AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2014 (7) TMI 517
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.... 2,50,000/- 08.09.2006 Total 13,50,000/- In order to verify the loans taken by the assessee firm, the Assessing Officer issued summons u/s. 131 which were served on the creditors and the statement on oath was recorded. The Assessing Officer observed that Shri Sabbir Haji Karim Dangra had advanced Rs two lakhs on 02.09.2006. The Assessing Officer found from the bank statement that Rs two lakhs was deposited in cash on 01.09.2006 and on the very next day i.e. on 02.09.2006, Rs two lakhs was advanced to the assessee by cheque. The creditor during the course of recording his statement submitted that he advanced Rs two lakhs to the assessee out of sale proceeds of cloths and that he was doing cloths business. The creditor explained that he made sales of Rs. 6,84,279/- and has also earned Rs. 89,800/- from accounting work. The Assessing Officer noted that he has shown gross profit from sale of cloths at Rs. 56,221/- and net profit was shown at Rs. 1,03,798/- and from this, he made withdrawals for household expenses of Rs. 36,000/-. From this, the Assessing Officer held that the creditor had no creditworthiness to advance loan of Rs two lakhs to the assessee. 4. The A....
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....eeds. It was submitted that she was filing her return of income u/s. 44AF of the Act. The Assessing Officer observed that she had withdrawn Rs. 40,000/- for household expenses. From this, the Assessing Officer observed that the creditor did not have creditworthiness to advance Rs. 2,50,000/- to the assessee. Therefore, the Assessing Officer made addition u/s. 68 of the Act of Rs. 13,50,000/- as unexplained credits of the assessee and added the same to the income of the assessee. 7. On appeal, the Commissioner of Income Tax (Appeals) deleted the addition by observing as under: "4. Decision: 4.1 I have duly considered the submission of the appellant. The addition of Rs. 13,50,000/- made u/s. 68 of the Act, on account of unexplained unsecured loans, is on the ground that creditworthiness of the loan creditors has not been established. In so far as the genuineness and identity of the loan creditors are concerned, the same has not been disputed by the Assessing Officer. 4.2 In respect of the first two loan creditors, namely Shri Sabbir Haji Karim Dangra and Smt. Nasiama Sabbir Dangra, I find that both are husband and wife and are mainly in the business of trading of cloth for the la....
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....t materialize during the year, the same amount has been treated as loan in his name, by the appellant firm in its books of accounts. The above amount had been deposited in cash by the above person on 7.9. 2006 and withdrawn on the very next day, that this on 8.9 .2006 and cheque of the above amount was given to the appellant firm. Shri Yakub also stated that the above amount was taken out from his cash book and deposited in his bank account on 7.9. 2006. This statement of the Shri Yakub has not been disputed by the assessing officer. The assessing officer has only stated that the financial position of the loan creditor is not sound and, therefore, his creditworthiness has not been established. This finding of the assessing officer is again without proper appreciation of the records of Shri Yakub, who is filing his return of income for the last 7 to 8 years and also maintaining books of account including cash book, Therefore, the finding given in this regard in respect of the first two creditors would also become applicable in the case of the third creditor. The appellant has also furnished details as to how the above amount was generated out of the business of Shri Yakub, who is tr....
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....vailable on record, we find that in the instant case, the assessee has received sum of Rs. 13,50,000/- from following four persons: Sr.No. Name of the person Amount Rs. Date of loan 1 Sabbir Haji Karim Dangra 2,00,000/- 02.09.2006 2 Nasiama Sabir Dangra 4,00,000/- 02.09.2006 3 Yakoob Gani Pothiawala 5,00,000/- 08.09.2006 4 Jarina Jamalbhai Noorani 2,50,000/- 08.09.2006 Total 13,50,000/- The Assessing Officer found that the creditors did not have creditworthiness to advance sum of money to the assessee and that cash was deposited on the previous day of advancing of loan to the assessee and therefore, held that the credits shown by the assessee in the books of account were not genuine and added the loan amount of Rs. 13,50,000/- to the income of the assessee. On appeal, the Commissioner of Income Tax (Appeals) deleted the addition on the ground that sums were withdrawn by the creditors from the cash book and deposited in the bank account and the Assessing Officer after investigation has not found the same to be not correct. 10. The Departmental Representative relied on the order of the Assessing Officer. 11. The Authorized Representative of the ass....
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....iled before the Assessing Officer as well as Commissioner of Income Tax (Appeals). Hence, he submitted that the addition was rightly deleted by the Commissioner of Income Tax (Appeals). 12. We find that no specific error in the finding of the Commissioner of Income Tax (Appeals) could be pointed out by the Departmental Representative. We find that all the four creditors were examined by the Assessing Officer wherein they admitted the fact of advancing of loan in question to the assessee. After examination of the creditors, no material could be brought on record by the Revenue to show that the cash which was deposited in the bank account of the creditors had flown from the assessee or creditors had actually no source of their own. 13. We find that it is not in dispute that all the four creditors were income tax assessee, advanced the loan to the assessee through banking channel and they all had their independent source of income and the only observation of the Assessing Officer is that in his subjective opinion, they are persons of small means. However, balance sheets filed alongwith return filed by the creditors shows that they have capacity to advance loan in question to the ass....