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2019 (11) TMI 1141 - AT - Income TaxAddition u/s 68 - as considered the entire case and confirmations filed for 162 persons and came to a conclusion that there is no creditworthiness, the transactions are not genuine as the loans obtained from the farmers, milk suppliers and commission agents and therefore the entire amount borrowed by the assessee is added to the total income of the assessee - HELD THAT:- The assessee carrying small time cashew processing business. He has borrowed small amounts from local people who are milk vendors, ryotvaari coolies and commission agents to carry his business. In the assessment order, the Assessing Officer has found that assessee has borrowed money from 1357 persons, but he filed confirmation letters in respect of 162 persons. By examining the confirmation letters filed by the assessee, the Assessing Officer came to a conclusion that these people from whom the assessee borrowed funds, have no creditworthiness for the reason that they are small time milk vendors, ryotvaari coolies and commission agents. In our opinion, AO has committed a mistake in observing above for the reason that if at all he is having any doubt, he should have to issue summons to the parties and examine them, without doing that simply disbelieving the confirmation letters is not correct. On appeal before the ld. CIT(A) the assessee has filed the confirmation letters from all the remaining creditors. CIT(A) called the remand report from the Assessing Officer and in the remand report, the Assessing Officer has observed that most of the creditors are agriculturists, daily labours and persons working in unorganised sectors. He has also observed that payments should have been made through banking channel, but the assessee has borrowed the funds by taking cash and repaid the same in cash. We find there is nothing wrong in borrowing funds from daily labourers, agriculturists and milk vendors, if at all Assessing Officer is having doubt, he should have called them by issuing summons and examine them. Simply on the basis of that they are not filing returns of income, therefore the amounts borrowed by the assessee cannot be considered as not genuine transaction, is not correct. The Assessing Officer himself observed that the assessee has already repaid ₹ 67,70,700/- to 367 people and 173 creditors were repaid by cash mode amounting to ₹ 31,58,000/- and remaining 194 creditors were repaid through cheque amounting to ₹ 36,12,700/-. Still 34 creditors are yet to be repaid amounting to ₹ 6,21,000/-. By considering the facts and circumstances of the case, we are of the opinion that the assessee has filed the confirmation letters from the loan creditors though small loan creditors who are agriculturists, milk vendors & commission agents. All the details are available with the Assessing Officer. Without issuing summons and without examining them, simply on the basis of assumptions and presumptions, confirmations given by the assessee cannot be discarded. - Decided in favour of assessee
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