDITION OF RS. 1,80,000/- ON ACCOUNT OF INT EREST ON ADVANCES. IN THESE CASES, EVIDENCES WERE FOUND WHE RE THE ASSESSEE ADVANCED UNACCOUNTED LOANS TO VARIOUS PERSONS. THE AMOUNT OF ADVANCE IS NOT DISPUTED. THE ONLY DISPUTE IS WITH REGARD TO ACCRUAL OF INTEREST ON THES E ADVANCES OR IT WAS A PART AND PARCEL OF RS. 60 LACS LOAN 3 ADVANCED TO VARIOUS PERSONS WHICH THE ASSESSEES HAVE ADMITTED TO BE OUT OF BOOKS. . 2. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE QUANTUM OF LOAN ADVANCED BY THE ASSESSE IS NOT IN DISPUTE. HOWEVER, AS PER THE MARKET PRACTICE, THE INTEREST PORTION IS DEDUCTED AT THE TIM E OF ADVANCING THE LOAN ITSELF. THEREFORE, THE CIT(A) WAS N OT JUSTIFIED IN SUSTAINING THE ADDITION OF RS.1,80,000/ - ON ACCOUNT OF INTEREST EARNED ON ADVANCES GIVEN. HE ALSO PLEADED THAT IT WAS A NOTIONAL INTEREST. ON THE OTHER H AND, THE LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 3. WE HAVE HEARD BOTH THE SIDES. DURING THE SEARCH OPERATION, LOOSE PAPERS WERE FOUND WHEREIN DETAILS OF ADVANCES MADE OF RS. 60 LACS FOR A PERIOD OF FOUR MONTHS AT THE RATE OF INTEREST OF 9% WERE MENTIONED. THE ASSESS EE ADMITTED THE QUANTUM OF ADVANCE, PERIOD OF ADVANCE AND RATE OF INTEREST. THEREFORE, LEARNED ARS ARGUMENT TH AT THE 4 ADDITION WAS MADE ON ACCOUNT OF NOTIONAL INTEREST IS UNJUSTIFIED. THE QUANTUM OF ADVANCE WITH THE PERIOD OF ADVANCE AND RATE OF INTEREST WAS AVAILABLE IN THE SHEETS FOUND DURING THE SEARCH OPERATION. THEREFORE, THERE W AS DEFINITELY ACCRUAL OF INTEREST ON THESE ADVANCES. THE ADDITION WAS NOT FOR NOTIONAL INTEREST BUT FOR ACCRUED INTEREST. THE OTHER PLEA WITH REGARD TO DEDUCTION OF INTEREST AT THE TIME OF ADVANCING THE LOAN IS ONLY HYPOTHETICAL PLEADING WHICH IS NOT BASED ON ANY EVIDENCE. IT WAS SI MPLY A STATEMENT MADE BY THE LEARNED COUNSEL FOR THE ASSESSE E BY MENTIONING THAT SUCH PRACTICE PREVAILS IN THE MARKE T. NOTHING WAS STATED BY SHRI OM PRAKASH MITTAL, FATHER OF THE ASSESSE, IN THE STATEMENT RECORDED AT THE TIME OF SEARCH OPERATION IN THIS REGARD. IN THE ABSENCE OF ANY EVIDEN CE IN SUPPORT OF THE ASSESSEES CONTENTION, WE ARE UNABLE TO AGREE WITH THE SAME. THE CIT(A) HAS CONFIRMED THE ADDITION BY HOLDING AS UNDER :- 5 3. I HAVE SEEN THE ASSESSMENT ORDER, THE GROUND OF APPEAL & SUBMISSION OF APPELLANT. 5. FIRST GROUND IS AGAINST ADDITION OF RS.1,80,000/- ON A/C OF INTEREST EARNED ON THE ADVANCE OF RS. 60 LACS AS ADMITTED DURING SEARCH. THE ONLY CONTENTION OF APPELLANT WAS THAT LOAN/ADVANCE OF ONLY RS. 58,20,000/- WAS GIVEN AND REST OF RS. 1,80,000/- LAKH WAS INTEREST PORTION. HOWEVER, FROM THE STATEMENT OF SH. OMPRAKASH MITTAL RECORDED ON 09.10.2006, REPLY TO Q. NO. 5 IS ABSOLUTELY CLEAR WHEREIN HE STATED THAT SH. MAHESH MITTAL (HIS SON) EXTENDED UNACCOUNTED LOAN OF RS.60 LAKH FROM 12.07.2006 TO 11.11.2006. HENCE RS. 60 LAKH IS AMOUNT OF LOAN ONLY AND IT DOES NOT INCLUDE INTEREST FOR 4 MONTHS. THEREFORE, ADDITION OF INTEREST INCOME ON 6 SUCH LOAN OF RS. 1.80 LAKH AS MADE BY THE A.O. IS HEREBY CONFIRMED. IN THESE CIRCUMSTANCES, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) AND CONFIRM THE SAME. 4. IN THE RESULT, BOTH THE APPEALS OF THESE ASSE SSEES ARE DISMISSED. PRONOUNCED IN OPEN COURT ON 15TH MAY, 2 015 SD/- SD/- (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER MAY 15 , 2015 DN/-