Bechar Raghvji Patel Vs ACIT (ITAT Mumbai)
153A Addition Without Incriminating Material Deleted – Interest Receipts/Payments Taxable Only on Net Basis – Additions u/s 69A 69C Rejected – ITAT Mumbai
Search u/s 132 in Patel RPL Realty Group led to assessments u/s 143(3) r.w.s. 153A wherein AO made additions towards alleged unsecured loan & interest transactions based on seized Tally sheets. For AY 2012-13 (unabated year), ITAT held that no incriminating material was found during search; therefore assessment itself was bad in law following Abhisar Buildwell, and addition u/s 68 was quashed.
For later years, AO added gross interest receipts ₹92.63 lakh u/s 69A and interest payments ₹87.96 lakh u/s 69C based on seized notings. CIT(A) held that entries themselves explained nature & source and provisions of 69A/69C were not applicable; only net undisclosed interest of ₹4.37 lakh was taxable as business income. ITAT upheld this view observing that AO wrongly added gross figures despite himself computing differential amount and without issuing proper show cause notice, violating natural justice.
Further, addition of ₹1.87 lakh on loan reconciliation was deleted as it was based merely on presumptions without any independent incriminating material. Accordingly, assessee appeals largely allowed and Revenue appeals dismissed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
