Commissioner Of Income-Tax, Orissa v. Orissa Corporation (P) Ltd

MATH MAI, TSA Beat HreGeasTATA (sto) fafaes (19 AT, 1986) (aTAla ante Yao TER ate ANAT Aaa) wastufafaan,,1961(1961at43)—“aT 256(2)—fafa aranit seq fasan fata—fratfedt‘Gre avag fratca-ag 8 aaa ard & aface wa feet wereafaat & ara war at ag wea e wa 8 ahaa at atra cafeaat at safeafa & sara a, araet afirerctt ertwaa sar whet wt fratfeat a ara e wa A faatfear weyeg afer or aferdifaa fear oat, fag afer & faeg atag ate afsaergr wineaz atardt—ata¥uisea fart grat sea carrey 8 ag aetat at art fiswaa saa fafaraa & fay afewco a} fazfina we fear ane,feg sea enaraa are fade wer a gaare for wat —areca © fda fates aeaeeit seat oz at aeat 8—afe oem% fear ar wea atedBF arare az, ar sia: qatar atesAT HTT: HETAT TAT aewTl R arareaz aval & fromdfrarer stat 2, at wae Gen oad mgt ae afaa Blat @,ug fafa acaritsea 8—afecar faongaaATg BeT TTarenfea at, at fafar ar sea agt goat || fratfedt-scaef gana aaa at grade fafate aadt oft atc"ae HAST at FR aqare ATT Har wadt ah3] faaraz, 1960‘et aaa QA ares Farad % far MP 1962-63 ae Freteoat BT aaa ag 8, araee afrardt > faaifedt ® oa ae mTeatare vet Fear frat fe1,50,000 vad at andl sur fa atwe ait at weet wt area ag afa fear var ar fe & gst Faelt sareedha aera saad eae Bae ae area ge B 1 fraifedt & sant afrard B ane gfe seal oa, sealhatgfeat te at, ate fara-finer Saar F araret aa deals arfafafeat araax afeard ® oa dhga ara at afae atTEfe ara afafian, 1961 at aren 131% alla qaare HT HSsa daard at maar afeard & ane ta Haar aie, fag sat.gad sq geisaarg ata Bt at aR; ots TAN| AA:arent afeard % 1,50,000 ee at amet waa at afae actaat ® eq F arat ate safratfeat at ara A os fear) aerasaged (atta) % ana fratfedt at atte arfter et 78| Saw IWafaarn & ana att at ata at weedt ala afafaaa atMT 271(1)(at) B aretta Frater ante F arare ge wraaTal FT TEaltz agian agaa (fra) 3 50,000aaa at afer aferdfraav dtionfea & afrticn & fara atta afaawr F Fae atadie @ a8. Oat adtet a faqerer afar A at fearsafew Ft zaata alait egra feat faWaT araret sfafscatfaaifed & adl-ara H Hat cease FaraJi easetHTT AE ATfar & wait arafaa eafeaat arer faaifedt et fag ce ae at THA2| faaifedt a afanfaa Saati & seaifaa gfeat ate gee arealaa seqa fart) afsacr at aa ag arfe afe faatfeat 34sqfaai a frat aaa ae afawar fear warfH AAaI< g,‘am adl at aad, at ead eae: dae ad vat fawaare fe Carsfaaa fasng fara arat afer fe % waa fretted st aratedata #1) ae aura ga ara at ate it cata fear vor fe MATT-araat faaifed) & ale wafe gaat faatzor fear at Xe aT, atwala ag edlare Hwa gu arafeaa araaz afsard & aaa a aTfea hfe i ga ara at soma 2 <8 ef gah arat ar sratTFrea-Paert fratfefaal & Aaard B es FH, ateaa F ar faa faar, wefaar are| Pratfefaay at var gat ot a ag fag sega faatfedt aram 3a qa aad art afsaca Fag faoad fasta fe werfaart at fraifedt & fase ofan frond fraraar att faaifeat-& fagteoga weal st agar eqraifad adl f1 sa ofefeafaatRafeawr mits % afaton at stay ag xa THAT At atx-gafag gat t& afaton at fara ax feat user frat a at etal veqait at atat araia1,50,000 eat a Fraifedt at aaara # sistgeq at aaa ate afer afirdfa wa at areamae & wer fay ary at Sear at 1 afc Fesat geal B See:HF seq cararara a aay % findt Ph waa wt Ars hng BF LARIT‘wt feauser farm 2 gsq ara Faneafafaaa ayae 256(2) % aefta araea sega fear) geq edrarad 2 aftcrores faary at crear edtare HWA BF eqeare ae fears wa 3aie fate gaat eet seaay earaaaX diea at aE gianaafta az gq, Section: HEADER CCJIMISSIONER OF INCOME-TAX, ORISSA v. ORISSA CORPORATION (P) LTD. MARCH 19, 1986 [R.S. PATHAK AND SABYASACHI MUKffAIUI, JJ.] Income Tax Act 1961-ss.68 and 256(2) - Cash credits in books of assessee - Onus of proof about source of income. High Court refusing to direct Tribunal to state case -When valid. Interference with findings of fact by the Tribunal -Permissible under what circumstances. For the accounting year ending on 31st March, 1961, corresponding to the assessment year 1962-63, the Income-tax Officer did not accept the assessee 's accounts showing cub credit of Rs.1,50,000 said to have been received by way of loans from three individual creditors. He produced before the Incmae-tax Officer, discharged hundies and confirmation letters from these creditors who were income-tax assessees. The assessee made attempts to bring the creditors before the Income-tax Officer by issue of notices under s.131 of the Income Tax Act, 1961 but failed, as these were returned with the endorsement 'left'. The assessee thereafter wante4 fUrther opportunity to find out the whereabouts of the lenders. The Income-tax Officer observed certain inconsistencies in the confirmation letters which did not inspire confidence, and being of the view that the alleged creditors were not genuine bankers but were mere name lenders, treated the entire uount as unproved cash credit and added the same to the income of the assessee. The Assistant Appellate Coaal.ssioner dismissed the appeal of the assessee. In a separate proceeding under s.27l(l)(c) of the Act on the basis of the assessment order the Inspecting Assistant Coamissioner imposed a penalty of Rs.50,000. The Tribunal came to the conclusion that the Revenue was SUPREME COURT REPORTS not justified in drawing adverse inference against the assessee. It was of the view that if the assessee could not produce the persons alleged to be the creditors, it did not lead automatically to the adverse inference that the arount represented undisclosed income of the assessee. It found that the creditors were income-tax assessees and while being assessed they had made statements before the respective Income-tax Officers admitting that they were allowing their names to be lent, without actually giving loans as creditors of different assessees. The Tribunal also could not suatain the imposition of penalty. The Revenue sought for statement of the case to the High Court on the aspect of addition of unproved cash credit to the total income of the assessee, and also on the imposition of penalty but the same was refuaed. The High Court also refused to accede to the prayers of the Revenue in its application under s.256(2) of the Act. In the appeals before this Court on behalf of the Revenue it was contended that in view of the provisions of s. 68 of the Act the onus in these types of cases was on the assessee. and in this case the assessee had not discharged that onus. Dismissing the appeals, the Court, Bl!Lll : l.(i) The High Court has no power under s.256(2) of the 1961 Act to call upon the Appellate Tribunal to state a case if there was some evidence to support the finding recorded by the Tribunal, even if it appears to the High Court that on a re-appreciation of the evidence, it might arrive at a conclusion different from that of the Tribunal. (987 D-E] (ii) The conclusion reached by the Tribunal in the instant case, that the assessee had discharged the burden that lay on him could not be said to be unreasonable, or perverse or based on no evidence. If the conclusion is based on some evidence on which it could be arrived at, no question of law as such arises. [987 G-H] (iii) The assessee had provided the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that they were income-tax asseesees. Their index numbers were in the files of the department. The Revenue apart C.I.T. v. ORISSA CORPORATION Ratafafratita—agq aa at ara fafasag at AAT Fa ATE arntat fareawh, ffsota & fac wena8, atafafreaa ear 2, ar te} arnt} atarc ae ard wear 8, aeWTA: YATT g AT ava: Ataa F Ae ae Retr gawa at fie frealtar aH eararay & afeasa ge a edna aad BT gata qt &,freer saat gat fafasag aah fac fee @, at fafa araae TH Bere Slate fH aa eqraraa ar frog ga areT gfqa-nat@, @, aaife gaata aqaral, aenat att aeel ar aaara faar: farg afete az & feat area ar aaa steal aval@ at Ht aT:Sa areal F sare ae ait wTa: BA aver aealte waa: tayaaa ot arafta &, a amar 81 feat Pare a afsacy ayaeagl, agar ar aaa at aat fasaal ar ararz gl qatarafer att a at oa feat ot ater at arare gate feat at ariasatt gana wer at agfaa wr ® gedtare HH aT aaa: alea ®AAT AT AT waa:aedel, aguray ate aemat % arare gt wyarar arferi (Fz 9)|| val araal XY tar aal alat fH fraifedd3% eqcdtaco ataeatare HT IA aA & ara FH wT F fined fafa ofa ¥ eaeq atTATag seat as fH a aaaHt fearward; PReg oeraedigfa st ofefeafaat tat dt fe caara ofaa frond ag & firsifta at fraffedt % grr at ard & wa A Arar sre, det dar asaren aa ar fs faaten axa arar sifted tar fread adt 7fefanrét 1 Rar frost det aeardt fread ai, 7 fe ffs aracel frome yY||||Ye od.| AAKTATI To THATRNA 503: qs TAT Ha F fH zor atta afanca F area F afeqATaTSTfafix daesya sear dar,wararaa ataeaiferfe ag aesafer at & fa Pe azar fratfedd % get atefacet F scaaakan aca oe sfaa 9 & att aaa & are frare wz frat Tar&, afew F area at arqey we Bog; sat aay frewed frated% get atz fager F oega aren oe faare we fara war at, ale FAT:afancy & st faced frarar ar, ae aera atal aT Fa-aeT TTareifia arala afatina Hz fear var ar gah afafad seatararag &gdadt fafesaa gaara at ater agl Ba z fanafancn & ata ay cia aga dk ardent Bara TaH-TH aTATTERT FA THT SH GTA arfae faa fe say wrdl-at ait wae arwaa aaraargés a ae tel feet wa ar sar aa as, faasara VY saree wa F far var gl, faa oe fafa aeaeet faarayarated & 1 sa aeat &, faaat aaa afrnea Pear qar g at freealfaa fear wat 2, faa er 8 geqes grt areit afadaerarat Tefaregat| (421 eza 10) go afaswr agaral, aenat ar| aecet a fara met afs fraifedt S adl-are # ad HE ofafce & frat Fraifeat ater sica ua afarat tat 3, at fratfedt & faq ag ariamTAT arava 2, afe gaa dar wa % fae war aie fe ga sat aTala ware att ae atfad wear at aravay 3 fe ag ara ael etgasaa® faa & ag adtfaa adl dar fe ag ate ara arfatmtiag faaifedl & ag ae ana 2 fe ag ale waragl aT aTgeqraa ar eqsdlacay & fac, afe argeasdbqeor feat war gt ay,meer aren Aa Be, ae Aree TAT eaeelHeT Ht Tear HTL Ateequajarn a ae afaa slat & fe aa sift ara at safe at atat faara agfeagat wT YBa at BT aHAT AMT 4g afafaatfema & fan sa cqsdtaco a aedlare adt we aaa fH ag aT&iaarfa, afe area afavaacdta gt at var aeaecy fear aTamat 21 fears feat wey eqcdtacn at agfeager BT FATAagedtart eeH feat ash aga at. ga ware aaftafad al eeana & fe ag NE aga we et TTT(FW 11)| 2 Oy AAA Bt Ate Awast UToAto Waaear ale Ho:tile gar att FATA To qarfyaitsaat wt atte aTaal Uo Glofaa, THo To.aaara att alo Glo agzatt eararaa at facta earagfa aexaral qasit + fear t saranta aasit— from issuing notices under s. 131 of the Act at the instance of the assessee, did not pursue the matter further. It did not examine the source of income of the alleged creditors to find out whether they were credit-worthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. The assessee, therefore, could not do any further. (987 E-G) 2, Section 68 of 1961 Act was introduced for the first time in the Act. There was no provision in 1922 Act corresponding to this section. It gives statutory recognition to the principle that cash credits which are not satis-factorily explained might be assessed as income. It enacts that if a sum is found credited in the books of an assessee maintained for any previous year, the cash credit might, in case where it is assessed as undisclosed income, be treated as the income of that previous year, and the financial year may not be taken as. the previous year for such a cash credit even if the undisclosed income was not found to be from the assessee' s regular business for which the books were maintained. The cash credit might be assessed either as business profit or as income from other sources. (984 G; 985 A-C) E Lalcband Bhagat Ambica llaa v. Com:lasioner of !=--tax, Bibar & Orissa, 37 I.T.R. 288; Ba.r. Jebaagl.r Gbeesta v. CcwaiBBioner of lncoB!-tax, Bombay City. 41 I. T.R. 135; Sreelekha llmlerjee & Ors. "· c-1.ssioner of ~. Bf.bar & Orf.ssa, 49 I, T.R, 112 and Comisaioner of 1--ta: {Central), Calcutta "· Daalatr- llavatmll, 53 I.T.R, 574 ref erred to. F CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 1379-1380 (NT) of 1974, From the Judgment and Order dated 31st October, 1973 of the Orissa High Court in S,J,C, Nos. 85 and 116 of 1972. G S.C. Manchanda, K.C. Dua and Ms. A. Subhashini for the Appellants. S.P. Mittal, S.N. Aggarwal and B, P. Maheshwari for the Respondents. H The Judgment of the Court was delivered by SABYASACHI MllKHARJI, J. These appeals by special leave arise from the decision of the Orissa High Court dated 31st October, 1973 refusing to direct the Tribunal to state a case under section 256(2) of the Indian Income Tax Act, 1961 (hereinafter called the Act) and to refer certain questions said to be questions of law arising out of the appellate order of the Income Tax Appellate Tribunal for determination of the High Court. The assessment year involved was 1962-63. There were proceedings -one appeal was related to an assessment order whereby additions were made to the quantum of income disclosed by the assessee and the other was in respect of ia.,osition of penalty under section 27l(l)(c) read with section 274(2) of the said Act. The questions involved respectively in two applications before the High Court were as follows "S.J.c. No. 116 of 1972 1. Whether in the absence of proving confirmation letters and Hund.is by the assessee, the assessee has discharged his initial onus by producing merely the confirmation letters and Hundis to prove the nature of the transaction? 2. Whether in the facts and circumstances of the case the Tribunal was right in ordering deletion of Rs. 1,50,000 as assessee's income from undisclosed sources? 3. Whether in the facts and circumstances of the case the cash credit is the assessee's income from undisclosed sources? S.J.C. No. 85 of 1972. Whether in the facts and circumstances of the case the Tribunal was right in shifting the onus from the assessee to the Revenue in deleting the penalty?" The assessee at the relevant time was a private limited company and maintained accounts according to the calendar 2 Oy ala star sea rarataa Bartha31 aqay, 1973:ara ga fafrsaa & fate sarna Sat al ae ge faas sre sargrant afafaan, 1961(fat eat gas qearq “afafaag” wermaré) a are 256(2) Fada aaa ar HoT Hw % fagafynenal fate ata att Sea eagrar F aaa % faraarar aia afew aladta aera saya ala are aforegaal at, faaat stat ag wer ware fH a fafa ara see Z,fadfaa ex B erare st feat arHt faater ag ataved %, ae1962-63 alat ay ari wlaarfert ga cart ay: WH aT Rat attaet fant aca Pratzor arte & at, fae aren fratfeet sreegaz al 7§ ara at weofeada far ay ale ead ata garafiafraa at aret 274(2) & ara afea are 271(1)(4) % setteraifea & afavay & araea F at| 9. qadea sat wae: farafafad wr Fy — “1972 BI GAo Fo Ao Ho 116— 1. aar fratfeat are afee araeet cat ale gisat aralfaa a feu ora an feafa F faatfealF aecagre at valeat atfad ea % faa ara gfse aaa cal ate gfear atat Hey aga arefeas vit Hr Fraga wt fear S ? 2.7aT HeFH al F Brave ge att saatafefeaftalFt afencr arasafea ata’ afaatfedt arar % ST 7 1,50,000 era al fager aT HT aT earaan at ?| 3. aT alae FH getFB arent azate saatafefeafaat F and oar avafea otal& feaifed? atalae? 1972 BI Wao Ho Ato Fo 35— aa ATRe B aeal B atare az ale gaat ofefeafaatlH, afawer ar fatfed & user at alsa ak aT mzaafer azar att afer at fagea azar ata ar ?” 3. fraifedt gave ana ot sredz fafats araet dt ak Fe EAT aT F HZATT eta Far wack dt 131 fearaz, 1960el aara at ame Farag % far at Pe 1962-63 ae fantae Br acdaet ae 8, arzat afsaerad a fratfedy ® ga dat at-eaart agtfran fora fF 1,50,000 eat at aad oar afer atae a | att weal at araa ag afar fear cat ot fe 3 eRaett SAHA F Hat TaT-aAT saa A ao ¥ ate ae ora geGt freifeet & araaz aferard & ane gfe ara aa, gaffe.@feat ta at att farafarr Aaah} aren er daria at‘fafafeeat araat afaard & ota att gaara at atfne at Tefe afafran at art i31 8 ata gaa ard axk ga aaaqatar‘at aTaant afraret& anette Hrarar we, fHeg vat gaa se7 Fare ara BT at ag: “oles aa’ | wa: ataHT afrard 1,50,000 eva at aaea wan a fag andl gat ® er ¥ aayatt st fratfedt at ara Hse fear agraw anger (arta)% ana fratfeat at aia aferassak are afro“ama AT art ait at ws| AAT4. Bat ate afer at arer 271(1)(a) & ata frertcorFH HAT IT Hradarel at TE ate Teas agar (Fre) >50,000 erg at wifes arfirctfca az dt 1 arfca & afatan % fregatteafin afar & we & feat ame| at adie att TS 1 DAY atta ar fraerer 5. afeaen A ge ara at ate cara fear fie war dah a|>|aeae;»|Son| ane4:1J+‘:Ked(a7 -"‘7';eyby “{i| ( ny( year. For the accotlnting year ending on 31st December, 1961 corresponding to the assessment year 1962-63, the Income-tax Officer did not accept the assessee's accounts showing cash credit of Rs. 1,50,000. Three amounts were shown to have been received by way of loans from three l ndi vidual creditors of Calcutta under Hundis. The assessee produced before the Income- tax Officer letters of confirmation, the discharged Hundis and particulars of the different creditors general index numbers were with the Income-tax Department. Attempts had been made to bring those creditors before the Income-tax Officer by issue of notices under section 131 of the Act, but the said notices were returned with the endorsement 'left'. The Income-tax Officer, therefore, treated the entire a100unt of Rs. 1,50,000 as unproved cash credit and added the same to the income of the assessee. The appeal of the assessee to the Assistant Appellate Commissioner was dismissed. Thereafter there was further appeal to the Tribunal. In the meantime on the basis of assessment order proceeding was taken under section 27l(l)(c) of the Act and the Inspecting Assistant Coumissioner illJPOSed a penalty of Rs. 50,000, An appeal against the illJPOSition of penalty was also filed before the Tribunal. Both the appeals were disposed of by the Tribunal. The Tribunal noted that the credit .entries stood in the name of third parties in the account books of the assessee. The explanation was that the amounts represented loans to the assessee from the concerned persons. The assessee had produced discharged Hundis and confirmation letters from these alleged lenders. The Tribunal was of the view that if the assessee could not produce these persons alleged to be the creditors, it did not follow automatically that the adverse inference should be drawn that these amounts represented undisclosed income of the assessee. It was further noted that the credi-tors were income-tax assessees and while being assessed they had made statements before the respective Income-tax Officers admitting that they were allowing their names to be lent with-out really giving loans as creditors of different assessees •. A list of the assessees had also been given but the name of the present assessee did not figure in that list. The Tribunal came to the conclusion that the Revenue was not justified in drawing adverse inference against the assessee and adding 984 these amounts to the assessment of the assessee. The Tribunal also, in those c~rcum.stances, could not sustain the imposition of the penalty and deleted such imposition. The Revenue sought for statement of case on both these aspects i.e. on the aspect of the addition of Rs. l,50,000 to the total income of the assessee and also on the imposition of penalty. The questions sought for by the Revenue were to the effect noted before~ The Tribunal refused to refer any statement of case to the High Court on those questions. The Revenue went up in an application under section 256(2) of the Act before the High Court. The High Court also refused to accede to the prayers of the Revenue. Hence these appeals. <2afafscai at fs faaifedl% cat dafa & aa-ara eafeaat F ae aver eqfeaal fratfeat Bara Fit fea wa easly ae TTzat é1 fratfedt a afaafar saad a geaifarefsat att gfeeae ca segs faa1 afracr ar sa ae ot fa afe faaifedt gacsafsagl ay faaat atat ag afer far qaré fe 3 aaarc 2,‘Qe agl wt aHdt, Tr eae ead: St ag aa faacrar & fe tar ofan“fasag fraratSah qatat sa arar ara atfed AY ale fae & at cet cara faaifeat fear war at fe amafer Aaare ara 2 arzHz 1faatfedtFate safe saat fratca feat at <er ar, at sea ag<eaTaIT HWA BU aafaa araHr afsare F ama J aaa far s fp“3 ea ata Hl gama= te gs fe saw ara sr saatafara-faea“fraifefaat & sara BET A,areca FT aro faa faa, we fear“mia 1 faaifefaat at ca gah at at ag farg sega faaifedt erarega gat tad ari afaren a ag faoag fare fe uses farsa‘apt faatfedl.& fava oft fasae fraretar ate fratitat & fratzorF ea weal al Wsat eaqraifad atesa afifeafaal A afcafer & afeectigey at era adi ta aah al ate gafar gar taafaaan at fager ax feats use faster a at ctat cagat at araawaa 1,50,000 vay ay faaifedt ay ga ara F aisa B gaa ataaa atc afer afadfra ext at araat aaa & Haat fet ora at“Sear By ures faarae F frat oat H dae A scar at, F gah eagare ae sara & Fafa A ea goat F Aaa T yea eararaa‘al arma & fadt vt wor at fadfaa art & zaare azfeat)user fad §seq earmaT & anaafafaaa ayaver 256(2) ¥ aela ade sega feat1 sea eararara a vt userfart at qreaary eitare wer A gaat Ht feat | aa: Tate 6. Barer sara fratwr area FH oa saat & ofa arase fear ar frat avant afsart + ofits araeet cal FH afare afsafraardzeal at ate gah aarat ag wa esta Pear var at fH gfe eae cat& favara geqer aval Gar gad ag at aa saga Prat fe fraifedt arHATA & fae faatfefaat arer aaa eb da a ad aaa atinag faeHT HB aT FT gaTHTT Hl Gar Hea FaaHa gu gt alt agrwed Gar 508 seqan arareaa favia afret [1986] 3 sao fro a> arate afgard & ag fraaa Pear fis az ast afrafira Satara aEart 1318 ada aaa art at ate afafaam ay ara 131 Fata a gaa ard at me at, F ga fecroht& ara fe “olemar” areiter fae fear aca ar ag. gah are fratfedd afaafarsaat Bada aarcardda eh aay eran ak azzareal at arnt afar * gah xarar ae wa eae fear fareet at me alrar ar aga gt afr ST TaaT gs, FE AO AT AT& atc ate & 92 ag ara arfaa at 7g 8 fe aarafad get arat F& afante saat cant vel &, faegFare F Taare SI 7, ag ft cater at 78 fa afafram at aret 68 & sodat at Saad gk ea HITS araal H are fraifedd oe garg ate gaaaa a at fretfedd & ga are ar faaga sgt fear ar atx, Farfe wat orafaa fear aar %, ga feafa Ffafa aaat ser wgetwat Ba1 1961 ata aferfrae at are 68afafiam a qget areqeemfid at Ty 1 1922 ala tae F ge are ar aaa ars atgrade val arga area A ag war ware fH set are uie featqdag & fay wit we fraifedt at qeant A oar at wy argard & att fratfedt saat safe at aa at aaa aleeqsdtatroagt Zar & ar sae rer fear war eqedlawn arrayafgaral at wa w aararase val¢,aaga WHIT FATay uf ula faatfedt at sa gaad at ara & wr F aaaaonfa at or ahah: agare ga fagia at aradt araarara fdlh 3 fe ane gar at Te cael ar, faaat aaa qararagTwey & eqsetnco aa feat oat 2, ara} wT FH Prater Pear sar21 gaara tag afafrafra frat var 3 fe afe are cafe featqdad & fxg wat ve fratfedt st qeant F ora at wg ars ot Batt (sit fr facta ag & fart al amet @) set fe oar at rg aecan at Prater asafed ara & wa 8 fear arar @, set sa saga aygt ata & er H rar aT Hat & ate facia ag BY TAT at 7g Oatwan % far gd ay % we FH at Arar aT aaa, wer gt asafea are@Y Tad ae 7 Tar Tar at fH ag fratfedt # ta faafaa areas asta ef & faak fag agar waaaase gar slay Tea aT ae f |BDtines|+>||:|yy 4—- Y:ia| Prater ar att areare are & we Far ea Ma Aa aT FST% frat or aaa ftOC= Our attention was drawn to the statements in the assessment order where the Income-tax Officer had observed certain inconsistencies in the confirmation letters and observed further that the confirmation letters did not inspire confidence. It also observed that the assessee had stated that after making all possible attempts in their own way, had failed to produce the parties and thereupon requested the Income-tax Officer to issue summons under section 131 to all the alleged creditors and the notices under section 131 of the Act which had come back unserved with the remarks 'left'. The assessee thereafter wanted further opportunity to find out the present whereabouts of the alleged lenders. The Income-tax Officer observed further that the wide prevalence of Hundi racket was well-known and it had been estab1ished beyond doubt that most of the so-called Rundiwallas are not genuine bankers but mere name lenders. It was.argued that in view of the provisions of section 68 of the Act, the onus in these types of c·ases was on the assessee a~ in this case the a~s·essee had not dis_charged that onus and in the premises questions of law as indicated above arose. Section 68 of 1961 Act was introduced for the first time in the Act. There was no provision in 1922 Act corres-ponding to th~s section. The section states that where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Income-tax Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. The section only gives statutory recognition to the principle that cash credits which are not satisfactorily explained might be assessed as income. The section enacts that if a sum is found credited in the books of an assessee maintained for any previous year (which might be different from the financial year), the cash credit might, in case where it is assessed as undisclosed income, be treated as the income of that previous year, and the financial year may not be taken as the previous year for such a cash credit even if the undisclosed income was not found to be from the assessee's regular business for which the books were maintained. The cash credit might be assessed either as business profits or as income from other sources. Under the 1922 Act where a large amount of cash was found credited on the very first day of the accounting year, and considering_ the extent of the business, it was not possible that the assessee earned a profit of that amount in one day, the amount could not be assessed as the income of the year from that business on the first day of which it was credited in the books. Under this section, even in such a case the unexplained cash credit might be assessed as the income of the accounting year for which the books are maintained. See in this connection the observations of Kanga and Pallddwala' s Income Tax, Seventh Edition, Vol. I pages 609 and 610. ae f Y:ia| 8. 1922 ara dae F aefta, Tet fe gel aHal cHA H aT A aeqrar wat fs ag Maragd % saa fea Aaa at ARS, ale BATTah ater ae faare ewe gt ag daa vat ar fe fratfedt a ow eyfea ¥ sa tay ar ara aotiaa fear 3, za