2025 (5) TMI 1776

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....for short) vide which, the ld.Commissioner set aside the assessment order of the AO passed under section 143 read with sections 144C(3)/144B of the Act relating to the assessment year 2017-18 and directing the AO to pass a fresh assessment order as per the directions contained in the 263 order. 2. The grounds raised by the assessee are as under: "1. In law and in the facts and circumstances of the case, the order passed by Ld. Pr. CIT, Ahmedabad-1 u/s 263 of the Income tax Act is ab initio void being bad in law. 2. On the facts and circumstances of the case, the learned Pr. CIT erred in setting aside the assessment order dated 20/09/2021 passed by the faceless assessing officer u/s 143(3) r.w.s.144C(3) r.w.s. 144B of the Income- Tax A....

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....sessee had borrowed funds to the tune of Rs. 26,19,78,904/- paying interest thereon of Rs. 2,05,40,844/- all of which was claimed as expenses by the assessee and allowed by the AO. The assessee was also noted to have made interest free loans to the tune of Rs. 5,39,80,000/-. The ld.Pr.CIT was of the view that there was a diversion of interest bearing funds for non-business purpose, which the AO had failed to examine and had therefore wrongly allowed the assessee's entire claim of interest of Rs. 2,05,40,844/-. He also noted that there was a discrepancy in the amount of legal and profession charges reported by the assessee in the tax audit report of Rs. 84,58,450/- and that reflected in the profit & loss account to the tune of Rs. 68,45,601/....

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....icient own interest free funds for the said purpose to the tune of Rs. 18,19,90,119/- for advancing the interest free loan of Rs. 5.39 crores. The assessee had also submitted that all its interest bearing loans had been utilized for business purpose. Its submissions in this regard are reproduced at para-4 of his order as under: "4. In response thereto, the assessee has submitted its reply, which is verified and placed on records. The assessee has submitted that no fresh funds were obtained during the year under consideration and the company was having sufficient reserves of Rs. 18,19,90,119/- to grant interest free loan to its subsidiary. The assessee further submitted that interest bearing loan substantially utilized for the business pur....