TMI Blog2014 (10) TMI 1028X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has passed an order u/s 143(3) on 26.12.2011 at an income of ₹ 3,75,85,219/- inter alia making an addition of ₹ 2,88,98,869/- u/s 68 and ₹ 90,50,000/- as notional interest on interest free advances. 3. Aggrieved the assessee carried the matter in appeal. The first appellate authority deleted the addition. Aggrieved with this order the revenue is in appeal on the following grounds :- 1. The CIT(A) has erred in deleting the addition of ₹ 2,88,98,869/- made by the AO on account of sundry creditors remained unestablished. 2. The CIT(A) has erred in deleting the addition of ₹ 90,05,000/- made by the AO on account of notional interest when advances as extended by the assessee were interest free and for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the creditors are Trade Creditors brought forward from earlier years as per the details submitted by the appellant. These credit balances were accepted in the earlier years and assessment orders were passed u/s 143(3). It was also stated by the appellant that as the transactions were conducted through banking channels and were examined and accepted in the assessment order for the earlier years. On perusal of the assessment record, I find that the Assessing Officer issued summons under section 131 of the I.T. Act 1961 to all the sundry creditors and vide his remand report dated 8.1.2013, the Assessing Officer did not report stating that any of the creditor had denied any transaction with the appellant. In the confirmations, the creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.4.2009 and the copies of accounts in the books of the appellant as well as their confirmations which have already been furnished. On perusal of the observations of the Assessing Officer in the remand report pertaining to the account of M/s. Chevaliers Builders and Construction Pvt. Ltd. I find that the said party had a credit balance of ₹ 11,46,86,625/- as on 1.4.2008 i.e. at the beginning of the assessment year 2009-10 which was reduced during the financial year 2008-09 to 12,52,625/- as on 31.3.2009 thereby implying that during the year the appellant had paid back the total amount of ₹ 11,34,34,000/-. In the remand report dated 8.1.2013, it was confirmed by the Assessing Officer that the appellant during the year paid to hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest. If the assessee had not bargained for interest, or had not collected interest, the income-tax authorities could not fix a notional interest as due, or as collected by the assessee. There was no provision in the Income-tax Act empowering the income-tax authorities to include in the income interest which was not due or not collected. The addition of amounts as notional interest was not justified. 8. The Hon ble Supreme Court in the case of Excel Industries 358 ITR 295 (SC ) held as follows :- Applying the three tests laid down by various decisions of this court, namely, whether the income accrued to the assessee is real or hypothetical ; whether there is a corresponding liability of the other party to pass on the benefits of du ..... X X X X Extracts X X X X X X X X Extracts X X X X
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