COMMISSIONER OF INCOME TAX Vs. DEO NARAYANLAL JAGDISHLAL
LAWS(ORI)-1973-10-3
HIGH COURT OF ORISSA
Decided on October 31,1973

COMMISSIONER OF INCOME TAX Appellant
VERSUS
Deo Narayanlal Jagdishlal Respondents

JUDGEMENT

Ranganath Misra, J. - (1.) These are applications under Sec. 256(2) of the Income Tax Act of 1961 (hereinafter called "the Act") on behalf of the revenue. The relevant assessment years are 1963 -64 and 1964 -65.
(2.) The assessee is engaged in the business of hardware and paints. For defects found in the books of accounts the Income Tax Officer rejected the returns of both the years and made assessments to the best of his judgment. In the assessment year 1963 -64, he found cash credits to the tune of Rs. 1,20,000. Having come to hold that the assessee had failed to establish the cash credits, he took the peak amount of Rs. 70,000 as income of the assessee from undisclosed sources. In the second year, under similar circumstances, he added a sum of Rs. 20,000 to the profits of the assessee from undisclosed sources. The appellate authority upheld these additions. Upon further appeal by the assessee, the Appellate Tribunal dealing with the matter said: "......The assessee filed confirmation letters and the discharged hundi papers in support of the genuineness of the loans. The Income Tax Officer, however, was not convinced with the bare hundi papers and confirmation letters and, therefore, called upon the assessee to produce the creditors/ persons along with their books of account in support of the genuineness of the loans. The assessee failed to do so. The Income Tax Officer also noticed difference in G.I.R. numbers of the parties as furnished by the assessee and that found in the Income Tax records of those parties. The Income Tax Officer, however, issued notices under Sec. 131 of the Income Tax Act, 1961, to the creditors at the addresses furnished by the assessee. In obedience to the notices, the creditors did not appear in person but wrote back: 'I maintain no books of account and in the absence of books, it is not possible for me to furnish detailed particulars of transactions asked for. I can confirm the transactions only upon production of the discharged documents which are lying with the party concerned.' All the creditors wrote in the same language and avoided appearance before the assessee's Income Tax Officer. The Income Tax Officer did not stop here but conducted local inquiries at Calcutta and gathered that the impugned loans were bogus and the creditors (sic) was the confession made by the creditors to the Income Tax department at Calcutta...... Thus, it is very clear that although a gist of the confession was supplied to the assessee and the Income Tax Officer apprised the assessee of his intention to include the impugned amount in the assessment, the assessee sagaciously eluded from leading in any evidence except those in the shape of confirmation letters and discharged hundi loans. The assessee's learned counsel submits that the identity of the creditors has been proved and since the creditors fled from Calcutta, their present whereabouts were not known and the assessee could not be held to be guilty of non -production of the creditors. Reliance is also placed on some other decision of the Calcutta Bench of the Appellate Tribunal in which alleged credits appearing in the names of the same set of creditors were accepted as genuine. We have heard both the parties and come to the conclusion, on a proper appraisal of the evidence, that the initial burden cast on the assessee has been discharged. The assessee by making a request to the Income Tax Officer to cause summons issued on them got the reply as to the existence of the creditors. Significantly, the Income Tax Officer did not dispute the existence of the creditors but what he disputed was the genuineness of the loans. In arriving at this conclusion, the Income Tax Officer was influenced by the alleged confession made by the creditors. Although a gist of the confession was supplied to the assessee and the revenue did not give full -dress copy of the confessional statements, the genuineness of the loans could not be condemned as in the confessional statements the assessee was not implicated and those confessional statements were obtained in a proceeding. The purport of the confession was to have a general denial of having transacted any genuine loan. Although the assessee had no knowledge of the whereabouts of the creditors, the Income Tax Officer had gone to their place of stay as is evident from the confessional statements. The Appellate Assistant Commissioner had strongly relied on the confessional statements recorded by the Income Tax Officer, N.C.E.P.T., District -1, Calcutta. In reply to the enhancement notice of the Appellate Assistant Commissioner, the assessee made a specific request for the production of the creditors for his examination. Such a reasonable request was not acceded to. The order of the Appellate Assistant Commissioner was almost based on the confessional statements......"
(3.) The conclusion of the Appellate Tribunal in this case seems to have been reached on a consideration of the totality of the evidence placed on the record. Undoubtedly, it was open to the Appellate Tribunal to form an opinion that the explanation offered by the assessee was satisfactory in regard to the nature and source of the cash credits and as we are of the view that the Tribunal has, on an assessment of the entire material formed its opinion in the matter, the finding is one of fact and there is no question of law arising out of the appellate decision. In the circumstances, both the applications must stand rejected. There shall be no order as to costs. K.B. Panda, J.;


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