2015 (12) TMI 1458 - AT - Income Tax

Unaccounted loan - Assessing Officer found that the gift portion of ₹ 5 lakhs is a separate one and it cannot be linked to the loan portion of ₹ 7 lakhs which was said to be given during the assessment year 2007-08 - Held that - The fact remains that the total sum of money given by the assessee to his son is only ₹ 12 lakhs. ₹ 5 lakhs was given in the assessment year 2006-07 and another sum of ₹ 7 lakhs was given in assessment year 2007-08. The Assessing Officer appears to have accepted the gift of ₹ 5 lakhs. However, he confuses himself that the loan of ₹ 5 lakhs is a separate one and he made an addition with regard to loan and not with regard to gift. The fact remains is that for the assessment year 2006-07, what was given by the assessee is only a sum of ₹ 5 lakhs either as loan or gift to his son Shri R. Ganesan. Therefore, there is no necessity for the Assessing Officer to take the transaction as two independent transactions. This Tribunal is of the considered opinion that the transaction of ₹ 5 lakhs is only one transaction. Therefore, the Assessing Officer may not be justified in treating the transaction between the assessee and his son in the assessment year 2006-07 as two transactions and making an addition of ₹ 5 lakhs. Since the transaction is only one transaction, this Tribunal is of the considered opinion that the addition made by the Assessing Officer to the extent of ₹ 5 lakhs is not justified. Accordingly, the orders of the lower authorities are set aside and the addition made by the Assessing Officer stands deleted. Coming to the assessment year 2007-08, reading of the assessment order clearly shows that the assessee and his son categorically admitted that payment and receipt of loan was to the extent of ₹ 7 lakhs. The Assessing Officer appears to have presumed that the sum of ₹ 7 lakhs would not have been repaid during the year under consideration, since neither the assessee nor the assessee s son claimed before him that the same was repaid. This Tribunal is of the considered opinion that when the loan transaction was confirmed and they claimed that it is not reflected in the statement because the transaction was settled during the same financial year, the presumption of the Assessing Officer was that the loan transaction was not settled during the year under consideration. Therefore, the presumption of the Assessing Officer that there was no claim either by the assessee or by his son that the loan was repaid during the year under consideration is beyond imagination. This Tribunal is of the considered opinion that there is no justification in making addition of ₹ 7 lakhs. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to delete the addition of ₹ 7 lakhs made for the assessment year 2007-08. - Decided in favour of assessee.

Summary

Issues:
1. Dispute over whether amounts given by the assessee to his son were loans or gifts.
2. Assessing Officer's addition of Rs. 5 lakhs for the assessment year 2006-07 and Rs. 7 lakhs for the assessment year 2007-08 based on presumption of non-repayment.

Analysis:
1. The appellant claimed that amounts given to his son were initially loans that were later converted into gifts. The Assessing Officer disbelieved this claim, treating the amounts as unaccounted investments due to lack of clarity. The appellant argued that the Assessing Officer's presumption of non-repayment by the son was unfounded as no specific queries were raised regarding repayment. The Tribunal agreed, stating that the Assessing Officer cannot presume non-repayment without concrete evidence or clarification. Therefore, the addition made for both years was deemed unjustified, and the orders were set aside.

2. For the assessment year 2006-07, the Assessing Officer made an addition of Rs. 5 lakhs, considering the gift and loan portions separately. However, the Tribunal found that the total amount given was Rs. 12 lakhs, and the transaction should be treated as a single entity. Thus, the addition of Rs. 5 lakhs was deemed unjustified, and the Assessing Officer's decision was overturned. Regarding the assessment year 2007-08, the Assessing Officer added Rs. 7 lakhs based on the assumption of non-repayment, despite confirmation of the loan transaction. The Tribunal disagreed with this presumption, stating that the lack of explicit claims of repayment does not justify the addition. Consequently, the addition of Rs. 7 lakhs for this year was also set aside. Both appeals of the assessee were allowed, and the Assessing Officer was directed to delete the additions made for both assessment years.