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TMI Blog2016 (5) TMI 238X X X X Extracts X X X X X X X X Extracts X X X X ..... -(A) has erred in law and in facts of the case by confirming the addition of Rs. 61,25,000/- u/s 68 of the Income Tax Act, 1961, confirming that the loans received by the appellant during the relevant were not genuine and that the creditworthiness of the lenders is not proved, when the same was duly established by the documents placed on record and through affidavits and statements on oath. The facts of the case and the submissions of the assessee are not considered in the right perspective and various findings made by the Id. CIT(A) including that all the 10 unsecured lenders were apparently unconnected persons are either factually incorrect or untenable in law. 3. That the Id. CIT(A) has grossly erred in law as well as on the fact of the case by confirming the addition of Rs. 11,09,350 u/s 41(1) of the Income Tax Act, 1961, for various reasons including the following: a) The Id. CIT(A) ignored the fact that Mr. Ashaf Sohail, the alleged bogus creditor, has accepted in his statement of oath as recorded by the Id. A.O. during the assessment proceedings that the impugned amount of Rs. 11,09,3507- was payable by the appellant for purchase of animals. b) The Id. CIT(A), has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h they have confirmed thatthey have given the above-unsecured loan through their own income and savings of the previous year. The AO noted that the source of income of these 8 ladies were from embroidery and knitting, trading of sarees and handloom clothes and therefore the AO was of the view that as these ladies are engaged in the business they should have made themselves available for verification before the AO. Regarding the other two persons, both of them are male and are earning commission from the sale of animals to meat factories. Both of them have advanced Rs.Five lacs each to the assessee company. Both persons have stated that their savings of earlier years for AY 2009-10 and 2010-11 are put into bank account in cash and then cheque for loan was given. On these facts, the AO made an addition of Rs. 61,25,000/- u/s 68 of the Act. On appeal before the ld.CIT (A), the same arguments were reiterated. 4. The ld.CIT (A) was of the view that it is apparent that unconnectedpersons would deposit such huge amount of cash on one single day in their bank account who earned their livelihood from embroidery, stitching and petty business would have so much of disposable cash they have g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n previous day, issue of cheques on next day is a legal transaction, and it cannot be doubted. He further relied on the decision of Rajasthan High Court in the case of CIT Vs. Jai Kumar 267 CTR 396. 6. The ld. DR relied on the orders of the lower authorities and he submitted that addition u/s 68 has rightly been made as the assessee has failed to prove the creditworthiness and genuineness of the transaction. 7. We have carefully considered the rival contention.we have also perused the paper book containing 67 pages, wherein the assessee has submitted the copies of the confirmation, income tax return, computation of income, statement of affairs, and bank passbook statement of the 10 unsecured lenders. It also contains the affidavit of the 8 ladies and two persons submitted in response to this summons, where they have confirming advance given to the assessee and further copy of the statement of two unsecured lenders which are recorded by the AO during the assessment proceedings. The assessee also placed before us the written submission made before the learned Commissioner of Income tax (Appeals). We have carefully gone through the submission and evidences placed before us. On perus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on their respective business is shown. All the computation of income, statement of affairs and capital account has been prepared in similar fashion. Surprisingly all the 10 lenders have opened their bank account with the same branch of Dena bank i.e. Dena Bank, Subash Bazar, Meerut City. It is also surprising that the address of all the parties is 13 Ismail Nagar, Meerut City. All these lenders have come together and deposited cash in their bank accounts with the same bank and then deposit these amounts with the assessee as well as its sister concern on the very next day proves more than what is saidby lower authorities. Therefore in the case of these 8 ladies wherein the identicalmodus operandi has been adopted for giving alleged loan to the assessee who are having their meager income and has meager cash in hand and have minimum bank balance with them. We are of the view that the assessee has miserably failed to prove the creditworthiness of these lenders. 10. Now coming to the issue of genuineness of these transactions. We found that the assessee has failed to prove the genuineness of the transaction as all the bank accounts are with the same bank, in the same branch and on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see was to record his name as creditor in places of the traders who sale the animals. Therefore, AO held that Mr. Asraf Sohail is not a genuine creditor. Against this, the assessee preferred an appeal before the CIT (A), who confirmed the above addition. Before us, the ld. AR submitted that it is modus operandi of the business of the assessee to record the transaction of purchase in the name of the broker and therefore the liabilities is genuine. He further stated that Mr. Asraf Sohail accepted this fact and therefore no addition u/s 41(1) of the Act can be made. Against this, the ld. DR relied on the orders of the AO. 12. We have carefully considered the rival contention it is apparent that Mr. Asraf Sohail appeared before the AO and confirmed that he is a broker and purchase of animals has happened through him. It is also submitted that it is modus operandi of the assessee to credit the name of broker instead of petty suppliers. However, the name of those suppliers who supplied animals through this broker was not made available by the assessee before the lower authorities. Therefore in the interest of justice we set aside this ground to the file of the AO to enquire from whom th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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