TMI Blog1983 (4) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... rest) . Rs. 3,11,400 . On having been called upon to prove the genuineness of the aforesaid loan, the assessee firm produced the following documentary evidence before the authorities below (i) Confirmatory letter of Shri R. A. Goel Prop. M/s Ram Gopal Nand Kishore in which he had admitted the factum of loan and had also given his P. A. No. under which he was assessed to income-tax atBombay. (ii) Affidavit dt.28th July, 1980of Shri R. S. Goel in which he again confirmed to have advanced loan of Rs. 3,00,000 to the assessee on29th Nov., 1977and had also confirmed to have received book the loan from the assessee firm alongwith interest. (iii) The loan had been raised through Shri Raj Kumar of Delhi, whose affidavit was enclosed alongwith the objections to the draft assessment order with a bank certificate dt.30th March, 1981. (iv) At the instance of CIT (A) statement on oath of Shri Raj Kumar was also recorded by the ITO on6th Nov., 1981. (v) In the course of s. 144B proceedings the IAC had obtained a copy of bank a/c of Ram Gopal Nand Kishore as standing with Union Bank of India, a copy of which was given to the appellant from which it is evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who had been instrumental, according to the appellant, in arranging the loan, the ITO was directed by me to cross examine Shri R. K. Jain with regard to the affidavit filed by him. Again, because Shri Ramesh Chand Agarwal, partner of the appellant firm stated in the appeal proceedings that the loan was repaid by the appellant after arranging limit of Rs. 2.50 lakhs from he Allahabad Bank, Bulandshahar on the hypothecation of potato stock, cold storage, machinery and building etc., and against agricultural land belonging to him, the ITO was also directed to examine from the bank account of creditor whether the repayments made by the appellants by the account payee cheques of Rs. 1,00,000 on 7th March, 1978, Rs. 1,00,000 on 23rd March, 1978 and Rs. 1,11,400 on 17th April, 1978 had been credited in he bank account of the creditor: 12. The ITO examined Shri Raj Kumar Jain on oath with reference to the affidavit field by him in the course of proceedings under s. 144B. This statement of Shri R. K. Jain which has been sent by the ITO, fully corroborates his earlier assertions in the affidavit dt.30th March, 1981that he had got a loan of Rs. 3,00,000 arranged for the appellant firm from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s date but on many other dates, preceding and succeeding to the date on which the loan was given to the appellant. It is seen that the Departmental Authorities atBombayissued a notice under s. 226(3) to the ITO, Bulandshahar for recovering an amount of Rs. 3,00,000 from the appellant in respect of the outstanding demand of more than Rs. 8,00,000 against the creditor, who is assessed to tax atBombay. This fact proves beyond doubt that the appellant did take a loan from Shri R. A. Goel, who is not only assessed to tax but is reported to be paying substantial amount of taxes to the Department or, in any case, is a person of sufficient means or was engaged in extending loans to persons who were in need of money at good rates of interest because an amount of Rs. 11,000 has been charged as interest by the creditor from the appellant. Reports of Intelligence Authorities at Delhi, Calcutta and Bombay are based on no material evidence because it is seen that the Inspector of the D.D.I. (Int.), Unit-I, Bombay on 27th Dec., 1979 to the D. D. I. (Int.) Delhi mentions that enquiries made at Chhota Lal Bhawan, Iind Floor, 418, Kalba, Devi Road, Bombay revealed that Shri Suresh Goel, som of Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also the credit worthiness of the creditor and the genuineness of the transaction, which has taken place by crossed cheques. The being the position, the impugned addition is knocked off and the appellant will get a relief of Rs. 3,00,000." 6. The Departmental Representative argued vehemently that the onus which lay on the assessee firm to prove the genuineness of the loan had not been discharged. It was his contention that even though the identity of Shri R. A. Goel stood proved, yet his credit worthiness and the genuineness of the transaction had not been proved by the assessee firm and consequently the CIT was wrong in deleting the addition as made by the ITO under s. 68 of the IT Act. He also referred to the following case law: [1975 CTR (Cal) 40 : (1978) 111 ITR 951 (Cal) (Bharati (P) Ltd. vs. CIT)] [(1979) 117 ITR 690 (Cal) (CIT vs. W. T. Walker Company)]. Pithisaria, IInd Volume, 3rd Edition at p. 1890 and 1900. 7. On the other hand, the ld. counsel for the assessee argued that it was a case of a newly organised firm of which none of the partners had any income previously. Shri R. C. Agarwal in whose case also the income returned having been verified, there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : (1976) 103 ITR 344 (Pat); Roshan Di Hatti vs. CIT (1977) 107 ITR 938-940 (SC) and also p. 612 of Commentary on Income Tax by Kanga and Palkhivala. 8. We have given our careful consideration to all the facts of the case as well as the evidence produced before the authorities below. copies of which werealso placed before us in the form of paper book. The Departmental Representative could not produce any evidence before us to show that Shri R. A. Goel was doing hawala business, much less to show that the loan of Rs. 3,00,000 raised by the firms from him was a hawala transaction. On the other hand, the ld. counsel for the assessee produced before the authorities below all the necessary evidence not only to prove the identity of the party which, of course, was not doubted by the ITO but also to prove the credit worthiness and genuineness of the transaction. The CIT (A) is very right when he says that it is nobody s case that the bank account of Shri R. A. Goel atDelhirelated to the firm. We feel that the assessee firm produced whatever maximum evidence it could to discharged the onus which lay on it to prove the genuineness of the above loan in the facts and circumstances of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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