TaxTMI 
TaxTMI 
2015 (3) TMI 443
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.... on 31-12-2007. The return filed by the assessee was selected for scrutiny. It was noticed by the Assessing Officer that there were cash deposits of Rs. 23,50,000/- in the assessee's bank account of Bombay Mercantile Co-op. Bank Ltd., Solapur Branch. The Assessing Officer sought the explanation of the assessee in respect of source of the said deposits. The assessee stated by way of written submission that he was planning to commence Civil Construction Business in 2006 as his retirement was due in the near future. He required capital for the said business and he, accordingly, collected the money from his close friends. He further stated that the amount collected from the friends was kept in home for a long time and finally it was deposited in the bank and fixed deposit receipts were made in order to make availability of funds when the business would warrant. The assessee also furnished the list of the loan creditors along with their address as well amount taken from them. The details of the loan creditors as submitted by the assessee are as under: Sr.No. Name and address Amount Dt. Of confirmation of letter Occupation 1 Shri Basavraj Ambadas More,A/P. Nagansur, ....
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....e was Rs. 15000/-. He stated that at the time of retirement, he had received total amount of Rs. 4,00,000/- and Rs. 1,50,000/- leave encashment and gratuity etc. respectively. It appears that he was stated that he spent some amount on the education of his son. He also stated that there was an expenditure on the extension of residential house. He admitted that he has given a loan to the assessee but stated that he is not remembering the date. He also stated that out of total amount/advance of Rs. 3,00,000/- he has received back amount of Rs. 2,50,000/- from the assessee during the period October/ November 2007 from time to time. The Assessing Officer did not believe the statement of the said person as in his opinion his creditworthiness was doubtful. The Assessing Officer has also noted that as per the extract of the bank account with the Bank of Maharastra that there were credit entries but the said person has also made investment in the fixed deposits etc. In sum and substance the Assessing Officer declined to accept the creditworthiness of the said person to give the loan of Rs. 3,00,000/0 to the assessee. (II). Shri Rewansidhheswar Swamiji: It is stated that he is residing at....
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....ed that he received the gratuity of Rs. 2,96,000/- and PF of Rs. 2,00,000/-. The Assessing Officer has made the certain observation in respect of his bank account but the said person confirmed before the Assessing Officer that he has given the advance to the assessee and he has sufficient source of agricultural and past savings. (IV). Shri Irrappa Rajappa Konapure: The said loan creditor was residing at Nagansur, Tal.-Akkalkot, Distt.-Solapur. He was 57 years old and he was not assessed to tax. There are 5 members in his family including him. i.e his wife, two sons and daughter in law. He stated that he is owner of 4.5 Acre agricultural land which was irrigated. He also produced 7/12 extract of his agricultural lands. He stated before the Assessing Officer that he has cultivated sunflower and jowar and sold his agricultural produce at Akkalkot market to ADDTYA. He could not produce the proof of the sale of land agricultural crop. The said loan creditor also filed the copy of his bank account maintained in Solapur DCC Bank, Nagansur. He also stated that he is also having 5 buffalos and two cows from which he sales the milk to villages. He confirmed that he has given Rs. 3,00,000/....
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....d that there was a joint bank account with Solapur DCC Bank bank account. He confirmed that he has given the hand loan of Rs. 5,00,000/- to the assessee in cash from time to time from May 2006 to October 2006. He also confirmed before the Assessing Officer that he received the amount of Rs. 4,50,000/- back from the assessee in the month of December 2007 to March 2008 in cash. The Assessing Officer was not satisfied with the reply of that loan creditor. He raised the doubt in respect of creditworthiness and declined to accept his genuineness. (VII). Sou Taramati S. Jadhav: In respect of this loan creditor the Assessing Officer has noted that the assessee has not produced the said person for examination. The assessee only filed 7/12 extract. On verification of 7/12 extract it is seen that the said person was having agricultural land admeasuring about 3.88 hector. The Assessing Officer has observed that the land is non-irrigated and the person had cultivated Tur, sunflower and jowar etc. the Assessing Officer raised the question mark on the genuineness of the claim of the assessee that he has taken an interest from advance or loans from the above 7 persons for the purpose of starin....
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....cept one or two, they belong to the village and they are not trained witnesses but depose correct facts before the Assessing Officer. He argues that the person who appears before the Assessing Officer is aware about the consequence also for his false statement which is recorded on oath. He referred to the statement of the loan creditors placed in the Compilation as the copies of 7/12 extract and he submits that Sec. 68/69 are the deeming provisions having the limited application. There is a primary burden on the assessee to prove the identity and genuineness of the transaction as well as the creditworthiness of the person from whom it is claimed that the money has come. He submits that the assessee produced 6 loan creditors as well as their confirmation letters. Those 6 loan creditors in their personal statements before the Assessing Officer on oath explained the source where from they are generating the income and it cannot be said that those persons do not have any income to lend the money to the assessee. He submits that in respect of 2 loan creditors they were employees and they also got retirement benefits. The inference drawn by both the authorities below in respect of 6 loan....
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.... creditors. Out of 7 loan creditors, 6 loan creditors, appeared before the Assessing Officer and confirmed that they have given the advances to the assessee in cash from time to time for his business purpose. It is true that none of the 6 persons are assessed to tax but at the same time as per the material available on record, it is seen that all the 6 persons stated before the Assessing Officer that they are having agricultural lands and they are cultivating those land and taking the agricultural produce. It is also seen that those persons also produced sample copies of the sale bills in respect of the agricultural produce claimed to have been sold by them in the market yard as well as to the sugar factories. 8. So far as Shri Ravindra Shamrao Tambolkar is concerned he has confirmed that he has given the loan to the assessee. He has also explained the source. He was working as a Overseer in Solapur Municipal Corporation and has received the retirement benefits. He confirmed that he has given the personal loan to the assesse of Rs. 3,00,000/- and out of that he has received back Rs. 2,50,000/- during the period October/November, 2007. In the case of this person, he has not state....
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.... agricultural land to demonstrate that in fact he is owner of agriculture land. He also claimed that he is taking crops like sugarcane, maize, jowar, harbhara etc. He also stated that he sales agricultural produce. Merely because he is not assessed to tax but the data on record suggest that he is otherwise capable to give the loan to the assessee and then why he should be rejected on the reason of his creditworthiness. The assessee has to establish identity, genuineness and creditworthiness of the loan creditor. In this case on the perusal of the facts and figures noted by the Assessing Officer, in our opinion the assessee has discharged his primary burden u/s. 68/69 of the Act and hence, no addition is justified. We, accordingly, delete the addition of Rs. 3,00,000/- 11. In respect of Shri Irrappa Rajappa Konapure, the Assessing Officer has noted that he is also agriculturalist and owner of 4.5 Acre agricultural land which was irrigated. He also cultivated and takes the sunflower and jowar and sales his agricultural produce. He has also stated that he has 5 buffalos and two cows from which he sales the milk to villages. He also confirmed that he has given Rs. 3,00,000/- to the ....