TaxTMI 
TaxTMI 
2003 (10) TMI 245
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....the lenders and there was also no receipts with the lenders as a proof. (2) That the learned CIT(A), Agra, while deleting the above addition has totally ignored the arguments of the AO and decided the matter in favour of the assessee by giving credence to his version without proper consideration and appreciation of the material facts placed on record and also discussed in the assessment order. (3) That the order of the learned CIT(A), Agra being erroneous in law and on facts be set aside and that of the AO be restored." 3. The facts of the case in brief are that a sum of Rs. 4,32,266 has been added to income of the assessee as value of unexplained silver weighing 51.147 kg. taken as loan from 4 persons and the amount of interest pa....
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....e or their credit worthiness was not proved. Therefore, he treated the same as undisclosed income of the assessee. 5. During the course of assessment proceedings first three persons namely Shri Rajesh Kumar Agarwal, Shri Govind Prasad Sharma and Shri Govind Ram were produced before the AO who had also recorded their statements. They have admitted that they had given silver on loan to the assessee. Confirmation letters of these persons were also filed which were supported by their affidavits. These confirmation letters and affidavits contained the date of giving silver, rate of interest/rent, source of giving silver and rent and also the name and address of the depositor alongwith his IT file numbers, etc. The assertions of Shri Rajesh Ku....
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....with records of these persons and had not noted any discrepancy. As far as the question of written agreement is concerned, it is the satisfaction of lender who may require such agreement. In the line of business of assessee large number of people give and take silver on loan without any written agreements. Traditionally there are no written agreements. Further there is no legal requirement to enter into a written agreement to venture into such type of contract. Under the provisions of Indian Contract Act, contract may be written or oral also. But the basic requirements of a valid contract are that parties must be competent to contract, the contract should be legal and there should be a consideration. All the necessary requirements are sa....
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.... doubt only. It is submitted that such assertion of AO is therefore not correct and he should not have drawn any adverse inference therefrom. There is no deeming provision in law in regard to such transaction as in the case of cash credits where the assessee is obliged to prove the loan to the satisfaction of the AO. In such circumstances, the various persons produced before the AO, in law, were own witness of the AO. These witness having said nothing in favour of AO, the AO was barred from drawing any contrary conclusion." 6. We have carefully considered rival contention, assessment order, order of the CIT(A) and we noted that the AO has not given any finding that why the statements given by all the three persons. namely Shri Rajesh Kum....