ITO, NEW DELHI vs. SH. ANIL GUPTA, NEW DELHI

On the facts and circumstances of the case, the Ld.CIT(A) has erred in deleting the addition of Rs.10,20,000/- as undisclosed income u/s 68 of the I.T Act, 1961. As per para 3 of the assessment order Rs.4,80,000/- was disclosed by the assessee as loan from Ms. Promilla Gupta and as per HDFC Bank statement (A/c. NO. 00031000309133) Rs. 15,00,000/- were given by Smt. Promilla Gupta, B-67, Defence Colony, New Delhi. The Ld.CIT(A) has completely discreet loan issue and given relief and not treated the same as undisclosed income.”

The assessee filed his return of income on 29/7/2010 showing income of Rs. 3,35,240/-. The case was scrutinized and the assessment was completed on 20/3/2013. The Assessing Officer made addition income of Rs.10,20,000/- as unsecured loan u/s 68 of the Act, Rs.91,37,430/- on account of notional interest @ 15% per annum on loan and advances of Rs.6,09,16,205/- given to various persons. Thus total addition of Rs. 1,04,92,670/- was made.

Aggrieved by this, the assessee filed appeal before the CIT(A). The CIT(A) allowed the appeal of the assessee.

The Ld. DR submitted that the Assessing Officer rightly held that merely furnishing particulars is not enough and correctly disallowed Rs.10,20,000/- u/s 68 of the Act. The Ld. DR further submitted that the interest income paid during the year amounts to unsecured loans and hence Assessing Officer rightly worked out Rs.91,37,430/- and added it to the total income of the assessee. Therefore, CIT(A) was wrong in allowing the appeal of the assessee.

The Ld. AR relied on the order of the CIT(A) and submitted that all the records were brought before the Assessing Officer. As relates to Ground No. 1, the Ld. AR submitted that when the assessee has secured interest free loans and advances and while returning the same he has not obligation to pay interest thereon. In respect ground No. 2 that of loan given to Promilla Gupta, the Ld. AR submitted that all the documents were before the Assessing Officer .and thus it cannot be treated as unaccounted loan. Thus, the CIT(A) rightly set aside the order of the Assessing Officer .

We have heard both the parties and perused all the records. As regards Ground No. 1 related to interest free loan, when the party takes a loan or advances without any interest only the principal amount has to be repaid at the estimated time. It is not necessary to pay interest when there is no such arrangement as such. Thus, the CIT(A) was right in deleting this addition. As regards to Ground No. 2, after going through the assessment order, the ledger account of Promilla Gupta and computation of income of the assessee, it is seen that the Assessing Officer has not taken cognizance of all the relevant documents as to on what basis disallowance u/s 68 of the Act for Rs.10,20,000/- was made. The CIT(A) for both the grounds has correctly arrived at the conclusion and allowed the appeal of the assessee.

In result, the appeal of the Revenue is dismissed.