The Chennai Bench of Income Tax Appellate Tribunal has held in favour of the appellant-assessee, Sathyanarayanan Radhika that, the deduction of interest on loan amount taken by him in the previous year cannot be treated as unexplained and reassessed.
During Financial Year 2015-16, the assessee received a sum of Rs. 1,00,42,690/- as loan from Shri R. Sathyanarayanan. He noted that as per audit report in Form No.44AB, the loan received by the assessee was not otherwise than by an account payee cheque or account payee draft and moreover, as per the ledger account of M/s. Raghuram Jewels the aggregate amount of loan through cheque was received at Rs. 1.25 Crores.
According to the Principal Commissioner of Income Tax (PCIT), the Assessing Officer (AO) failed to verify the balance amount of Rs. 17,00,690/- received in violation of Section 269SS of the Income Tax Act,1961 which is required to be added back to the total income of the assessee. The Assessee, aggrieved by the revision order or PCIT to redo the assessment, approached the tribunal in this regard.
The particulars of loan taken in Form No.3CD i.e., the audit report vide 31(a) , wherein the loan amount is mentioned at Rs.1,42,00,690/-, whereas the actual loan amount is at Rs.1.25 Crores and this sum of Rs.17,00,690/- is interest pertaining to earlier year which is accumulated in this loan and it was subsequently rectified by filing the Addendum to Form No.3CB, wherein the correct amount was disclosed, as per the submissions of the Authorized Representative of the appellant.
The counsel for the appellant also contended that, the facts of the case does not pertain to a situation in law where a reassessment under Section 263 of the Income Tax Act, 1961 is required in the light of the assessment order of the assessee. The case of CIT v. C.R.K. Swamy [2012] was referred to by the appellant-counsel CA Joshita Jothi.
In reply, the counsel for the revenue relied on the revision order passed by the PCIT and suggested that the appeal of the assessee be dismissed.
The Bench comprising Mahavir Singh and Manoj Kumar Aggarwal observed that, “the loan amount of Rs.1.25 Crores was taken in the previous year from Shri R. Sathyanarayanan and the balance amount of Rs.17,00,690/- was interest on the loan amount and this cannot be treated as unexplained and moreover, there is no failure of the provisions of Section 269SS of the Income Tax Act, 1961 because the assessee has not received any cash loan.” and held that “ we quash the revision order and allow the appeal of the assessee.”
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