TMI Blog2010 (8) TMI 1106X X X X Extracts X X X X X X X X Extracts X X X X ..... essed the total income of the assessee at ₹ 17,90,940/-. During the course of assessment proceedings, the AO found that the assessee took loans from friends and relatives and ₹ 16,25,961/- was outstanding at the end of the year. The AO examined the details of loan enclosed with the return and issued summons u/s. 131 to some of the persons who had given the loan to the assessee. In response to the summons the loan creditors attended and their statements were recorded and necessary details as called for were produced by them before the AO. The AO, therefore, noted that the persons who had given loan had tried to prove their creditworthiness but perusal of their bank accounts showed that just before the cheques for loan were issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd restore that of the AO. 4. On the other hand, the Ld. counsel for the assessee relied on the order of the Ld. CIT(A) and urged before the bench to confirm his action. He also submitted that to prove the creditworthiness of the loan creditor the assessee filed copies of acknowledgement of I. T. Return P L Account, Balance Sheet, Loan confirmation, xerox copies of the bank account of loan creditors, bank statement in respect of bank account of Swastik Refinery (P) Ltd., bank statement in respect of bank account of Vegetable Oil (P) Ltd. and assessee s balance sheet and P L account. He also contended that the above documents shows the creditworthiness and genuineness of the loan creditors. The above creditors were regularly assessed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter hearing the rival submissions, perusing the material available on record and the case laws cited by the Ld. Counsel for the assessee, we find that the Ld. CIT(A) has given relief to the assessee by passing a speaking order and after obtaining the report of the AO on the submissions made before him by the assessee in respect of creditworthiness and genuineness of the creditors. For the sake of brevity, we reproduce the relevant portion of his order as under : In view of the above submission of the appellant and scrutiny of the documents submitted by the appellant in support of the loans a letter was written to the AO vide this office letter no. CIT(A)XXIV/Remand/09-10/227 dated 10.07.2009. By this letter it was pointed out to the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake amount of ₹ 16,25,961/ - was added. It was further stated by the AO that from the bank statement it was amply evident that without the alleged receipts from Swastik Refinery P Ltd / Shri Vegetables P Ltd /withdrawal from PPF amount the cash creditors did not have the creditworthiness to advance the loans and therefore the AO requested that further time may be granted for examination of the above transactions. However no report has been submitted by the AO so far therefore the issue is decided on the basis of material available on record. Thereafter, on 16.07.09 the appellant filed further written submissions in which the appellant reiterated what was stated earlier and also filed copies of relevant documents such as confirmation, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing channels and they have produced their bank statements in support of their contention no adverse inference can be drawn in the hands of the appellant merely on the ground that before the issue of loan cheques an equivalent amount was deposited in the account of the depositors. The onus to explain the deposit in their bank accounts is on the depositors and if any adverse inference has to be drawn on the basis of examination of these accounts unless nexus is established between the deposits in the bank accounts of the depositors and flow of fund from the appellant such adverse inference has to be drawn only in the hands of the depositors and not the appellant. Considering the above facts of the case the addition of ₹ 16,25,691/- is d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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