TaxTMI 
TaxTMI 
2018 (4) TMI 874
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....e. 2.1. The brief facts of this issue are that the assessee is an individual running a petrol pump and had filed his return of income for the Asst Year 2007-08 on 31.10.2007 declaring Nil income. The assessee was directed to produce the books of accounts, copies of bank statements and other relevant papers and documents by the ld AO in the assessment proceedings. The ld AO observed that the authorized representative of the assessee appeared from time to time and the case was heard with reference to the papers, documents and submissions furnished by him. The ld AO observed that assessee had derived his income during the year under appeal from retail outlet of Indian Oil Petrol Bunk. He was also having income from other sources. The ld AO observed that the assessee had claimed loss of Rs. 19,63,492/- as regular business loss and had set off the same against his petrol bunk business income of Rs. 4,18,968/- . The ld AO treated the loss of Rs. 19,63,492/- was treated as speculation loss. The assessee did not file any appeal against this action of the ld AO before the ld CITA , though an appeal was preferred in respect of other additions made in the assessment. Hence there was no occ....
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....l of the said list, the minimum amount of loan was Rs. 16,227/- and maximum amount was Rs. 19,500/-. The assessee had received Rs. 18,500/- each from 17 loan creditors, Rs. 18,000/- each from 11 loan creditors, Rs. 19,000/- each from 16 loan creditors and Rs. 19,500/- each from 13 loan creditors and Rs. 17,000/- each from 3 loan creditors and a sum of Rs. 16,227/- was recorded in the name of Shri Nirmal Sarkar. The assessee furnished the loan confirmation from all the 61 loan creditors in the same type of statement of accounts printed from the same place. In order to verify the genuineness of loan, summons u/s 131 of the Act were issued by the ld AO to 40 of them at random basis. In response to the said notices, the following persons appeared before the ld AO :- 3.2. The ld AO recorded statements from aforesaid persons and found that none of the so-called loan creditors were having sound financial ability to afford the loan to a Petrol Pump Owner (i.e the assessee herein) since they were found to be a daily wage earner having income during the financial year for Rs. 50/- to Rs. 60/- per day as a daily wage earner. The ld AO also observed that even some of those persons used to w....
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....n of land, fishing, farming and other works in the village area moreover it is now high time of harvesting of crops and most of them are engaged in such works. They all are being very innocent having no such profoud education background but honest and sentimental native people. Under the circumstances your humble petitioner earnestly requests to consider the fact in the matter of aforesaid nature / character of the summoned persons in my case during hearing and in no way consider their absence if any absconding to face the inquiry. I would request earnestly to give them all adequate time to decide my case of proceedings and oblige." 3.4. The ld AO observed that the submissions of the assessee are not acceptable in view of the fact that the ld AR was initially asked whether he could produce the persons who are claimed to have given loan to the assessee, the ld AR brought around 20 persons from whom statements could not be recorded on the same date viz 10.11.2009 (not on 9.11.2009). However, statements of the two persons were recorded on that date and the ld AR was requested subsequently to send 3 persons in a day vide order sheet noting dated 23.11.2009. The ld AO observ....
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....Tax(Appeals)-XXXII, Kolkata has erred in law as well as in fact in not considering the recorded statements of the summoned and examined Unsecured Loan Creditors of the assessee. 7. We have heard the rival submissions. We find that the ld AR argued that the assessee is running his business in a village where no banking facilities are available. He argued that the parties in order to keep safe custody of their hard earned savings had come forward to offer loans to the assessee in cash totaling to Rs. 11,37,227/- comprising of 61 persons. He submitted that some of these persons had even appeared before the ld AO in response to the summons issued u/s 131 of the Act and had confirmed the fact of giving loan to the assessee herein. While this is so, there is no case of making any addition treating the loan creditors as bogus u/s 68 of the Act. He stated that the assessee was suffering from serious illness related to cardiac problem and accordingly could not produce the loan creditors before the ld AO in the remand proceedings. In response to this , the ld DR vehemently relied on the findings of the lower authorities in as much as the creditworthiness of the loan creditors were not pro....