2025 (3) TMI 2069

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....IT(A)"] dated 02.07.2024. 1.1 In this case, the Ld. AO found that an amount of Rs. 7,71,00,000/- was advanced when charging interest on the same. The Ld. AO took an adverse note of these 6 cumulative transactions pertaining to advancing of loans without interest, since the assessee was a Non-Banking Financial Company (NBFC). Thereafter, the Ld. AO proceeded to estimate interest income @ 9% on this amount and added Rs. 69,39,000/- as notional income, added under Section 69A of the Act. 1.1 Aggrieved with this action, the assessee approached the Ld. CIT(A) where also he could not succeed on the basis of the following findings: "It is evident from the findings of the Assessing Officer contained in the Assessment order that the a....

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....d during the course of assessment proceeding, thus material should be excluded/ignored for the purpose of this case. 3. For that in the facts and circumstances of the case the Learned Commissioner of Income Tax Appeals erred in upholding that the statement of third parties on which the Ld Assessment officer relied during the course of assessment proceeding were not subjected to cross examination for the assessee, thus the third party statement relied upon should be excluded/ignored for the purpose of this case. 4. For that the facts and circumstances of the case the notice u/s 143(2) of the Income Tax Act 1961 was without jurisdiction and bad in law and hence the entire assessment order is bad in law and the same should be....

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....sal of the said loans it was clear that there would be no interest income accruing from the same. The Ld. AR further mentioned that it was not the case of the Ld. AO that some income had actually accrued by way of interest and the same has not been disclosed to the IT Department. The Ld. DR relied on the case of Rungamatee Trexim (Pvt.) Ltd. reported in 2008 (12) TM 1759 (Calcutta High Court), order dated 19.12.2008, and argued that the notional income could not be taxed since only real income has to be taxed. 2.1 The Ld. DR relied on the orders of authorities below and stated that in the case of NBFC the only commercial activity is advancing loan on interest. He stated that it was strange that huge sums of money had been advanced withou....