TaxTMI 
TaxTMI 
2025 (3) TMI 1840
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...., 1961. 2. GROUNDS OF APPEALS:- 1. The assessment order u/s 143(3) is bad in law. 2. The Ld AO has erred in law as well as on facts in making disallowance of interest of Rs. 2,45,853/- u/s. 36(1)(iii) of the Act and the Ld CIT(A) has also erred in law as well as on facts in confirming the same. 3. Facts Of The Case as recorded by The Ld CIT(A) "In this case, the above named assessee has filed his e return of income on 19.09.2014 declaring total income at Rs. 9,85,135/- along with return of income audit report u/s 44AB of the Act in Form No. 3CB & 3CD and Balance Sheet, P&L A/c etc. were also filed. The return of income was process u/s 143(1) of the Act. The case was selected for scrutiny. The assess....
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....the assessee are fully supported by the Supreme court judgement in the case of HERO CYCLES (P) LTD. VS CIT and CIT Vs. Reliance Industries Limited. Copies of the judgements are enclosed." 4. The Ld AO pass an order with following observation. In the circumstances, interest @ 12% p.a. is hereby charged on Rs. 20,48,777/-, Therefore amount totaling to Rs. 2,45,853/- (i.e 12% of Rs. 20,48,777/-) is hereby added back to the total income for the year under consideration. 5. That the assessee filed an appeal against the order of assessment before Ld CIT(A). That said appeal was disposed of by Ld. CIT(A) with following observation. Further, appellant's argument that as it had interest-free fund in the form of Partners&#....
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....e that reply submitted by assessee. That the LdCIT(A) has observed in the order that no infirmity or illegally was found in the order of Ld AO and confirmed the action of the AO about the unexplained investment u/s 69A of the Act. Besides this the Ld CIT(A) has dismissed the appeal of the assessee stating that assessee is not willing to pursue the appellate proceedings anymore. (i) We note that The fact of the case is that appellant firm had provided interest free loans/advances of Rs 20,48,777/- to Shri Ashok G Khant (Indl), who is husband of one of the partner named Smt. Jyotsana Ashok Khant.AO had calculated interest @ 12% per annum on Rs 20,48,777/-, and added Rs. 2,45,853/- to the total income of appellant. The advances of money ....
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....al expediency for advancing of such interest free loan. (iv) We note During the course of de-novo assessment proceedings, the appellant submitted that the appellant had sufficient interest-free funds available in the form of partners' capital to cover-up interest-free advances advanced to Shri Ashok G. Khant and therefore, there cannot be any disallowance on account of interest. (v) We note the appellant had interest-free fund in the form of Partners' capital to the tune of Rs. 49,49,096/- which were much higher and sufficient to cover-up the interest-free advances of Rs. 20,48,777/-. Therefore, there was no question of making any disallowance u/s. 36(1)(iii) on account of interest. A copy of the audited Balance sheet and Prof....