TaxTMI 
TaxTMI 
2022 (10) TMI 395
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....pting the sundry creditors as business associates in contrary to the assessee's submissions, where the assessee himself accepted them as sundry creditors in para No. 05 of Page 04 of CIT(A) order and directing to delete the addition made by AO. 3. The ld. CIT(A) erred in considering the dual stance taken by the assessee in submissions of the assessee wherein the assessee at one point of time claims the sundry creditors as business associates at para No. 05 of Page 04 of CIT(A) order and in the next para of the CIT(A) order( para No. 05 of page 04 ) claims them as sundry creditors and speaks of restrictions on AO to accept the creditworthiness of the creditor as soon as the sundry creditor accepts money lent to the assessee. ....
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....d that all have agricultural income without any evidences like ITR's, bills and vouchers or a certificate from Horticulture Officer/Agriculture Officer or any equivalent authority, hence have failed to prove their credit worthiness". 3. Facts of the case, in brief, are that the assessee is an individual and derives income from hiring of Hitachi vehicle in addition to real estate business during the financial year relevant to the A.Y 2015-16. He filed his return of income on 31.3.2017 declaring taxable income of Rs.7,00,930/-. The case was selected for limited scrutiny through CASS to verify "Whether Sundry Creditors are genuine and whether the cash deposit has been made from disclosed sources". Statutory notices u/s 143(2) & 142(1) w....
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....associates was not supported by any registered documents and therefore, he rejected the same. However, to verify the genuineness and creditworthiness of the creditors, the Assessing Officer issued summons and recorded statement u/s 131 of the I.T. Act, 1961. During their sworn statements, he noticed that all are non-filers and all the above seven persons are stated to be agriculturists. Some of them have stated that they have taken cash loans from others i.e., one of the sources for investment in purchase of properties. During the course of recording statement of the above sundry creditors, he noted that they have not produced any documentary evidences in support of their claim of lending such huge amounts of money to invest along with the ....
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.... of income. In absence of proper substantiation to prove the creditworthiness of the creditors, the Assessing Officer observed that assessee's claim of taking loans from the above mentioned creditors to the tune of Rs.4,21,54,560/- is not tanable. He also observed that all the transactions were only cash transactions and attract provisions of section 269 SS of the I.T. Act, 1961. The Assessing Officer accordingly held the above investment as unexplained investment in purchase of property u/s 69 of the I.T. Act, 1961 and added back the same to the total income of the assessee. 6. In appeal, the learned CIT (A) directed the Assessing Officer to delete the addition of Rs.4,21,54,560/-by observing as under: "7. The assessment order,....
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....om agricultural activity remains unverified. 9. Referring to the statement of Sri P. Rajasekhar Naidu who has given loan of Rs.91,38,640/-, he submitted that Mr. Naidu in his reply to Question No.6 has explained his source to the tune of Rs.19.00 lakhs only and the remaining amount has not been properly explained. 10. Similarly in the case of Mr. M. Krishnamanaidu who has given loan of Rs.91,38,640/- his source is explained to be from agricultural income. Similarly, in the case of P. Rajasekhar who has given a loan of Rs.91,38,640/-, he has also not fully explained the source of income and is said to have borrowed Rs.20.00 lakhs from Shri Idali Ramaiah and Chit of Rs.15.00 lakhs as well as gold loan of Rs.30.00 lakhs. He submitted tha....
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....estored to the file of the Assessing Officer for fresh examination. 12. We have heard the rival arguments made by both the sides, perused the orders of the AO and the learned CIT (A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us by both sides. We find the AO in the instant case made addition of Rs.4,21,54,560/- on the ground that the assessee could not substantiate with evidence to his satisfaction regarding the creditworthiness of the seven parties from whom the assessee has taken money as business associate members for purchase of the property at Vizag. We find the learned CIT (A) deleted the addition, the reasons of which have already been reproduced in the preceding ....