2003 (11) TMI 293 - AT - Income Tax

Issues Involved:
1. Addition of Rs. 1 lac from Sh. Inderpal Singh.
2. Addition of Rs. 2 lacs from Sh. Om Prakash Goel.
3. Addition of Rs. 1 lac from Sh. Vijay Kumar.
4. Addition of Rs. 1 lac from Sh. Ravinder Pal.
5. Addition of Rs. 1 lac from M/s Devinder Sandhu & Co.
6. Addition of Rs. 2 lacs from M/s B.S. Sandhu Hosiery Factory.

Detailed Analysis:

1. Addition of Rs. 1 lac from Sh. Inderpal Singh:
The AO added Rs. 1 lac to the assessee's income, doubting the genuineness of the loan from Sh. Inderpal Singh, who did not file an income-tax return for the relevant year and did not charge interest. The CIT(A) deleted the addition, noting that the creditor's bank account showed substantial deposits, indicating financial capacity. However, upon appeal, it was noted that the genuineness of the transaction was doubtful due to the long delay in repayment and lack of interest, leading to the conclusion that the CIT(A) was not justified in deleting the addition.

2. Addition of Rs. 2 lacs from Sh. Om Prakash Goel:
The AO added Rs. 2 lacs, suspecting the genuineness of the loan from Sh. Om Prakash Goel, who deposited cash in his bank account just before advancing the loan and did not charge interest. The CIT(A) deleted the addition, emphasizing that the creditor's bank account showed regular substantial deposits, indicating financial capacity. The appellate tribunal upheld the CIT(A)'s decision, agreeing that the identity, financial position, and genuineness of the transaction were satisfactorily established.

3. Addition of Rs. 1 lac from Sh. Vijay Kumar:
The AO added Rs. 1 lac, doubting the genuineness of the loan from Sh. Vijay Kumar despite his confirmation and financial capacity. The CIT(A) deleted the addition, noting that the creditor was a regular income-tax assessee with substantial cash availability in his books. The appellate tribunal upheld the CIT(A)'s decision, concluding that the addition was unjustified as the identity, financial position, and genuineness of the transaction were established.

4. Addition of Rs. 1 lac from Sh. Ravinder Pal:
The AO added Rs. 1 lac, doubting the genuineness of the loan from Sh. Ravinder Pal, who confirmed the loan and had substantial cash in his books. The CIT(A) deleted the addition, noting that the creditor was a regular income-tax assessee and the loan was confirmed. The appellate tribunal upheld the CIT(A)'s decision, agreeing that the addition was unjustified as the identity, financial position, and genuineness of the transaction were established.

5. Addition of Rs. 1 lac from M/s Devinder Sandhu & Co.:
The AO added Rs. 1 lac, doubting the genuineness of the loan from M/s Devinder Sandhu & Co. due to the lack of interest charged. The CIT(A) deleted the addition, noting that the creditor was an existing assessee with substantial income and credit balances. The appellate tribunal upheld the CIT(A)'s decision, agreeing that the addition was unjustified as the financial position and genuineness of the transaction were established.

6. Addition of Rs. 2 lacs from M/s B.S. Sandhu Hosiery Factory:
The AO added Rs. 2 lacs, doubting the genuineness of the loan from M/s B.S. Sandhu Hosiery Factory due to the lack of interest charged. The CIT(A) deleted the addition, noting that the creditor was an existing assessee with substantial income and credit balances. The appellate tribunal upheld the CIT(A)'s decision, agreeing that the addition was unjustified as the financial position and genuineness of the transaction were established.

Conclusion:
The appellate tribunal upheld the CIT(A)'s deletion of additions for all creditors except for Sh. Inderpal Singh, where the genuineness of the transaction was found doubtful. The appeal of the Revenue was partly allowed.

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