1975 (6) TMI 20 - AT - Income Tax

Summary

Issues:
1. Dispute over deletion of amounts included in assessments for asst. yrs. 1967-68 to 1969-70.
2. Genuineness of credits treated as unexplained.
3. Verification of transactions with alleged creditors.
4. Treatment of credits in the name of Ail Das Gokal Das and Raj Kumar Tulsi Das.
5. Adequacy of evidence tendered by the assessee.
6. Legal implications of the transactions with alleged hawala parties.
7. Burden of proof on the assessee regarding source of deposits.
8. Applicability of Indian Evidence Act in assessing genuineness of transactions.

Analysis:
The judgment involves a dispute concerning the deletion of amounts included in the assessments of an assessee firm for the assessment years 1967-68 to 1969-70. The primary issue revolves around the genuineness of credits treated as unexplained by the Income Tax Officer (ITO). The ITO had included certain amounts in the assessments, suspecting them to be the assessee's income from undisclosed sources. The assessee firm dealt with transactions involving alleged creditors, Ail Das Gokal Das and Raj Kumar Tulsi Das, whose genuineness was questioned by the ITO. The ITO's suspicion was based on the parties being labeled as hawala operators and name-lenders. The ITO demanded physical production of the creditors for verification, which the assessee failed to comply with due to reasons beyond its control. The Assistant Commissioner (AAC) evaluated the evidence submitted by the assessee and found it to be sufficient, deleting the amounts in question.

Regarding the transactions with Ail Das Gokal Das and Raj Kumar Tulsi Das, the ITO's doubts were based on the alleged nature of the creditors. The Revenue contended that despite supporting documents like promissory notes and receipts, the genuineness of the transactions should not be accepted without examining the creditors. The assessee argued that the transactions were passed through banks, which were verified by the ITO, and therefore, the suspicion was unfounded. The Tribunal held that the evidence did not justify the ITO's suspicions, as the transactions were verified by banks and no discrepancies were found. The Tribunal agreed with the AAC's decision, dismissing the Revenue's appeal and upholding the genuineness of the loans and interest.

In conclusion, the Tribunal dismissed the Revenue's appeal regarding the credits in the assessee's books for the assessment year 1967-68. Consequently, the Tribunal found no reason to interfere with the AAC's decision for the assessment years 1968-69 and 1969-70, upholding the deletion of interest paid on these deposits. The judgment emphasizes the importance of evaluating evidence dispassionately and the burden of proof on the assessee in demonstrating the genuineness of transactions, especially in cases involving alleged hawala operators and name-lenders.