O R D E R

PER ANUBHAV SHARMA, JM:

This appeal is preferred by the revenue against the order dated 15.10.2024 of the Ld. National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in DIN & Order No.: ITBA/NFAC/S/250/2024-25/1069683950(1) arising out of the order dated 25.03.2024 u/s 143(3) r.w.s 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by the NaFAC for AY: 2022-23.

2. The department is in appeal raising following grounds:

“1. Whether on the facts and circumstances of the case and in law, the ld. CIT(A) was justified in deleting the additions made u/s 68 of the Act even though the onus of evidence regarding unsecured loans has not been discharged including loan confirmations, PAN and re-payment details despite opportunity given by the AO repeatedly beginning from notice dated 12.09.2023 u/s 142(1) and also proposed to be added as per Para 3.4 of the Show-cause notice dated 12.03.2024.

2. Whether Ld. CIT(A) was justified in deleting the interest expenses even though the AO treated it as not being utilized wholly and exclusively for business purposes.

3. Whether Ld. CIT(A) was justified in deleting the addition of miscellaneous expenses, interest on LIC and interest on TDS/TCS being not allowable u/s 37 of Income Tax Act, 1961.

4. Appellant craves right to add, delete, amend any ground at any time during the appellate proceedings.

It is prayed that the order of Ld. CIT(A) is contrary to the facts on record and the settled position of law, and the order of the AO deserves to be restored.”

3. Heard and perused the record and we find that there is a material observation of ld. CIT(A) giving relief to the assessee whereby it has been held that there is violation of provision of Section 144B(1)(xii) of the Act while proposing the alleged additions/disallowances made and for completeness we reproduce the relevant part of the impugned order of ld. CIT(A):

“8.2 The facts and grounds of the case, arguments of the appellant, evidences placed on record and relevant case laws have been carefully perused. The Appellant AOP filed its return of income u/s 139(1) of the Act which was processed by the CPC u/s 143(1) of the Act on the returned income of Rs. 8,72,33,330/-. In the due course, the case was picked up for complete scrutiny to verify the following issues:-

(a) ICDS Compliance and Adjustment

(b) High Creditors/ liabilities

(c) Income from Liquor Business

(d) Stock Valuation

(e) Refund Claim

The AO accordingly issued statutory notices u/s 143(2)/142(1) of the Act and in compliance, various details such as written explanations, Balance Sheet, Audit Report, Profit & Loss Account, details of unsecured loans, sundry debtors, details on loans/advances, direct expenses, current liabilities, other expenses, rent, compensation paid to employees etc. were furnished as is evident from para 3.2 of the assessment order. Upon verifying/analyzing all the details furnished by the appellant, the AO issued a show cause notice cum Draft Assessment Order (in short DAO') on 12/03/2024 vide DIN: ITBA/AST/F/143(3)(SCN)/2023-24/1062430635(1) based on his inferences and proposed an addition of differential sum of Rs. 49,39,21,763/- @8% of the total turnover of Rs. 726,44,38,671/-. The relevant portion of the said SCN is reproduced as under:-

"In the wake of non-submission of details as requested, the total income of the assessee is charged at an 8% of the total turnover of the assessee i.e., Rs. 58,11,55,093/- (8% of the total sales of Rs. 7,26,44,38,671/-). Already, the assessee had declared Rs. 8,72,33,330/- as total income in the return of income filed by the for the AY under consideration. The difference amount i.e., Rs 49,39,21,763/- Rs. 58,11,55,093/-- Rs. 8,72,33,330/-) is added to the total income of the assessee.

Also, Penalty u/s 270A will be initiated for under-reporting of income to the tune of Rs. 49,39,21, 763/-.

Considering the facts of the case,