C.SUJITH KUMAR,DODDABALAPUR vs. ACIT, CIRCLE-6(3)(1), BANGALORE

Brief facts of the case are the assessee, an individual, filed his return of income for the Assessment Year 2017-18 on 31.10.2017 declaring a total income of Rs.51,25,400/-. The case was subsequently selected for complete scrutiny under Computer Assisted Scrutiny Selection (CASS).

On being aggrieved by the order of the learned AO, assessee filed an appeal before the learned CIT(A). The learned CIT(A) on perusal of the information furnished by the assessee dismissed the appeal of the assessee.

On being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us by raising the following grounds:

Ground Nos.1 and 6 are general in nature and needs no adjudication.

Ground Nos.2, 3 and 4 are with respect to the addition made by the learned AO amounting to Rs.1.56 Crores. On this issue, the learned Authorized Representative [in short ‘AR’] submitted that all the loans were obtained through the banking channels and the copy of the financial statements are attached in the Paper Book which were also furnished before the lower authorities. She also submitted that the assessee had opening balance which was repaid during the year and again taken as loan from the same parties. She drew our attention to the bank statements available in

On the contrary, the learned Departmental Representative [in short ‘DR’] submitted that assessee in the tax audit report in Form 3CD has not disclosed the taking and repayment of loan by the assessee and hence it remains unexplained. Further, he also submitted that assessee has not provided the copy of the financial statement for the earlier Assessment Year where it was claimed that there exists opening balance which was repaid during the year. He therefore pleaded that the order of the learned CIT(A) be upheld.

We have heard the rival contentions and perused the material available on record. The assessee has taken the following unsecured loans from various parties as detailed below:

It was the contention of the learned AO that the assessee has transferred an amount of Rs.37 lakhs to his son Shri. Abhishek which was invested by Shri. Abhishek in Fixed Deposit. The maturity proceeds amounting to Rs.36,56,767/- was later transferred to the assessee’s account as repayment of unsecured loans. Further, on similar nature, the unsecured loans from Shri. Akhilesh, another son of the assessee, was also repaid during the year. These entries were demonstrated by the ld.AR. The learned AO, on perusal of the sources of income of Shri. Abhishek and Shri. Akhilesh, noticed that the disclosed salary and interest was amounting to Rs.12 lakhs respectively while filing their individual return of income. The learned AO concluded that there is no sufficient source for Shri. Abhishek and Shri. Akhilesh for explaining the repayment of unsecured loans to their father, the assessee. The learned AO failed to consider the fact that assessee has already obtained unsecured loans during the earlier years from Shri. Abhishek and Shri. Akhilesh which was disclosed in the financial statements for the Assessment Year 2016-17. On perusal of Form 3CD for the Assessment Year 2016-17, we notice that the assessee has declared in 31a available in Paper Book Page No.242 that there exists closing balance of unsecured loans for Shri. Abhishek and Shri. Akhilesh. This could not be controverted by the learned DR since the books of accounts reflect the transaction including the salary and interest payment made by the assessee to his sons Shri. Abhishek and Shri. Akhilesh. In this background, we have no hesitation to conclude that the sources for the unsecured loans stand explained and hence the addition made by the learned AO deserves to be deleted. Thus the grounds 2, 3, and 4 raised by the assessee are allowed.

With respect to ground No.5 regarding interest under sections 234A and 234B of the Act, these being consequential, needs no adjudication.

In the result, the appeal of the assessee is allowed.