2022 (5) TMI 1378

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ovider; providing services of goods transport agency and business support services, transportation of heavy vehicle chassis by road. For the Asst.Year 2015-16, the assessee filed its return of income on 29.9.2015 declaring total income of Rs.57,87,230/-. The case of the assessee was selected for scrutiny assessment. During the course of assessment proceedings, the ld.AO noticed that there was transaction of loans and advances between the assessee-company and one of its director, Shri Kamal Deshraj Dogra who was having 50% share holding in the assessee-company. The AO also noticed that the assessee had claimed interest expenses of Rs.38,95,633/- on unsecured loans, but it had given interest free advance to Shri Kamal Deshraj Dogra for non-bu....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... under section 36(1)(iii) of the Act can be made. The assessee in support of its contentions submitted that from the bank account of Shri Kamal Deshraj Dogra with HDFC Bank it could be seen that various transactions have taken place with Kamal Freight Pvt.Ltd. which is a subsidiary of assessee-company, wherein also Shri Kamal Deshraj Dogra is director of that company. After considering the above arguments, theld.CIT(A) held that the assessee failed to establish commercial expediency, and thereby dismissed ground raised by the assessee as follows: "3.4. The AO in the assessment order has clearly brought out the fact that appellant has borrowed fund and same has been utilised to give advance .free loan to Shri Kamal Dogra. Therefore,....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... and or on facts in not considering fully and properly the explanation furnished and the evidence produced by the appellant. 1.3 The Ld. CIT(A) has grievously erred in making the impugned disallowance without giving sufficient and specific opportunity to the appellant and thereby violating the principles of natural justice. 2.1 The Ld. CIT(A) has grievously erred in law and on facts in disallowing interest expenses of RS.16,81,184/-. 2.2 That in the facts and circumstances of the case as well as in law, the Ld. CIT(A) has grievously erred in upholding that advances to Shri Kamal Dogra were made for non-business purposes and thereby confirming the disallowance of Rs. 16,81,184/-." 5. At the time of hearing, the ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... that the assessee's arguments that the payment was made for business expediency, however, the assessee has not able to demonstrate exigency for advancing interest free loans. Initially, the assessee stated that loan was advanced for purchase of land for the company, but the director, Shri Kamal Deshraj Dogra himself under section 133(6) proceedings admitted that the land was not purchased and no money was given. The assessee vide order sheet dated 14.11.2017 was required to produce Shri Shankar Lal Kabra for verification of the sale of the land. On 29.11.2017 the authorized representative of the assessee and director Shri Kamal Deshraj Dogra attended the hearing and admitted that they were not able to produce Shri Shankar Lal Kabra for ver....