Accounting treament

You say that Mr A is audited. so he must have shown flat and housing loan against that flat in balance sheet. How has he shoun payment of installments? through cash? (bec he has not shown a/c of Mr B)

If Mr B is your client, Mr B should show the correct position in own BS ,ie, he has given loan to Mr A by paying his loan installments. mr A could consider revising the returns.