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2014 (10) TMI 1028 - ITAT DELHIAddition u/s 68 - AO made addition of opening balances without properly verifying the record - whether AO did not place any material on record or evidence to support that the appellant had in some way generated unaccounted funds and rotated its own unaccounted funds through these creditors? - HELD THAT:- AO did not point out any discrepancy while examining the creditors u/s 131 and gave a finding that an ‘X’ creditor was bogus - AO did not place any material on record or evidence to support that the appellant had in some way generated unaccounted funds and rotated its own unaccounted funds through these creditors. Observations of the AO in the remand are against the provisions laid down in section 68 as he did not bring any adverse finding with corroborative evidence that the sundry creditors were not genuine - There are no fresh credit during the year. Hence section 68 cannot be invoked during the year. Hence we uphold the order of the Ld. CIT(A) and dismiss this ground of the revenue. Addition being notional interest on loans and advances - whether there is no provision of Income Tax Act which authorizes the AO to tax notional income? - HELD THAT:- The fact that the loans and advances that were given by the appellant in the course of its normal business activities for acquiring land is not in dispute which is also agreed by the Assessing Officer in his remand report. This fact has also been confirmed in writing by the concerned parties. It is also true that the Income Tax Act, does not envisage taxability of any notional income as such. AO in his remand report has not doubted the nature of advances but has given a vague reasoning for upholding the addition made. As perused the definition of income in Section 2(24) and the various judicial decisions relied upon by the appellant. Since AO did not establish with any supporting material or evidence that interest was earned or accrued to the appellant, “notional income or interest” cannot be taxed under the provisions of law. Accordingly, the addition made by the Assessing Officer on account of notional interest is here with deleted. Decided in favour of assessee.
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