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2003 (5) TMI 466

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..... ich the CIT(A) is wrong on facts and in law in sustaining the addition of Rs. 71,000 on account of loan creditors and disallowance of interest of Rs. 5,135 thereon. No proper reasons have been given in doing so. The evidence brought on record has not been considered properly and in the right perceptive. The loans are quite genuine and the same ought to have been accepted. 4. The facts of the issue are that the assessee who was running contract business in earlier years and had been obtaining contracts for M.E.S. started the business of dealing in purchases of metal scraps through auction. For the purpose of his business, he was required to make deposits, with various Government Departments, who sold their scrap, as earnest and bid money .....

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..... to square up the accounts with money received out of sale proceeds of goods. The CIT(A) held that the Assessing Officer was not justified in making the addition in respect of those amounts which had been advanced by cheque to the assessee and the total works out to Rs. 55,000. Therefore, he directed to delete the amount of Rs. 55,000 plus interest thereon and the balance amount of Rs. 71,000 and interest thereon was confirmed. 5. During course of hearing the learned Counsel for the assessee vehemently argued that the assessee who started the business of purchasing of goods in auction for the first time did not have sufficient fund for investment in the new business, therefore, he approached his near relatives being his sister, brother .....

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..... submitted by him which reveals that the payment of Rs. 2,09,792 was paid in cash on the last date of deposit on 5th June, 1989. The learned Counsel also drew our attention to page 11 of the paper book which is capital account of the assessee and balance sheet as on 31-3-1990. In the capital account of the assessee for the year under consideration the opening balance was shown at Rs. 57,353 and the profit opening balance was Rs. 20,307. The balance sheet as on 31-3-1990 reveals loan of sum of Rs. 1,65,500. The learned Counsel has filed copy of confirmation letters, affidavit and photocopy of bank pass books of various creditors. We noted that the learned Counsel also cited the decision of ITAT Agra Bench in the case of Subhash Dall Mill w .....

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..... he assessee firm is over. The assessee firm cannot ask that person who makes investment, whether the money invested is properly taxed or not. The assessee is only to explain that the investment has been made by the particular individual and it is the responsibility of that individual to account for the investment made by him. If that person owns that entry, then the burden of the assessee firm is discharged. It is open for the Assessing Officer to undertake further investigation with regard to that individual who has deposited this amount. So far as the responsibility of the assessee is concerned, it is satisfactorily discharged. Whether that person is an income-tax payer or not or from where he had brought this money, is not the responsibi .....

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..... uine. Various case laws were cited by the learned D.R. in his favour. 9. After careful consideration, we noted that the identity of the creditors has been proved. The creditors have confirmed that they have advanced loan to the assessee. In most of the cases, transactions have been routed through bank account. Therefore, asking source of such deposits will amount to asking source of the source which is not permitted under the law as held by the Hon ble High Court of Patna in the case of Sarogi Credit Corpn. v. CIT [1976] 103 ITR 344 and the decision of the Ahmedabad Bench of the Tribunal in the case of Rohini Builders v. Dy. CIT (Mag.). Once it is established that the amount has been invested by a particular person, be he is a f .....

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