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2018 (3) TMI 896

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..... ve further opportunity to the creditor to appear in person and assessment was made in a hurry on 28.03.2013. The fact remains that assessee represented before A.O. on 19.03.2013 whereas the assessee called Sri K. Chandra Sekhar Rao on 25.03.2013 and completed the assessment on 28.03.2013. This shows that the Assessing Officer has taken an adverse opinion without giving a proper opportunity to the assessee. Merely because the creditor did not respond to the notice, no adverse inference can be taken with regard to the creditworthiness of the creditor. The complete particulars and the source of income earned by the creditor were available on record and if there is any doubt with regard to the source, the assessee could have been given furt .....

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..... ved an amount of ₹ 10 lakhs on 02.04.2009 and another sum of ₹ 10 lakhs on 11.09.2009. The amount received on 02.04.2009 was deposited into bank account and subsequently the amount was withdrawn and redeposited into the bank account. Similarly the amount received on 11.09.2009 was withdrawn and redeposited into bank account. The assessee furnished the cash flow statement. 3. A.O. called upon the assessee to produce Sri K. Chandra Sekhar Rao for cross verification of his identity, genuineness of the transaction and explanation for the sources of money. The assessee failed to produce Sri K. Chandra Sekhar Rao. Therefore, summon u/s 131 of the Act was issued to Sri K. Chandra Sekhar Rao but there was no response from the assesse .....

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..... received as advance from Sri K. Chandra Sekhar Rao in two instalments towards proposed sale of property but since the sale agreement was cancelled by the proposed purchaser, the assessee agreed to return this amount in two instalments and accordingly refunded the same on 13.04.2010 and 24.04.2010. It was also contended that the assessee fully complied with all the three basic conditions laid down by the Hon ble Supreme Court i.e., (a) nature of the transaction / identity of the creditors; (b) The genuineness of the transaction and (c) The creditworthiness of the transaction. 7. Ld. CIT(A) observed that the sale agreement and cancellation of sale agreement was only on Hundred Rupees Stamp Paper and there is no identity proof of Sri K. Cha .....

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..... at the agreement should be registered, so long as the parties have faith in each other. He also placed before the Tribunal a copy of PAN of Sri K. Chandra Sekhar Rao along with Pattadar Pass Book to indicate that he has got sufficient land holding and capable of advancing ₹ 20 lakhs. Learned Counsel for the Assessee also placed a copy of the receipt duly signed on a Revenue Stamp indicating that Sri K. Chandra Sekhar Rao has received the impugned amount which was refunded by Smt. Paladugu Divya in two instalments. It was thus contended that the identity and creditworthiness is proved beyond doubt and in such cases, it is for the Revenue to issue summons and call the creditors to seek further details whereas in the instant case, a lett .....

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..... ls of agricultural holding of Sri K. Chandra Sekhar Rao and the proof that the amount was paid as advance and returned to the creditor was placed before the Tax Authorities and in fact summons were issued u/s 131 of the Act to the creditor but without giving sufficient time to the creditor and without informing the assessee, the assessment was made in hurry by taking an adverse inference that the creditors are not genuine and thus the addition made deserves to be set aside. 9. On the other hand, Learned Departmental Representative placed reliance upon the following decisions in support of her contention that u/s 68 of the Act, the initial burden is upon the assessee to prove that three ingredients i.e., identity, genuineness and creditwo .....

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..... ts that in the case of the assessee, the A.O. having not examined further, the order was found to be erroneous. However, second appellate proceedings cannot be equated to revisionary proceedings if an addition is made without proper verification and the same requires to be quashed / deleted. 11. I have carefully considered the rival submissions and perused the record. I have also carefully gone through the case law relied upon by both the parties. In the instant case, the Pattadar Pass Book, name and address of the creditors, agreement of sale and cancellation agreement and also the account copies were placed before the A.O. as well as the Ld. CIT(A). This fact is not controverted by the Learned Departmental Representative. It is also no .....

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