Ajit K. Sengupta, J. - (1.) In this reference under Section 256(2) of the Income-tax Act, 1961, for the assessment years 1965-66 and 1966-67, the following question of law has been referred to this court: "Whether the conclusion and/or the findings of the Tribunal that the assessee had discharged the initial onus in proving the loans as genuine and that the loans in question are genuine, are vitiated in law being based on partly relevant and partly irrelevant material and/or inadmissible evidence and/or evidence contradictory and/or inconsistent with the material on record and/or the Tribunal have acted without any legal evidence and/or by rejecting improperly admissible evidence and whether such conclusion and/or findings are otherwise unreasonable and/or perverse ?"
(2.) The facts shortly stated are that, in the course of the assessment proceedings for the years under consideration, the Income-tax Officer noticed hundi loans in each of the said years. He, therefore, called upon the assessee to prove the genuineness of the said loans. The assessee produced confirmatory letters and discharged hundis. He also filed copies of accounts to show that the receipts and repayments were made by cheques. The Income-tax Officer, however, called upon the assessee to produce the parties, but the assessee did not do that. He (Income-tax Officer, accordingly issued notices under Section 131 of the Act to the hundi creditors but the same were received back unserved. Even those on whom notices could be served did not appear in response to the said notices. The Income-tax Officer, accordingly, held that no reliance could be placed on the confirmatory letters. It was also held by him that the enquiries revealed all those parties being bogus hundi-wallas, the said loans were, therefore, not genuine. The Income-tax Officer, accordingly, added Rs. 90,000 (assessment year 1965-66) and Rs. 45,000 (assessment year 1966-67) as the income of the assessee from undisclosed sources. In both these years, he also disallowed interest thereon.
(3.) Aggrieved by the said additions, the assessee brought the matter by way of appeals before the Appellate Assistant Commissioner of Income-tax (Central) Range-II, Calcutta, who, after considering the facts and circumstances of the case and the material on record as also the fact that the receipts as well as the repayments of the loan amounts in question for the years under consideration were by cheques, accepted the genuineness of the loan transactions in question. He, accordingly, deleted the aforesaid additions made by the Income-tax Officer to the total income of the asses-see in each of the years under consideration.;