2025 (8) TMI 1645

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....the course of assessment proceedings, the AO observed that the assessee has debited a sum of Rs. 34,66,984/- under the head "Bank Charges and Interest" and separately has shown "loans and advances" to related parties amounting to Rs. 2,55,44,363/- and it was held that no interest was charged by the Assessee from these persons whereas the assessee has raised loans / taken CC Limit and has paid huge interest to the bank and after issuing the show cause and considering the reply submitted by the assessee but not found the same acceptable, the AO held that the amount of expenditure incurred by the assessee on account of interest paid during the year needs to be proportionately disallowed as it is highly improbable that a prudent businessman wou....

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....Parkash, rest of four related parties in respect which the advances have been shown under the head "Loans & Advances", the same have been carried forward from the earlier sole proprietorship business of Mr. Darshan Singh Kler. In this regard, our reference was drawn to the balance sheet of the proprietorship business as on 31/03/2016 wherein these balances under the head 'loans and advances" have been reflected. 6. Further, our reference was drawn to the ledger account of Shri Happy Singh wherein there is opening balance of Rs. 10,00,000/- and there are no further transactions during the year. In respect of M/s Kler Hotels Pvt. Ltd., our reference was drawn to its ledger account wherein there is opening balance of Rs. 1,35,62,763/- and the....

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..../- have been repaid subsequently during the same F.Y. and there is a closing balance of Rs. 15,00,000/- and in respect of Rs. 80,00,000/- so paid on 06/04/2016, our reference was drawn to the bank statement of Shri Darshan Singh Kler wherein there is a cheque payment of Rs. 80 lacs to Shri Ved Prakash on 06/04/2016 and it was submitted that the said payment has been made from the individual bank account of Shri Darshan Singh Kler and as such no funds of the assessee have been utilized for making the said payment. In light of the same, it was submitted that no borrowed funds have been utilized by the assessee company for advancing these funds to the related parties and in absence thereof, the disallowance so made by the AO and sustained by t....