AI Drafter 
TaxTMI 
TaxTMI 
2019 (11) TMI 1141
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....dated 18/02/2019 for the Assessment Year 2011-12. 2. There is a delay of 28 days in filing this appeal. The Revenue has filed an affidavit for condonation of delay. We have gone through the affidavit and find that there is a sufficient cause to condone the delay. Accordingly, delay is condoned. 3. Facts of the case, in brief, are that the assessee is an individual engaged in the business of processing of manufacturing of cashew in the name and style of "Sri Balaji Process", filed his return of income by admitting total income of Rs. 3,85,725/-. Subsequently, the case of the assessee was converted into scrutiny and after following due procedure, assessment was completed u/sec. 143(3) by making addition of Rs. 1,19,18,600/-and added ....
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.... mode amounting to Rs. 31,58,000 and remaining 194 creditors were repaid through cheque amounting to Rs. 36,12,700. Still 34 creditors are yet to be repaid amounting to Rs. 6,21,000 at the time of recording statements. Further, none of the 401 loan creditors received any interest. The persons examined were mainly from rural areas such as K.O. Mallavaram, D.Polavaram and Gunipudi etc. Most of them are agriculturists, daily labours and persons working in unorganised sectors. 5) Preponderance of probability of bank account repayment to said to have made through cheque. In this case there is bank account the assessee fails to explain the necessity of taking loan in cash. So in the circumstances it is difficult to believe that ....
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....e of their source of income, extent of income and the basis of income, the size of their family, the details of family expenses and savings etc. Further, they have submitted their proof of identity. The assessing officer did not point out any specific defect in the confirmation letters rather saying that the persons examined were mainly from rural areas such as K.O.Mallavaram, D. Polavaram and Gunipudi etc. Most of them are agriculturists, daily labours and persons working in unorganised sectors. Preponderance of probability of bank account repayment to said to have made through cheque. It was further stated that when the appellant is having bank account he failed to explain the necessity of taking loan in cash. The Assessing Officer stated....
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.... or indirectly. It was further stated that out of the 401 creditors from whom the appellant obtained a loan amount of Rs. 73,91,700, as many as 367 creditors were repaid to the extent of Rs. 67,70,700 and more than 50% of the amount repaid was by cheque. After careful consideration of all these facts, I am of view that the appellant fulfilled his basic obligation to prove the identity of the creditors, the creditworthiness of such creditors and genuineness of the transaction i.e., unsecured loans. Therefore, the addition made by the Assessing Officer on mere preponderances and probabilities cannot withstand and the assessing officer is hereby directed to delete the addition of Rs. 2,85,24,750. The appeal made by the appellant on th....
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....ur opinion, the Assessing Officer has committed a mistake in observing above for the reason that if at all he is having any doubt, he should have to issue summons to the parties and examine them, without doing that simply disbelieving the confirmation letters is not correct. On appeal before the ld. CIT(A) the assessee has filed the confirmation letters from all the remaining creditors. The ld. CIT(A) called the remand report from the Assessing Officer and in the remand report, the Assessing Officer has observed that most of the creditors are agriculturists, daily labours and persons working in unorganised sectors. He has also observed that payments should have been made through banking channel, but the assessee has borrowed the funds by ta....