TaxTMI 
TaxTMI 
2015 (5) TMI 192
X X X X Extracts X X X X
X X X X Extracts X X X X
....sment year concerned in both the petitions is assessment year 2009-10. The present writ petitions are preferred against the orders passed by the Commissioner of Income Tax under Section 264 of the Income Tax Act, 1961. In W.P.(C) 6265/2013, the assessee had filed his return of income declaring a loss of income of Rs. 32,934/- on 25.09.2009. The assessment under Section 143(3) was completed on 12.12.2011, by the Assessing Officer at an income of Rs. 18,99,070/- as against the above mentioned loss. In the assessment order, the addition of Rs. 19,32,000/- on account of notional interest earned on advances given to Smart Tourist Private Limited was made. The petitioner is aggrieved by the fact that the said addition did not have any factual bas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1,61,00,000/- to M/s Smart Tourist Pvt. Ltd on 09.04.2007. There is no explanation why the assessee has given loan to the above concern out of its funds and no interest has been charged for this loan. In the absence of any explanation, evidence regarding identities of the parties and purpose of the loans, notional interest at 12% per annum is charged on the loan amount given. Sum of Rs. 19,32,000/- is added to the total income as notional interest on the loan/ advances given. Penalty proceedings u/s 271 (l) (c) for concealment of income and for furnishing inaccurate particulars of income are initiated separately. " 5.4 The Assessing Officer has noted that agreement to sell evidencing such advance against land has not been filed. He has f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aid ledger account a remarks has been made that confirmation being enclosed, but ongoing through the entire annexures no such confirmations has been filed by the assessee. The assessee has also not given any explanation why the said loan was given to the above concern out of its funds and no interest has been charges for this loan. In absence of any explanation, evidence regarding identities of the parties, purpose of the loan, notional interest @ 12% per annum is charged on the loan amount given. Accordingly, a sum of Rs. 19,32,000/- is added to the total income as notional interest on the loan/ advance given. Penalty proceedings U/s 271(l)(c) of the Income Tax Act is initiated for concealment of income and for furnishing of inaccurate par....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the loan/advance was given to Smart Tourist Private Limited. It was also noted that the identity of Smart Tourist Private Limited was not known. The logic that seems to have been applied by the revenue authorities is that the petitioner was a businessman and it would be imprudent for a businessman to advance a sum of Rs. 1.6 crores as in the case of W.P.(C) 6265/2013 to Smart Tourist Private Limited and to not charge anything in return. The explanation sought to be given by the petitioner in both these cases was that the advances were made in the course of their business and it is not at all necessary that an advance given by a businessman at all times must have an element of interest also. There are various other considerations which come ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ded the income as the amount of interest. The said addition was approved by the Commissioner of Income Tax (Appeals) and the Tribunal. 16. In this case there is no finding when the assessee had in fact received the interest or that the Jorhat Investments Ltd., had in fact paid the interest to the assessee and the interest was not reflected in the accounts. The finding is that the assessee ought to have charged interest. 17. The facts in the instant case are more or less identical with the case of Highways Construction Co. Pvt. Ltd. v CIT [1993] 199 ITR 702, wherein this court held (page 708) : "There is no finding of fact to the effect that actually the loan had been granted to the managing director or any other person on interest,....