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TMI Blog1975 (6) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... dated17-3-1966and . . 16,000 dated18-3-1966 . 1968-69 . Credited to the account of Raj Kumar Tulsi Das 900 1969-70 . . 1,070 2. The assessee firm is a dealer and commissioner agent for the sale of dry fruit and kirana. Its assessments for the asst. yr. 1967-68, 1968-69 and 1969-70 covered respectively the previous years ended26th July, 1966,14th July, 1967and2nd July, 1968. 3. Shortly after the beginning of the accounting year relevant to the asst. yr. 1967-68, the assessee collected through its bank a cheque for Rs. 30,000 bearing No. 780067 drawn on the Dena Bank, Chandni Chowk, by Anil Das Gokal Das. The amount was stated to have been obtai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n "Hawala" party, that the assessee had failed to prove the genuineness of the loan and, therefore, he was treating the cash credit of the party as the assessee s income from undisclosed sources. 5. The assessee contested the addition in appeal against the assessment for the asst. yr. 1967-68. The AAC observed that though the ITO was entitled to demand physical production of the creditor for verification of the statement made in the certificates given by the creditor, in view of the provisions of s. 67 and 101 to 103 of the Indian Evidence Act, in the instant case it was not possible for the assessee to comply with the ITO s requisition because of reasons beyond its control. In the peculiar circumstances of the case, he was of the view th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been repaid by cheque No. 866079 dt.7th July, 1967and No. 898311 dt.1st Aug., 1967, both drawn on the Union Bank ofIndia, Khari Baoli,Delhi. The receipts from this party also were supported by two promissory notes executed by partner. Shri Rikhi Ram on behalf of the assessee firm in favour of Raj Kumar Tulsi Das. Photostat copies of two certificates from this party were produced before the ITO to prove that the amounts in question had been repaid to Raj Kumar Tulsi Das, also with interest. 8. The ITO did not accept as adequate the evidence tendered by the assessee in support of the alleged loan transactions with Raj Kumar Tulsi Das. He asked the assessee to produce the creditor, (vide his latter dt.19th Sept., 1971) and the assessee s re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough the transactions of the assessee firm with these parties were supported by pro-notes, and their receipts and most of these transactions had been put through scheduled banks, their genuineness should not have been accepted without examining the alleged lenders. He referred to the full Bench decision of the Calcutta High Court in the case of Lakhmani Mewal Das vs. ITO 99 ITR 296 (Cal) to argue that the phenomenon of spurious creditors was quite prevalent and that despite the production of discharged hundies or promissory-notes and receipts and the furnishing of the last-known address of such spurious creditors, it is possible to question the genuineness of those transactions. It was submitted that in the instant case, the ITO had good re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... editors years after the transactions had been concluded, had not been properly appreciated by the ITO. 12. On a careful consideration of the rival contentions we have to hold that the evidence on record did not justify the ITO s action, which was based on mere suspicion and conjecture. The two creditors might have declared themselves to be name lenders, but there is nothing on record to suggest that such declaration specifically included the transactions with the assessee. The ITO had admittedly verified from the banks all the transactions by cheque and he found no discrepancy. We agree with the AAC that the scheduled banks in question would not be presumed to the accomplices to the assessee firm or its alleged creditors. Hence, there was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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