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TMI Blog1979 (1) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... this order of the ITO the assessee went up in appeal before the AAC. The appeal of the assessee was dismissed incapable of advancing this loan. 3. Being aggrieved with the order of the AAC the assessee has now come up in appeal before us. At the time of hearing of the appeal it is submitted by Shri B.L. Nema, the counsel of the appellant that all the expenses were duly vouched and no instance was given by the ITO of any unvouched expenses or unverifiable expenses. It is also submitted that the gross profit disclosed by the assessee. In view of this, the profit disclosed by the assessee being reasonable, should have been accepted by the ITO. 4. In reply Shri Badve, the Departmental Counsel relied on the orders of the ITO and the AAC. 5. We have considered the contention of the rival parties and perused the orders of the lower authorities. We observe that the ITO had not mentioned in his order any instance where the expenses were not supported by vouchers. Further the learned AAC also had not pointed out the same. Considering the fact that all the expenses were duly vouched and the profit disclosed by the appellant was also reasonable, we hold that the lower authorities were not j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ITO had enquired into the source of deposit and came to the conclusion that Shri R.N. Rana was not in a position to advance any amount to the assessee. He further opined that he was merely a name lender for which he received consideration. He came to this conclusion on the fact that Shri S.R. Rana had only 35 acres of land which according to the ITO would hardly yield an income of Rs. 3,000 to Rs. 6,000 per year. Further Shri S.N. Rana had borrowed money from Raigarh Central cooperative Bank Ltd. of which the creditor was one of the Directors. Shri S.N. Rana was unable to repay the loan taken from the Bank. The sale proceed of land amounting to Rs. 45,000 in respect of 116 acres of land upto the year 1969-70 was also fully utilised by the creditor for the construction of houses. Further, the ITO had stated in his order that the statements of Shri S.N. Rana were contradictory and Shri Om Prakash, one of the partners of the firm gave statement against the appellant firm. Shri Om Prakash stated that the amount of Rs. 50,000 was brought at the Kharsia Office of the appellant and this amount belonged to Shri Ramawtar. The AAC also agreed with the ITO while confirming the addition. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also certified to have paid the amount to the assessee as well as of having received back the amount. In regard to the agricultural income earned by the creditor, a certificate from the Tehsildar stating that this annual income was Rs. 26,000 has been produced before us along with a certificate from the local M.L.A. to the effect that the creditor possessed 15 acres of irrigated lands and he was having two crops annually. Shri Rana also submitted a certificate from the Agricultural Extension Officer, Dhanjaygarh stating that multi crops were produced in the agricultural land and about Rs.10,000 worth of fertilizer seed etc. were used by him annually. Certificate from the Raigarh Co-operative Bank stating that Rs. 21,600 was paid by Shri Rana on 9th May, 1975 has been filed. Further the Certificates from Shri Meghraj Sharma, local MLA mentioning that the creditor was a member of the ruling chief. 10. On behalf of the Department it is submitted that Shri S.N. Rana was not in a position to the advance the amount and even on the working made by the ITO calculated at 12 to 30 times of the land revenue he could not have a net income more than Rs. 3,000 per year. Similar calculation ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Shri Omprakash. In support of his contention Shri. B.L. Nema has placed before us various documents which forms part of compilation book. 12. We have perused the evidence produced before us by the rival parties and also considered their arguments. Before we discuss the capability of Shri S.N. Rana to advance the loan to the assessee, we confine ourselves with the statement of Shri Omprakash, a partner of the firm to find out as to how far his evidence is reliable. On perusal of the assessment order of the Income tax Officer we find that the ITO had relied of the evidence of Shri Omprakash. At the time of deposition Shri Omprakash had stated before the ITO that the money belongs to Shri Ramawatwar and credited it in the name of Shri S.N. Rana. From this, it is clearly seen the argument of the Revenue that Sri Omprakash was giving evidence against the appellant against his own interest falls through. This statement of Shri Omprakash was neither against the appellant firm nor against his own interest but it was against one of the partners Shri Ramawatwar he never said that this sum of Rs. 50,000 belonged to Shri Omprakash then he should not have included this amount in the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 40,000 against Rs. 26,000 stated by Shri Rana. The ITO had estimated the income of Shri Rana from agriculture at Rs. 3,000 per year. This estimate of Shri Rana's agricultural income was based on some of the vouchers produced by Shri Rana in respect of sale of agricultural products by him and also a certificate from submitted Divisional Officer (Civil) Dharmjaigarh. It is seen that Shri S. N. Rana produced before the ITO two vouchers for the sale of agriculture produced by him. One vouchers is dt. 1st Jan., 1970 and the other is dt. 20th Jan., 1975. In this letter addressed to the ITO Shri Rana had stated that he was producing a few bills in order to satisfy the ITO that he had agricultural Income. In this letter he had also made cash sales to the members of public. From this evidence one thing is proved that Shri S.N. Rana had agricultural land and he had also income from the same. The question now arises is whether Shri S.N. Rana was capable of giving the loan to the appellant firm. From the certificate of Agricultural Extension Officer, it is seen that Shri Rana was utilising the seed, manure fertilizer etc. worth Rs. 10,000 every year. From this it is clear that his income coul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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