2016 (7) TMI 829

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....ded by the AO with the aid of section 68 of the Income Tax Act. 3. Brief facts of the case are that the assessee has filed his return of income on 23.3.2006 declaring income of Rs. 1,22,751/-. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued and served upon the assessee on 19.5.2006. On scrutiny of the accounts, it revealed to the AO that the assessee has taken unsecured loan of Rs. 13,37,109/- from following 34 persons: Sr. No. Name of the depositors Amount of deposits shown 1. Akbarbhai B Belim Rs. 18,000/- 2. Amrut Ambalal Patel Rs. 18,500/- 3. Bahelim Shabbirhusen Kasambhai Rs. 17,500/- 4. Chauhan Chhatrasingh G Rs. 15, 584/- 5. ....

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.... Rs. 16,000/-   Total Deposits Rs. 13,37,109/- The assessee has filed confirmations and also produced the creditors before the AO. The ld.AO was not satisfied with the explanation of the assessee and made addition. 4. On appeal, the ld.CIT(A) has partly deleted the addition by observing as under: "4.3. I have carefully considered the facts of the case, the submissions of the assessee and the assessment order. In the case of Mrs. Vijayalakshmi Shrivastava in her statement recorded on 21/120/2006, it was stated by her that she owns 16 bighas of land and that wheat and chana is cultivated on the land and that no record of income and expenditure is maintained and that she earns Rs. 50,000/- - Rs. 60,000/- from agriculture....

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....orded and the facts of the case suggest that most of the depositors claim to have given the loan on 31/05/2003 or in May 2003. For most of the lenders this was the solitary loan transaction and none of these agriculturists had any evidence of sale of agriculture produce, expenditure bills etc. It is indicated by the AO that these are persons of small means and that most of 7/12 and 8A extract were issued on same date i.e. 19/12/2006 by Talati. It is a well settled law that taxing authority can take note of the surrounding circumstances (CIT vs. Durga Prasad More- 82 ITR 540 (SC). Going by the theory of totality of circumstances and deeper examination of the statements recorded, affidavits and considering factors such as land holdings, other....

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....ded that 31.3.2004 is a credit entry in Nutan Sahakari Bank Ltd. It was not a withdrawal by the creditor. He has withdrawn it on earlier occasions. He further contended that all the creditors have given their affidavits. They have confirmed the transaction during the course of their statement, and therefore, the AO ought to have not doubted the explanation of the assessee. On the other hand, the ld.DR relied upon the orders of the Revenue authorities below. 6. We have duly considered rival contentions and gone through the record. Section 68 of the Income Tax Act contemplates that where any sum is found credited in the books of an assessee, maintained for any previous year and the assessee offers no explanation about the nature and source....

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.... is highly improbable that agriculturist, having meager income would keep safe the sale proceeds of agriculture produce for five to six years in cash at home. Her statement in itself is contradictory. In reply to question no.5, she stated that "I keep all my savings at Bharat Cooperative Bank". Then, in the next reply to the next question, she deposed that "I keep few amounts of saving at home". If these two questions are compared with question no.9, where the AO had asked place of keeping agriculture income, she deposed that such income was kept at home. Similarly, we have perused the statement of other creditors. All that statements did not inspire credence to us. The assessee has taken alleged unsecured loan in systematic manner. In some....