Y. R. Meena, Arun Kumar Mitra ( 1 ) ON an application under Section 256 (2) of the Income-tax Act, 1961, this court has directed the Tribunal to refer the following question for the opinion of this court :"whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in allowing the interest amounting to Rs. 50,300 on the ground that the loans themselves had not been added earlier?" ( 2 ) IN compliance with our direction the aforesaid question has been referred for our opinion. ( 3 ) THE relevant assessment year is 1987-88. The previous year ended on March 31, 1987. During the course of assessment, the Assessing Officer noticed that the assessee has claimed interest of Rs. 50,800 paid to Master Utsav Agarwal, Mr. Nidhi Agarwal, Binita Agarwal, Deepa Soni, Sukumar Bharech and Atmaram Poddar. On further scrutiny the Assessing Officer found that Utsav Agarwal opened his Savings Bank Account No. 4635 on February 20, 1986. His cash deposit was Rs. 101. Thereafter, Rs. 1,00,000 was deposited to that account on March 18, 1986. By transfer Rs. 50,000 was obtained from Manisha Agarwal and Rs. 50,000 from Puja Agarwal. Utsav Agarwal has no source of income and then this amount of Rs. 1,00,000 has been given to Sterling Corporation. It is further found that Rs. 25,000 have been deposited on August 26, 1986, to the account of Utsav Agarwal and Rs. 35,000 was again lent out to Sterling Corporation by Utsav Agarwal. ( 4 ) SIMILARLY, in the case of Nidhi Agarwal the Savings Bank Account No. 4634 was opened in Oriental Bank of Commerce on February 20, 1986, and the cash deposit was Rs. 101. On March 18, 1986, Rs. 50,000 was deposited in cash and Rs. 50,000 was withdrawn on the same day by cheque. No explanation was given from where this Master Nidhi Agarwal brought this amount. Nidhi Agarwal has also lent Rs. 50,000 to S. N. Udyog on March 18, 1986, and Rs. 50,995 was returned by S. N. Udyog to Nidhi Agarwal on May 16, 1986. The source of various deposits in the account of Nidhi Agarwal was not been explained before the Income-tax Officer. ( 5 ) THE loan has also been advanced by Miss Dipa Soni. She is also a minor, only six years old girl. She advanced Rs. 50,000 and Rs. The source of various deposits in the account of Nidhi Agarwal was not been explained before the Income-tax Officer. ( 5 ) THE loan has also been advanced by Miss Dipa Soni. She is also a minor, only six years old girl. She advanced Rs. 50,000 and Rs. 11,000 to one Ramakant Misra. The amount of Rs. 50,000 was deposited in cash to Deepa's account on August 7, 1986, and on the same day Rs. 50,000 was also withdrawn from Deepa's account for payment to Ramakant Misra. Master Sukumar Bharech also advanced loan of Rs. 50,000 to Ramakant Mishra on March 8, 1986. ( 6 ) NO explanation was given by his guardian from where he got this money. ( 7 ) IT appears by mistake the Income-tax Officer has not added this cash credit amount in the hands of the assessee. But he disallowed only the interest of Rs. 10,800 claimed on the loan stated to have been given by these kids who had no source of their own. The addition on account of the interest has been deleted by the Commissioner of Income-tax (Appeals) and the Tribunal on the ground that when the principal amount of loan has not been added, the interest should not be denied on such loan. ( 8 ) NONE appeared for the assessee. Heard learned counsel for the Revenue and perused the material on record. ( 9 ) THE main reason given by both the authorities below that before lending this money to the assessee the lenders had deposited this amount with some other concerns and no materials has been brought on record that those deposits were not accepted by the respective Income-tax Officer when their assessment was completed. The Income-tax Officer has also not disbelieved the genuineness of the cash credit. ( 10 ) WE are of the view that the view taken by the Commissioner of Income-tax (Appeals) and the Tribunal is erroneous. Once the source of the loan has not been explained and if by mistake that amount of cash credit has not been added in the income of the assessee that does not mean that the interest should also be allowed. If the Assessing Officer has committed the mistake by not adding the amount of bogus cash credits in the hands of the assessee that does not mean that interest should also be allowed on those bogus cash credits. If the Assessing Officer has committed the mistake by not adding the amount of bogus cash credits in the hands of the assessee that does not mean that interest should also be allowed on those bogus cash credits. ( 11 ) FROM the record it appears when cash credits are not genuine, the Income-tax Officer should add back that amount of cash credits in the hands of the assessee. As that issue is not before us, therefore, we cannot direct the Income-tax Officer to add back that amount of bogus cash credits in the hands of assessee. The limited issue before us is regarding the allowability of the interest on bogus cash credits. Once the cash credits appeared bogus, though by mistake of the Income-tax Officer, the Income-tax Officer has not added that amount of cash credits in the hands of the assessee at least the interest which has been disallowed and addition made cannot be deleted on the ground that the cash credits have not been disallowed. ( 12 ) THE Assessing Officer has committed a mistake by not adding those cash credits in the hands of the assessee but has disallowed the interest on that cash credit amount. The addition of interest amount claim should not be deleted for mistake of the Income-tax Officer. In deletion of the addition on account of the interest on bogus cash credits both the authorities have committed the error, holding that interest should not be allowed as deduction. ( 13 ) IN the result, we answer the question in the negative, i. e. , in favour of the Revenue and against the assessee.