Mumbai400 089 Mumbai400 020 PAN/GIR No. ABZPD 4177 F (Appellant) : (Respondent) Appellant by : Shri Pramod Kumar Parida Respondent by : Shri Uodal Raj Singh Date of Hearing : 07.10.2020 Date of Pronouncement : 11.12.2020 ORDER Per Shamim Yahya, A. M.: This appeal by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals)25, Mumbai ('ld.CIT(A) for short) dated 13.04.2018 and pertains to the assessment year (A.Y.) 201314. 2. The grounds of appeal read as under: 1. Addition of business interest income u/s. 56 as against declared u/s. 28 and not allowing netting off of interest Rs.60,51,743/ (i) The ld. CIT(A) erred in not treating the interest earned, on fixed deposit out of business funds kept as security/margin money for availing O/D facility, as business income u/s. 28 with failure to appreciate the business nexus visavis utilization of business funds and further erred in not allowing the nettingoff of interest which had all the elements of mutuality towards the common business; therefore, the addition of interest u/s. 56 is uncalled for and the same may resultantly be treated as income u/s. 28 and nettingoff may consequently be allowed. (ii) Without prejudice to the above, maintaining F/D which was purely out of business funds for being a mandatory requirement to avail O/D facility was neither out of surplus funds nor idle funds nor any nonbusiness fund but only out of business exigency; 2 ITA No. 3919/Mum/2018 (A.Y. 201314) Smt. Irene Edwyn D'mello vs. ITO therefore, the action for addition u/s. 56 lacks merits and the order impugned may be vacated. (iii) Without further prejudice to the above, mere book entry is not enough to determine the character of income or the applicability of section as earning of bank interest was not the motive, the interest credit may therefore, be treated as business income and netting off may be allowed to keeping in view to the consistency approach. Addition on account of alleged unexplained O/D credit balance pending adjustment Rs.15,00,000/ (i) The Id. CIT(A) erred in confirming the addition of unadjusted opening credit balance as allegedly unexplained and liable to be taxed as deemed income without appreciating that when in earlier years, the same credit balance had been accepted by the Assessing Officer, no addition of same could be added unjustly in the subsequent year; hence, the addition may be deleted as on merits, as it is not a case u/s. 68 nor under any other section. (ii) The Id. CIT(A) failed to appreciate that the amount received, from Mr. Amit Ruparel to meet pending electricity expenses of tenants, was pending for future adjustment; hence no addition is called for in the hands of the Appellant and the same may be deleted. (iii) Without prejudice to the above, as the statement, if any, recorded was not confronted with the appellant, the addition made may be deleted. 3. Levy of Penal Interests The Appellant, on merits, denies her liability to penal interest. Apropos the issue of treatment of interest received as income from other sources. 3. Brief facts of the issue are as under: During the course of assessment proceedings, it was seen by the A.O. that the assessee had received interest on FD at Rs.60,51,743/. The closing WIP shown by the assessee was at Rs.13,65,05,000/ after claiming expenditure under various heads. It was also seen by the A.O. from the statement of total income of the assessee that eh interest on FD had not been offered to tax under the head 'Income from other Sources'. The assessee was asked by the A.O. vide a letter dated 09.07.2015 to explain as to why the interest received on FD should not be