| The Tax Publishers2020 TaxPub(DT) 3711 (Jp-Trib) INCOME TAX ACT, 1961
Section 132
Where assessee surrendered amount of advances given to various parties based on noting seized pursuant to search on his residence, addition was rightly made on allegation that assessee surrendered amount of advance given but interest earned on said advances was not declared in return of income. However, quantum was reduced based on individual terms and conditions of advances and based on what document was found during course of search.
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Search and seizure - Assessee surrendered amount of advances given to various parties - Interest earned on said advances was not declared in return of income -
Pursuant to search, assessee surrendered an amount on account of advance given to different parties. Surrender was made on the basis of noting seized from assessee's residence. AO made addition on allegation that assessee surrendered amount of advance given but interest earned on said advances was not declared in return of income. On that basis, addition of interest amount was made, adopting the rate of interest of 12% per annum on advance given for whole year. Held: There were independent transactions where different amounts were advanced by assessee to various persons and therefore, each of the transactions were to be seen in context of individual terms and conditions and based on what document was found during course of search. In respect of one of the transactions with a party (A) rate of interest of 1.5% per month was specified on the Hundi document. None of the other documents found during the search specify the rate of interest. Since amount was advanced, which was not disputed by assessee, it was deemed appropriate to sustain the rate of interest of 12% per annum as applied by AO. Except in respect of A, where it should be calculated at the rate of 18% per annum. Further, in respect of transactions with K, J and M, interest should be calculated for period of two months as evidence by documents found during the course of search. In respect of other transactions, it would be reasonable to calculate the rate of interest until end of financial year in absence of anything contrary brought on record, which showed date of maturity before close of financial year.
REFERRED : Vedabai Alias Vaijayanatabai Baburao Patil v. Shantaram Baburao Patil & Ors. (2002) 122 Taxman 114 (SC) : 2002 TaxPub(DT) 0475 (SC) Collector, Land Acquisition v. Mst. Katiji & Ors. (1987) 167 ITR 471 (SC) : 1987 TaxPub(DT) 1279 (SC) Shree Jee Jewellers v. The ITO, Ward-2 (1), Jaipur [ITA No. 393/JP/2017, dt. 27-1-2020] : 2020 TaxPub(DT) 0827 (Jp-Trib) Shri Babulal Vani Prop. M/s. Babulal Ramlal Vani, Shri Gordhanlal Vani (Deceased) Prop. M/s. Gordhanlal Ramlal Vani (Through Son & Legal Heir Shri Yogendra Vani) v. ACIT Ratlam 2019 TaxPub(DT) 6821 (Ind-Trib) M/s. AGL Moulds & Tools, Pappinissery, Kannur v. The ITO, Ward-1 (1), Kannur. [ITA No. 101/Coch/2019, dt. 15-5-2019] : 2019 TaxPub(DT) 3867 (Coch-Trib) M/s. Reliable Spaces (P) Ltd. v. Dy. CIT, Circle 10 (3), Mumbai [ITA No. 3085/MUM/2015, dt. 25-9-2018] Umbrella Projects (P) Ltd. v. The I.T.O, Ward 18 (1), New Delhi [ITA No. 5955/Del/2014 (Delhi Trib), dt. 23-2-2018] ACIT, Central Circle, Ghaziabad v. Jay Dee Securities and Finance learned and Vice-Versa (2017) 88 Taxmann.com 626 (Del-Trib) : 2017 TaxPub(DT) 2047 (Del-Trib) The Asstt. CIT 12 (3) (2) & Ors. v. Marico Ltd. [SLP (Civil) Diary No. 7367/2020 vide Order, dt. 1-6-2020] : 2020 TaxPub(DT) 2586 (SC)
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