DE vs. HARDA DEVELOPERS P. LTD,MUMBAIVS.ITO RG 9(1)-3, MUMBAI

M/s. Devsharda Developers Pvt. Ltd., 3. The only substantive issue involved in this appeal is an addition of Rs.572,930 made u/s 69C.

Rival contentions have been heard and record perused. Facts in brief are that there was a survey on the business premises of the assessee. Based on the papers seized in the course of Survey Operations, the learned AO came to a view that: (a) the Assessee had paid interest aggregating Rs. 572,930 to four parties and (b) since these interest payments were not recorded in the books of accounts an addition was made u/s 69C of Rs. 572,930.

By the impugned order, CIT(A) confirmed the action of the AO against which assessee is in further appeal before us.

We have gone through the orders of the authorities below, contention of learned AR was that before the lower authorities the Assessee had submitted that the papers seized from him only represented interest working. The loans in reference were taken by Charkop Shantidoot Co- op. HSL (hereinafter called Society) and the interest was also paid by the said Society and such interest payments as also concerned Loans were indeed reflected in the Books of the Society. In support of this contention, learned AR invited our attention to the copies of ledger accounts of the parties in the books of the Society showing loan receipts and interest payments, copies of bank account of the Society reflecting the interest payments and loan repayments, TDS Returns filed and TDS Certificates issued by the Society, as placed on record. Learned AR also explained that the Assessee had entered into a Development Agreement with the M/s. Devsharda Developers Pvt. Ltd., Society and hence in terms of the Development Agreement, the loans were arranged by the Assessee on behalf of the Society. Since the loans were arranged for and managed by the Assessee, the Assessee had done the detailed computation of interest payable to the Parties and thus the papers seized, only represented the interest computation and did not mean that the Assessee had paid the said interest without recording the same in his books of accounts.

As per learned A.R, the Assessee had produced clinching and substantial evidence in support of his contention and the learned lower authorities merely brushed aside the contention of the Assessee without even going through the same and without saying one word on how this evidence was not reliable. From the order of the lower authorities it is not clear as to whether AO has called for the concerned persons to whom interest was alleged to be paid and from whom loan was alleged to be received by the assessee. Merely on the basis of paper seized, the AO came to the conclusion that assessee had paid the interest without recording the same in its regular books of accounts. In view of the above discussion, we set aside the order of the lower authorities and the matter is restored back to the file of the AO for deciding afresh after considering the evidences filed by the assessee in support of the fact that interest was paid by the society and TDS was also deducted thereon by the society itself and not by the assessee. We also direct the AO to call the concerned parties to whom assessee has been alleged to be paid interest so as to verify the genuineness of the transaction of interest having