1971 (12) TMI 47

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ayments had also been made in cash but the interest had been paid by cheques. Both the creditors are on the record of the IT Department any they have got their income tax file numbers. The ITO held that the loans taken by the assessee from these two parties were bogus hundi loans as these creditors were blacklisted by the Department and the assessee failed to produce the parties and that the creditors had left the premises an notices issued to them under s. 131(1) of the Act had come back with the remarks that they had left their business places. The assessee requested the ITO to summon the Bank account of these two parties and these two parties had bank account with the Bank of India and Dena Bank. The ITO discussed modus operandi of hundi .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ns are fostered between the assesses and the Revenue and the litigations are almost coextensive with the businessman's life. There is ellusive boundry line between a genuine hundi loan and Hawala in a hundi transaction and each decision will depend upon facts of each case. In the case the assessee has proved identity of the creditors while stating that interest had been paid by cheques. But this evidence is not enough as this could be treated as creation of evidence. In this case the bank accounts of the parties in question which had been collected by the Department would go to show that there were huge transactions. The Department has failed to find out nexus between the loans given by the creditors and subsequent payment of these amounts .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... o these parties. 6. The next contention of the assessee was with regard to payment of bonus of Rs. 840. It was stated by the counsel for the assessee that this bonus was payable according to the trade practice and that the books of account had been produced to show that bonus had been credited in the personal accounts of the employees to whom the assessee was to pay the bonus and that ultimately the bonus had been paid in the next year. Besides the fact that the amount was small, we find that after debiting the amount to profit & loss account, the assessee credited the bonus in the accounts of the employees and there is evidence to indicate that the bonus had been paid. Thus the addition of Rs. 840 as had been disallowed by the AAC can not .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X