Gupta Cotton Ginning & Oil Mills, V. ITO Ward -4,

ITA 71/DEL/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0860 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 16-09-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 08-01-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Keywords: Business income
• Section: 40(b); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `C : NEW DELHI) BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.71/DEL./2008 (ASSESSMENT YEAR : 2001-02) M/S GUPTA COTTON GINNING & OIL MILLS, VS. ITO, WAR D 4, SAMAN ROAD, MEHAM, ROHTAK. DISTT. ROHTAK. (PAN/GIR NO.AABFG1150A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ARUN KUMAR JAIN, ADV. REVENUE BY : SMT. MONA MOHANTY, DR ORDER PER A.K. GARODIA: AM THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE O RDER OF THE LD.CIT(A), ROHTAK, DATED 7.11.07 FOR ASSESSMENT YEAR 2001-02. GROUND NO1. IS GENERAL AND HENCE, REQUIRES NO ADJUDICATION. GROUND NO.2 RAISED BY THE ASSESS EE READS AS UNDER THE LD. CIT (APPEALS) ERRED IN CONFIRMING THE ORDE R OF THE ASSESSING OFFICER DISALLOWING OF INTEREST AMOUNTING TO RS.11,760/- UN DER THE HEAD INTEREST LIABILITY, WHICH IS UNJUSTIFIED AND ILLEGAL. 2. BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE ASSESSING OFFICER IN PARA.13 OF THE ASSESSMENT ORDER THAT THE ASSESSEE HAS PAID INT EREST TO DIFFERENT PERSONS ON THEIR DEPOSITS. IT IS ALSO NOTED THAT INTEREST WAS GENER ALLY PAID @ 8-9%, BUT INTEREST WAS PAID TO ONE SHRI RAM KANWAR, PROP. M/S RAM KANWAR SHAM LAL, MEHAM @ 15% P.A. THE ASSESSING OFFICER ASKED THE ASSESSEE TO JUSTIFY THE HIGHER RATE OF INTEREST FOR THIS PARTY. IN REPLY, IT WAS SUBMITTED THAT OTHER PERSONS AGREED A T THE LOWER RATE OF INTEREST ON THEIR OWN COMPULSION. THE ASSESSING OFFICER WAS NOT SATISFIE D AND IT WAS HELD BY HIM THAT HIGHER RATE OF INTEREST WAS PAID TO ONE PERSON SHRI RAM KA NWAR ONLY. HE HAPPENS TO BE THE PARTNER IN THE ASSESSEES FIRM AND IS FATHER OF OTH ER THREE PARTNERS. IT IS ALSO NOTED BY THE I.T.A. NO.71/DEL./2008 (A.Y. : 2001-02) 2 ASSESSING OFFICER THAT HE IS A SENIOR CITIZEN AND E NJOYED REBATE U/S 88B OF THE I.T. ACT. IT WAS HELD BY THE ASSESSING OFFICER THAT EXCESS INTER EST PAID TO SHRI RAM KANWAR, AMOUNTING TO RS.11760 IS DISALLOWED U/S 40(B) OF TH E ACT. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE COMMISSIONE R OF INCOME-TAX (APPEALS), BUT WITHOUT SUCCESS AND NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 3. IT IS SUBMITTED BY THE LD.AR OF THE ASSESSEE THA T INTEREST PAYMENT @ 15% IS NOT EXCESSIVE AND HENCE THE DISALLOWANCE MADE BY THE AS SESSING OFFICER SHOULD BE DELETED. LD.DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AU THORITIES BELOW. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. WE FIND THAT AS PER SECTION 40(B), INTEREST TO ANY PARTNER IS ALLOWABLE TO THE EXTENT OF 18% P.A. IN THE RELEVANT YEAR, IF SUCH INTEREST PAYMENT IS AUTHORIZED BY AND IS IN AC CORDANCE WITH TERMS OF THE PARTNERSHIP DEED. FROM 1.6.02, THE RATE OF INTEREST ALLOWABLE U/S 40(B) HAS BEEN REDUCED TO 12%. IN THE LIGHT OF THESE PROVISIONS OF SECTION 40(B), WE FEEL THAT INTEREST PAID TO ONE OF THE PARTNERS IS ALLOWABLE U/S 40(B) TO THE EXTENT OF 18 % OR LESS IF THE SAME IS IN ACCORDANCE WITH THE PARTNERSHIP DEED. COPY OF THE PARTNERSHIP DEED HAS NOT BEEN BROUGHT ON RECORD BEFORE US AND THE SAME WAS NOT COMMENTED UPON BY TH E AUTHORITIES BELOW. WE, THEREFORE, FEEL THAT THIS MATER SHOULD GO BACK TO T HE FILE OF THE ASSESSING OFFICER FOR A FRESH DECISION AFTER EXAMINING THE PARTNERSHIP DEED IN THIS REGARD AND IF SUCH PAYMENT OF INTEREST TO ONE OF THE PARTNERS, SHRI RAM KANWAR IS IN ACCORDANCE WITH THE PARTNERSHIP DEED, THE SAME SHOULD BE ALLOWED. THIS GROUND OF TH E ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 5. GROUND NO.3 OF THE APPEAL READS AS UNDER: THE LD. CIT (APPEALS) ERRED IN RESTRICTING THE DIS ALLOWANCE OF RS.2,000/- AS AGAINST RS.3560/- MADE BY THE LD. A.O. UNDER THE HE AD GENERAL EXPENSES WHICH IS UNJUSTIFIED AND ILLEGAL. 6. BRIEFLY STATED, THE FACTS ARE THAT IT IS NOTED B Y THE ASSESSING OFFICER IN PARA.17.2 THAT IN THE REPLY GIVEN BY THE ASSESSEE ON 20.2.200 4, IT HAS BEEN ADMITTED THAT GENERAL EXPENSES OF RS.17,802/- ARE RELATED TO TEA AND COLD DRINKS AND OTHER ITEMS. IT IS OBSERVED BY THE ASSESSING OFFICER THAT SINCE THE POSSIBILITY THAT PART OF THESE EXPENSES HAVE BEEN INCURRED TOWARDS NON-BUSINESS PURPOSES CANNOT BE RU LED OUT, /15 TH OF THE SAME ARE I.T.A. NO.71/DEL./2008 (A.Y. : 2001-02) 3 DISALLOWED. BY MAKING THESE OBSERVATIONS, HE MADE DISALLOWANCE OF RS.3560. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEA L BEFORE THE COMMISSIONER OF INCOME- TAX (APPEALS), BUT WITHOUT SUCCESS AND NOW THE ASSE SSEE IS IN FURTHER APPEAL BEFORE US. 7. IT IS SUBMITTED BY LD.AR OF THE ASSESSEE THAT D ISALLOWANCE WAS MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) WITHOUT BRINGING ON RECORD ANY SPECIFIC EXPENSES INCURRED F OR NON-BUSINESS PURPOSES AND HENCE, DISALLOWANCE SHOULD BE DELETED. LD.DR OF THE REVEN UE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDER OF THE AUTHORITIES BELO W. WE FIND THAT IT IS NOTED BY THE ASSESSING OFFICER THAT AS PER THE SUBMISSIONS OF TH E ASSESSEE, THESE EXPENSES ARE INCURRED ON ACCOUNT OF TEA, COLD DRINKS ETC. AND HENCE WE AR E IN AGREEMENT WITH THE ASSESSING OFFICER THAT THE POSSIBILITY CANNOT BE RULED OUT TH AT PART OF THESE EXPENSES ARE INCURRED FOR NON-BUSINESS PURPOSES. NO DETAILS OF THESE EXPENSE S HAVE BEEN BROUGHT ON RECORD BEFORE US TO SHOW THAT THESE EXPENSES ARE NOT ON ACCOUNT O F TEA, COLD DRINKS ETC. AND TO SHOW THAT ENTIRE AMOUNT WAS INCURRED FOR BUSINESS PURPOSES ON LY. CONSIDERING THESE FACTS, WE FIND NO GOOD REASON TO INTERFERE IN THE ORDER OF THE COM MISSIONER OF INCOME-TAX (APPEALS) ON THIS ISSUE,. THIS GROUND IS ALSO REJECTED. 9. GROUND NO.4 OF THE APPEAL READS AS UNDER: THE LD. CIT (APPEALS) ERRED IN CONFIRMING THE ORDE R OF THE ASSESSING OFFICER DISALLOWING OF RS.9208/- UNDER THE HEAD TELEPHONE EXPENSES. 10. BRIEF FACTS ARE THAT IT IS NOTED BY THE ASSESSI NG OFFICER IN PARA.17.3 OF THE ASSESSMENT ORDER THAT TELEPHONE EXPENSES HAVE BEEN CLAIMED AT RS.46041. IT IS ALSO OBSERVED BY THE ASSESSING OFFICER THAT TELEPHONE FA CILITY WAS INSTALLED AT THE BUSINESS PREMISES AND AT THE RESIDENCE OF THE PARTNERS AS WE LL. IT IS ALSO OBSERVED THAT USE OF THE FACILITY FOR PURPOSES OTHER THAN BUSINESS CANNOT BE RULED OUT. BY MAKING THESE OBSERVATIONS, ASSESSING OFFICER DISALLOWED 1/5 TH OF THESE EXPENSES TO THE EXTENT OF RS.9208. BEING AGGRIEVED, ASSESSEE CARRIED THE MAT TER IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS), BUT WITHOUT S UCCESS AND NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. I.T.A. NO.71/DEL./2008 (A.Y. : 2001-02) 4 11. LD.AR OF THE ASSESSEE SUBMITTED THAT THIS DISAL LOWANCE IS EXCESSIVE, BUT CONSIDERING THE FACTS OF THE PRESENT CASE, WE ARE O F THE CONSIDERED OPINION THAT IN THE FACTS OF THE PRESENT CASE, DISALLOWANCE TO THE EXTENT OF 1/5 TH OF TELEPHONE EXPENSES IS NOT EXCESSIVE AND HENCE WE DECIDE THIS ISSUE AGAINST TH E ASSESSEE. THIS GROUND IS ALSO REJECTED. 12. GROUND NO.5 OF THE APPEAL READS AS UNDER: THE LD. CIT (APPEALS) ERRED IN CONFIRMING THE ORDE R OF THE ASSESSING OFFICER MAKING ADDITION OF RS.6,80,000/- REPRESENTING CRED ITS IN THE ACCOUNTS SHRI MURARI LAL & ANIL KUMAR (HUF AMOUNTING TO RS.2,80,000/- & RS.4,00,000/- RESPECTIVELY TREATING THE SAME AS NOT GENUINE & CONSIDERED AS IN COME FROM UNDISCLOSED SOURCES U/S 68 OF THE INCOME TAX ACT WITHOUT ANY CO GENT REASON & JUSTIFICATION THEREFORE. 13. BRIEF FACTS ARE THAT IT IS NOTED BY THE ASSESSI NG OFFICER THAT DURING THIS YEAR, THE ASSESSEE HAS RAISED FRESH LOANS OF RS.2.80 LAKH FRO M SHRI MURARI LAL AND RS.4 LAKH FROM SHRI ANIL KUMAR. THE ASSESSING OFFICER ASKED THE A SSESSEE TO PRODUCE BOTH THESE LOAN CREDITORS. REGARDING SHRI MURARI LAL, IT IS OBSERV ED BY THE ASSESSING OFFICER THAT AFTER SEVERAL OPPORTUNITIES, SHRI MURARI LAL WAS PRODUCED AND HIS STATEMENT ON OATH WAS RECORDED. THE ASSESSING OFFICER HAS DISCUSSED HIS STATEMENT REGARDING HIS INCOME ETC. THEREAFTER, IT IS NOTED BY HIM THAT WHEN ASKED ABOU T THE LOAN, HE STATED THAT HE HAS GIVEN A SUM OF RS.2.80 LAKH TO M/S GUPTA COTTON GINNING & O IL MILLS ON 24.3.2001. THIS MONEY WAS RECEIVED BACK FROM M/S SHIVDHAN LAL PREM CHAND, ROHTAK. IT IS FURTHER NOTED BY THE ASSESSING OFFICER THAT HE COULD NOT SHOW HIS CHEQUE BOOK AS HE HAS NEVER MAINTAINED THE SAME AND JUST TO GIVE LOAN, ONE CHEQUE WAS GOT ISSU ED. IT IS ALSO NOTED BY THE ASSESSING OFFICER THAT AS PER SHRI MURARI LAL, THE LOAN CREDI TOR, HE WAS NOT HAVING ANY ASSET AND WAS LIVING IN ROHTAK IN THE HOUSE OWNED BY HIS FATH ER. IT IS ALSO NOTED BY THE ASSESSING OFFICER THAT HE HAS GIVEN COPY OF STATEMENT OF HIS BANK ACCOUNT WITH VIJAYA BANK FOR THE PERIOD 17.1.01 TO 31.3.01. THE ASSESSING OFFICER W AS OF THE VIEW THAT SINCE HIS BUSINESS INCOME WAS OF RS.30,000 ONLY AND RENTAL INCOME WAS OF RS.13,000 FROM SONEPAT HOUSE AGAINST WHICH HE WAS TO PAY INSTALLMENT TO HUDA AND , THEREFORE, THIS MAN IS OF NO MEANS. THE ASSESSING OFFICER CAME TO CONCLUSION TH AT GENUINENESS OF THE LOAN AND CREDITWORTHINESS OF THE LENDER IS NOT ESTABLISHED. I.T.A. NO.71/DEL./2008 (A.Y. : 2001-02) 5 14. REGARDING SHRI ANIL KUMAR ALSO, WHO WAS ALSO PR ODUCED BEFORE ASSESSING OFFICER ON 20.2.04, THE ASSESSING OFFICER WAS OF TH E VIEW THAT THIS LENDER IS ALSO A MAN OF NO MEANS AND HE COULD NOT ESTABLISH HIS CREDITWORTH INESS. HE HAS COME TO THIS CONCLUSION ON THIS BASIS THAT A MAN HAVING ASSET OF MORE THAN RS.4 LAKH WILL NEVER SHIFT HIS FAMILY FROM HIS ANCESTRAL HOME TOWN MEHAM, TO A REMOTE PL ACE IN H.P. JUST TO RUN A PETTY KIRANA SHOP WITH AN INVESTMENT OF RS.30,000 TO EARN RS.2,0 00 P.M. TO SUPPORT HIS FAMILY OF 5 MEMBERS IN A RENTED HOUSE AND RENTED SHOP. IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT REGARDING THE CONTENTION OF THE ASSESSING OFFICER THAT BOOKS WERE NOT PRODUCED BY SHRI ANIL KUMAR, THE ASSESSEE HAS N O POWER TO FORCE HIM TO PRODUCE THE BOOKS. IT IS ALSO OBSERVED BY THE ASSESSING OFFICE R THAT AS PER THE ASSESSEE, THE LOAN WAS GIVEN BY SHRI ANIL KUMAR IN HIS HUF CAPACITY, BUT S HRI ANIL KUMAR NEVER ADMITTED THAT THE DEPOSIT WAS IN HIS HUF CAPACITY. IT IS ALSO OB SERVED BY ASSESSING OFFICER THAT FROM THE COPY OF CAPITAL ACCOUNT OF SHRI ANIL KUMAR IN T HE BOOKS OF M/S PUNEET SAWGIN MILLS AS ON 31.3.01, IT IS SEEN THAT SHRI ANIL KUMAR WAS PARTNER IN THE SAID FIRM AND THERE IS NO MENTION OF HUF CAPACITY. IT IS ALSO OBSERVED THAT THE COPY OF STATEMENT OF BANK ACCOUNT OF SHRI ANIL KUMAR WITH STATE BANK OF PATIALA ALSO SHOWS THAT THE SAID ACCOUNT IS IN INDIVIDUAL CAPACITY. THE ASSESSING OFFICER WAS NOT SATISFIED ABOUT GENUINENESS OF THESE TWO LOAN TRANSACTIONS AND CREDITWORTHINESS OF THESE TWO LOAN CREDITORS THAT HE MADE ADDITION OF RS.6.80 LAKHS U/S 68 OF THE ACT. BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (AP PEALS), BUT WITHOUT SUCCESS AND NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 15. IT IS SUBMITTED BY THE LD.AR OF THE ASSESSEE BE FORE US THAT THE LOAN CONFIRMATION OF SHRI MURARI LAL WITH THE ASSESSEE IS APPEARING AT PAGE 2 OF THE PAPER BOOK AND HIS OWN CONFIRMATION WITH M/S SHIVDHAN LAL PREM CHAND I S APPEARING ON PAGE 3 OF THE PAPER BOOK AND IT CAN BE SEEN THAT AN AMOUNT OF RS. 2,78,964 HAS BEEN WITHDRAWN BY HIM FROM SHIV DHAN LAL PREM CHAND ON 23.3.01 AND THE LO AN IN QUESTION WAS GIVEN BY HIM TO THE ASSESSEE ON 24.3.01 BY ACCOUNT PAYEE CHEQUE. I T IS ALSO SUBMITTED THAT THE COPY OF HIS BANK ACCOUNT STATEMENT IS APPEARING ON PAGE 4 O F THE PAPER BOOK AND FROM THE SAME IT CAN BE SEEN THAT CHEQUE IN QUESTION WAS GIVEN TO TH E ASSESSEE OUT OF CREDIT OF RS.278964 ON ACCOUNT OF CLEARING CHEQUE AND HENCE THERE IS NO CASH DEPOSIT IN THE BANK ACCOUNT OF SHRI MURARI LAL AND, THEREFORE, HIS CREDITWORTHINES S AND GENUINENESS OF LOAN TRANSACTION I.T.A. NO.71/DEL./2008 (A.Y. : 2001-02) 6 STANDS ESTABLISHED. IT IS ALSO SUBMITTED THAT HIS COPY OF INCOME TAX RETURN FOR ASSESSMENT YEAR 1999-2000 AND HIS BALANCE SHEET IS APPEARING O N PAGES 7 & 8 AND THE SAME FOR ASSESSMENT YEAR 2001-02 IS APPEARING ON PAGES 9 & 1 0 AND FOR THE PRESENT YEAR IS APPEARING ON PAGES 11 & 12 OF THE PAPER BOOK. 16. REGARDING THE LOAN FROM SHRI ANIL KUMAR (HUF), MEHAM, IT WAS SUBMITTED THAT HE WAS A PARTNER WITH M/S PUNEET SAWGIN MILLS AND C OPY OF HIS CAPITAL ACCOUNT WITH THAT FIRM FOR THE PRESENT YEAR IS AVAILABLE ON PAGE 27 O F THE PAPER BOOK AS PER WHICH A SUM OF RS.4 LAKH WAS WITHDRAWN BY HIM FROM THIS FIRM ON 21 .3.01 AS AGAINST HIS OPENING CREDIT BALANCE OF RS.5,10,041. IT IS ALSO SUBMITTED THAT COPY OF THE EXTRACT OF CASH BOOK ON 21.3.01 FROM THE CASH BOOK OF M/S PUNEET SAWGIN MIL LS IS AVAILABLE ON PAGE 28 OF THE PAPER BOOK AND FROM SAME IT CAN BE SEEN THAT, THIS PARTY RECEIVED A CHEQUE OF RS.707041 FROM GUPTA COTTON GINNING & OIL MILLS, MEHAM. THIS CHEQUE WAS DEPOSITED IN BANK AND THERE WAS CASH WITHDRAWAL FROM BANK OF RS.7.07 LAKH OUT OF WHICH RS.4 LAKH WAS GIVEN IN CASH TO SHRI ANIL KUMAR. IT IS ALSO SUBMITTED THAT COPY OF BANK STATEMENT OF M/S PUNEET SAWGIN MILLS IS AVAILABLE ON PAGE 29 OF THE PAPER B OOK. IT IS ALSO SUBMITTED THAT COPY OF THE BANK STATEMENT OF SHRI ANIL KUMAR IS AVAILABLE ON PAGE 37 OF THE PAPER BOOK. FROM THE SAME IT CAN BE SEEN THAT THERE WAS CASH DEPOSIT IN HIS BANK ACCOUNT OF RS.4 LAKH ON 21.3.01 AND THE MONEY WAS GIVEN BY HIM TO THE ASSES SEE BY WAY OF CHEQUE. IT IS ALSO SUBMITTED THAT SHRI ANIL KUMAR, HUF) IS ALSO INCOME TAX ASSESSEE AND COPY OF HIS INCOME-TAX RETURN FOR ASSESSMENT YEAR 2000-01 IS AV AILABLE ON PAGE 39 OF THE PAPER BOOK AND THE SAME FOR THE ASSESSMENT YEAR 2001-02 IS AVA ILABLE ON PAGE 41 OF THE PAPER BOOK. IT IS ALSO SUBMITTED THE CONSIDERING THESE FACTS, C REDITWORTHINESS OF THIS LOAN CREDITOR AND GENUINENESS OF THIS LAON TRANSACTION IS ALSO ESTABL ISHED AND BOTH THESE ADDITIONS SHOULD BE DELETED. LD.DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD. REGARDING THE LOAN OF RS.2.80 LAKH FROM SHRI MURARI LAL, WE FIND THAT HE WAS PRODUCED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AND HE NCE HIS IDENTITY IS ESTABLISHED. REGARDING THE CREDITWORTHINESS, WE FEEL THAT IT IS ALSO NOT RELEVANT AS TO HOW MUCH IS THE INCOME OF THE LOAN CREDITOR IN THE PRESENT YEAR, IF THERE IS A PAST SAVINGS OF THE LOAN CREDITOR BECAUSE CREDITWORTHINESS OF THE LOAN CREDI TOR WITH REGARD TO THE LOAN GIVEN BY I.T.A. NO.71/DEL./2008 (A.Y. : 2001-02) 7 HIM OUT OF PAST SAVINGS CANNOT BE DOUBTED ON THE BA SIS OF HIS INCOME IN THE PRESENT YEAR. WE FIND THAT THE LOAN IN QUESTION OF RS.2.80 LAKH W AS GIVEN BY HIM TO THE ASSESSEE OUT OF REPAYMENT OF LOAN RECEIVED BY HIM FORM M/S SHIVDHAN LAL PREM CHAND. SUCH REPAYMENT WAS RECEIVED BY HIM BY WAY OF ACCOUNT PAY EE CHEQUE AND LOAN IN QUESTION IS ALSO GIVEN BY HIM TO THE ASSESSEE BY WAY OF ACCOUNT PAYEE CHEQUE AS WE FIND IN THE BANK STATEMENT OF SHRI MURAI LAL, WHICH IS AVAILABLE AT PAGE 4 OF THE PAPER BOOK. CONSIDERING THESE FACTS, WE FEEL THAT THE ASSESSEE HAS ESTABLIS HED HIS CREDITWORTHINESS ALSO AND WE DO NOT FIND ANY REASON TO DOUBT THE GENUINENESS OF THI S LOAN TRANSACTION AND HENCE WE DELETE THIS ADDITION REGARDING LOAN OF RS.2.80 LAKHS FROM SHRI MURARI LAL. 18. REGARDING THE SECOND LOAN OF RS.4 LAKH FROM SHR I ANIL KUMAR ALSO, WE FIND THAT HE WAS ALSO PRODUCED BEFORE THE ASSESSING OFFICER A ND HENCE HIS IDENTITY IS ALSO NOT IN DOUBT. WE ALSO FIND THAT THIS LOAN CREDITOR IS ALS O INCOME-TAX ASSESSEE AND HE IS A PARTNER OF THE PARTNERSHIP FIRM M/S PUNEET SAWGIN MILLS. H E WAS HAVING OPENING CAPITAL OF RS.510041 WITH M/S PUNEET SAWGIN MILLS OUT OF WHICH HE HAS WITHDRAWN RS.4 LAKH IN CASH ON 21.3.01. THE SOURCE OF CASH IN THE HANDS O F THE M/S PUNEET SAWGIN MILLS HAS BEEN EXPLAINED OUT OF WITHDRAWAL FROM BANK AGAINST A CHEQUE OF RS.7.07 LAKH RECEIVED BY THAT PARTY FROM M/S GUPTA COTTON GINNING & OIL MILL S, MEHAM. AS PER THE COPY OF BANK STATEMENT OF M/S PUNEET SAWGIN MILLS, WE FIND THAT AGAINST A DEPOSIT OF RS.7.07 LAKH IN BANK, CASH OF RS.7.07 LAKH WAS WITHDRAWN FROM BANK. HENCE, THE SOURCE OF CASH IN THE HANDS OF THIS LOAN CREDITOR, SHRI ANIL KUMAR IS ALS O ESTABLISHED. SHRI ANIL KUMAR IS ALSO INCOME-TAX ASSESSEE. CONSIDERING ALL THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT FOR THIS LOAN CREDITOR ALSO, THE ASSESSEE WAS ABLE TO ESTABLISH THE CREDITWORTHINESS OF THE LOAN CREDITOR AS WELL AS THE GENUINENESS OF THE LOA N TRANSACTION. WE, THEREFORE, DELETE THIS ADDITION ALSO. GROUND NO.5 IS ALLOWED. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED AS ABOVE. 19. ORDER PRONOUNCED IN OPEN COURT ON 09.10.2009. (R.P. TOLANI) (A.K.GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: OCT. 09, 2009. *SKB* I.T.A. NO.71/DEL./2008 (A.Y. : 2001-02) 8 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A), ROHTAK. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. AR/ITAT