1976 (2) TMI 57 - AT - Income Tax

Summary

Issues:
1. Whether the cash credits in the names of three individuals are genuine loans.
2. Whether the addition made for low yield of groundnut by the ITO is justified.

Analysis:
1. The first cash credit of Rs. 6,000 in the name of Shri Pratap Singh was received via a cheque from Banaras State Bank. Despite some discrepancies in the acreage of his agricultural land, Pratap Singh's substantial savings and explanation for the deposit were deemed satisfactory. The Tribunal accepted his explanation, leading to the deletion of the sum from the assessment.

2. The second cash credit of Rs. 2,500 in the name of Shri Rishi Pal Singh was also contested. Although initially not produced before the ITO, evidence later surfaced confirming his appearance and deposition. With proof of adequate financial resources and the creditor admitting the loan, the Tribunal accepted the explanation, resulting in the deletion of the amount from the assessment.

3. The third credit of Rs. 4,000 in the name of Suresh Chand was also scrutinized. Despite initial observations questioning his agricultural income, Suresh Chand's deposition revealed ownership of 40 bighas of agricultural land. As a stranger to the assessee with sufficient agricultural income, the credit in his name was accepted, leading to the deletion of the amount from the assessment.

4. The final issue concerned the addition made by the ITO for the low yield of groundnut. The ITO believed the minimum yield should be 68%, whereas the assessee reported 66.32%. Citing comparable cases where similar yields were accepted, the Tribunal found the assessee's yield reasonable. Consequently, the addition of Rs. 2,000 was deleted, and the appeal was allowed.