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3.2.4. Since, the appellant is the owner of the document BS-1, the moot question arises that whether the entire transactions mentioned therein can be added in the hands of appellant even when there is clear mention of repayment of loan. The ledger account mentions opening loan balance/fresh loan given, interest charged, interest repaid and loan repaid. However, the Ld. AO by applying pick and choose method has only picked opening loan balance, fresh loan given and interest earned by appellant, however, has completely ignored the other transactions viz. loan repayment and interest received. The Ld. AO cannot pick and choose certain transaction on his free will and ignore other key transactions benefiting the appellant. The Ld. AO ought to have considered the repayment transaction before making the impunged addition and should Jarnalbeer Singh Bhatia IT(SS)A Nos. 19 to 27/Ind/2023 & ITA No. 226 & 228/Ind/2023- AY 2013-14 to 2018-19 have allowed proper set-off or telescoping effect of these transactions. Thus, after considering the nature of transactions appearing in the seized material, telescoping benefit should have been allowed by the Ld. AO.
3.2.5. Furthermore and most importantly the appellant failed to explain the source of cash loan and have also not shown interest income earned thereon while filing return of income. Here, it is worth mentioning that the loans given by appellant have also been repaid subsequently with interest and this fact is apparent from the seized ledger account and was not disputed by the Ld. AO. Since, there are evidence of advancement of loans by appellant for short period of time and the same were repaid with interest subsequently, therefore, making addition of entire loan and interest amount will tantamount to double addition and therefore, the only remedy to give telescopic benefit. As evident from seized diary the cash loans were given for a short period of time which were repaid subsequently and therefore, amounts including interest were available with the appellant which were utilized in providing further cash loans in the same and subsequent years. Thus, it is now abundantly clear that correct unaccounted income can be derived by giving telescopic effect. However, the appellant has taken alternate plea, though not accepted that peak credit theory should be adopted for ascertaining unexplained investment. The appellant has summarized all the transactions in a table and worked out peak credit. The same is reproduced hereunder:
Hindustan 12/20/2016 Abhikaran 500,000 23,798,721 Cash Naame Hindustan 12/24/2016 Abhikaran 250,000 24,048,721 Cash Naame Hindustan 12/31/2016 Abhikaran 250,000 24,298,721 Cash Naame Hindustan 12/31/2016 Abhikaran 154,420 24,144,301 Int A/c Jama 1/8/2017 R.K.V.K 112,500 24,031,801 Int A/c Jama Chadha Int A/c Jama Sep 1/11/2017 Tyre 68,250 23,963,551 To Dec 1/14/2017 Kiran Bhai 30,000 23,933,551 Int A/c Jama 1/19/2017 Sunil Gupta 336,000 23,597,551 Int Received 2/3/2017 R.K.V.K 112,500 23,485,051 Int A/c Jama Ashok 2/10/2017 Kothari 2,000,000 21,485,051 Int Jama Hindustan 3/1/2017 Abhikaran 900,000 20,585,051 Cash Received 3/1/2017 Uttam Seeds 1,000,000 19,585,051 Hindustan Cash Received Am 3/7/2017 Abhikaran 270,000 19,315,051 + Int 3/8/2017 Sunil Gupta 1,000,000 18,315,051 Cash Received 3/8/2017 R.K.V.K 112,500 18,202,551 Int A/c Jama 3/10/2017 Kiran Bhai 45,000 18,157,551 Int A/c Jama Agniwash 3/11/2017 Soni 60,000 18,097,551 Int A/c Jama 3/16/2017 Sunil Gupta 324,000 17,773,551 Int A/c Jama 4/11/2017 Sunil Gupta 1,500,000 16,273,551 Cash Received 4/11/2017 R.K.V.K 1,500,000 17,773,551 Cash Naame 4/11/2017 R.K.V.K 112,500 17,661,051 Int A/c Jama Jarnalbeer Singh Bhatia IT(SS)A Nos. 19 to 27/Ind/2023 & ITA No. 226 & 228/Ind/2023- AY 2013-14 to 2018-19 Hindustan 4/12/2017 Abhikaran 500,000 18,161,051 Cash Paid Chadha 4/15/2017 Tyre 68,250 18,092,801 Int A/c Jama 5/3/2017 R.K.V.K 5,000,000 13,092,801 Cash Received 5/17/2017 R.K.V.K 127,500 12,965,301 Int A/c Jama 6/12/2017 R.K.V.K 135,000 12,830,301 Int A/c Jama 6/14/2017 R.K.V.K 1,000,000 13,830,301 Cash Naame Hindustan 7/5/2017 Abhikaran 163,166 13,667,135 Int A/c Jama 7/7/2017 R.K.V.K 143,500 13,523,635 Int A/c Jama 7/10/2017 Sunil Gupta 206,250 13,317,385 Int A/c Jama Chadha 7/12/2017 Tyre 68,250 13,249,135 Int A/c Jama Agniwash 7/16/2017 Soni 180,000 13,069,135 Int A/c Jama 7/19/2017 Kiran Bhai 30,000 13,039,135 Int Jama 8/4/2017 Uttam Seeds 2,500,000 15,539,135 Cash Nagdi 8/5/2017 R.K.V.K 155,000 15,384,135 Int A/c Naame 8/19/2017 Kiran Bhai 30,000 15,354,135 Int Jama 9/5/2017 R.K.V.K 1,300,000 14,054,135 Nagdi Jama 9/7/2017 R.K.V.K 800,000 13,254,135 Cash Received 9/8/2017 R.K.V.K 1,400,000 11,854,135 Cash Received 9/8/2017 Uttam Seeds 3,500,000 15,354,135 Cash Paid 9/9/2017 R.K.V.K 1,400,000 13,954,135 Cash Received 9/9/2017 Uttam Seeds 1,500,000 15,454,135 Cash Paid 9/12/2017 R.K.V.K 100,000 15,354,135 Cash Received 9/12/2017 R.K.V.K 91,050 15,263,085 Int Jama 9/18/2017 Sunil Gupta 3,000,000 12,263,085 Nagdi Jama (L Me) Hindustan 9/25/2017 Abhikaran 165,000 12,098,085 Int A/c Jama Hindustan 10/9/2017 Abhikaran 500,000 11,598,085 Cash Received Hindustan 10/18/2017 Abhikaran 1,500,000 10,098,085 Cash Received Hindustan 10/21/2017 Abhikaran 500,000 9,598,085 Cash Received Jarnalbeer Singh Bhatia IT(SS)A Nos. 19 to 27/Ind/2023 & ITA No. 226 & 228/Ind/2023- AY 2013-14 to 2018-19 Chadha 10/23/2017 Tyre 68,250 9,529,835 Int Jama 10/25/2017 R.K.V.K 2,000,000 11,529,835 Cash Paid 10/26/2017 Sunil Gupta 190,000 11,339,835 Received 10/26/2017 Uttam Seeds 107,709 11,232,126 Int Received 10/28/2017 Kiran Bhai 11,232,126 Int A/c Naame Hindustan 10/29/2017 Abhikaran 500,000 10,732,126 Cash Received Hindustan 10/30/2017 Abhikaran 700,000 10,032,126 Cash Received 10/30/2017 R.K.V.K 500,000 10,532,126 Cash Paid 10/31/2017 Kiran Bhai 30,000 10,502,126 Int Received 10/31/2017 R.K.V.K 500,000 11,002,126 Cash Paid Hindustan 11/10/2017 Abhikaran 700,000 10,302,126 Cash Received 11/10/2017 R.K.V.K 800,000 11,102,126 Cash Paid Hindustan 11/11/2017 Abhikaran 300,000 10,802,126 Cash Received 11/11/2017 R.K.V.K 300,000 11,102,126 Cash Paid Hindustan 11/13/2017 Abhikaran 800,000 10,302,126 Cash Received 11/13/2017 R.K.V.K 900,000 11,202,126 Cash Paid Hindustan 11/17/2017 Abhikaran 48,900 11,153,226 Int A/c Jama 12/2/2017 R.K.V.K 3,600,000 14,753,226 Cash Paid 12/8/2017 R.K.V.K 1,400,000 16,153,226 Cash Paid 12/13/2017 Kiran Bhai 30,000 16,123,226 Int A/c Jama 12/20/2017 Sunil Gupta 1,000,000 15,123,226 Received 12/20/2017 R.K.V.K 69,900 15,053,326 Int Received 1/11/2018 R.K.V.K 150,000 14,903,326 Int Jama Int A/c Jama 28.10 1/13/2018 Kiran Bhai 15,000 14,888,326 To 28.11 1/13/2018 Kiran Bhai 500,000 14,388,326 Cash Nagdi Jama 1/14/2018 Sunil Gupta 89,167 14,299,159 The appellant submitted that peak credit comes to Rs. 3,00,77,005/- on 06.04.2016. This amount may be considered as unexplained investment in advancing cash loan and hence, no other addition is required to be made. Above submission has been made by Jarnalbeer Singh Bhatia IT(SS)A Nos. 19 to 27/Ind/2023 & ITA No. 226 & 228/Ind/2023- AY 2013-14 to 2018-19 the appellant subject to its earlier submission, wherein, he denied the ledger BS-1. I do not agree with the view of the appellant. In the facts and circumstances as discussed earlier, quantum of unexplained investment after taking into consideration of undisclosed interest income can only be derived correctly by giving telescopic effect to the income and resultant investment in different assessment years. Considering this discussion, quantum of unexplained investment and undisclosed interest income for the various years is worked out as under:
(iii) Therefore, after considering the details mentioned in the assessment order, seized material and telescopic effect, the addition of unexplained investment and interest income in each A.Y. is worked out as under:-
A.Y. Principal Interest Availability of Fresh fund Addition Amount (In income Fund at the introduced: of Rs.) earned (In year end (In Addition of Interest Rs.) Rs.) principal earned amount to be (In Rs.) made after telescopic effect (In Rs.) 2013-14 5005000 36000 5041000 5005000 36000 2014-15 0 934191 5975191 0 934191 2015-16 0 967815 6943006 0 967815 2016-17 30045585 805695 30851280 23102579 805695 2017-18 11505695 4271104 35122384 -19345585 4271104 2018-19 29428250 2703934 -5694134 2703934 From the above, it is abundantly clear that the appellant has advanced initial amount of Rs. 50,05,000/- as loan on interest and earned interest income of Rs. 36,000/- in AY 2013-14. Thus, the fund of Rs. 50,41,000/-(Rs.50,05,000 + Rs.36,000) was available with the appellant for lending in AY 2014-15. In AY 2014-15, the appellant earned interest income of Rs. 9,34,191/- and thus, at the year end total fund of Rs. 59,75,191/- (Rs. 50,41,000 + Rs. 9,34,191) was available for the money lending business in AY 2015-16. In AY 2015-16, the appellant earned interest income of Rs. 9,67,815/- and thus, at the year end total fund of Rs. 69,43,006/- (Rs. 59,75,191 + Rs. 9,67,815) was available for the next year. During AY 2016-17, the appellant advanced money amounting to Rs.3,00,45,585/-, out of which amount of Rs. 69,43,006/- pertains to AY 2015-16. Therefore, fresh capital/fund infused in money lending business comes to Rs. 2,31,02,579/- (Rs. 3,00,45,585 - Rs. 69,43,006). In subsequent years, as per the above table, no fresh fund has been introduced by the appellant. The appellant has earned interest income in the above years and quantum of interest earned has been indicated in the table above. Considering above discussion, investment made initially and fresh fund introduced in subsequent years are required to be treated as unexplained investment of the appellant. The interest Jarnalbeer Singh Bhatia IT(SS)A Nos. 19 to 27/Ind/2023 & ITA No. 226 & 228/Ind/2023- AY 2013-14 to 2018-19 earned in each assessment year is required to be taxed on account of undisclosed interest income. Accordingly, following additions are confirmed:-