9911796707
TMI Blog2006 (10) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... of farmers as at the year end. In order to examine the genuineness of the liability, the assessee was asked to furnish the list of farmers to whom such a huge amount was outstanding. Vide order-sheet entry dt. 3rd Feb., 1998 the assessee was required to give names and addresses of farmers in whose names the outstanding balances were more than Rs. 5,000 as on 31st March, 1995. The list was filed comprising of around 27,000 names out of which the AO selected five farmers at random basis for making examination. The assessee was called upon to produce those five persons personally along with their land records and bank passbooks. On 23rd Feb., 1998 three farmers out of the five were produced whose statements were recorded under s. 131. Thereaf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the addresses of the farmers were already available on record and the assessee-company was ready to bear the expenses, if any, in this connection. The AO considered the fact that the three farmers in their statements recorded on 23rd Feb., 1998 had admitted to have received payments within the outer limit of one month and the other two persons examined under s. 131 on 27th Feb., 1998 were produced after tutoring by the assessee. Considering these facts the AO made addition of Rs. 42,47,048, which came to be confirmed in the first appeal. 4. We have heard both the sides at length and perused the relevant material on record. It is obvious that out of 27,000 odd farmers the AO had selected only five for making investigation and on the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecorded on 27th Feb., 1998 was with reference to financial year 1997-98. It has been further asserted that for agricultural produce sold by him in January and February, 1995 he received payment in May, 1995. The narration of the above facts clearly indicates that at the first instance the AO had not referred to the period for which he was making investigation. When the statement of the fourth person was recorded on 27th Feb., 1998 and cross-examined by the assessee's counsel, it was duly admitted that the payment for 1994-95 was received in May, 1995 only. The AO has branded such statement as tutored. He further did not chose to comment on the affidavit of Shri Pratha Dangi in which he had made the position clear with reference to his earli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards the bills issued by the assessee some of which have been placed on record. Receipt No. 72 of book No. 1973 bears the date 23rd Feb., 1995 in which the name of the farmers along with addresses, quantity purchased and the rate is mentioned. At the bottom of this invoice there is a stamp for payment bearing the date 10th May, 1995. Similarly the receipt No. 59 of book No. 1935 is the invoice dt. 16th Feb., 1995 which carries the stamp of paid on 30th May, 1995. In the same manner copy of various invoices has been placed on record to show that purchases were made earlier and the payments were made at a gap of around 2 to 3 months. It is further observed that the assessee company enjoyed credit facilities from the Punjab National Bank, U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee is a limited company with huge brought forward balances of loss and unabsorbed depreciation. The reference of case to BIFR also shows the adverse financial position of the assessee company, in which apart from regular directors, representatives of the financial institutions are also on Board. It is really not understood as to how such an addition could have been made and sustained. By considering the entirety of the facts discussed above, we are of the considered opinion that the learned CIT(A) erred in sustaining this addition. We, therefore, order for its deletion. This ground is allowed. 5. Second and only other effective ground of the assessee's appeal reads as under: "Under the facts and in the circumstances of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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