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TMI Blog1987 (7) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... eque of Rs. 75,000, an equal amount was deposited in that account. This enabled the assessee to encash that cheque. The same was the position with the second cheque issued on 10-5-1981. The bank account showed a balance of Rs. 312 Only. Just before encashment of the cheque on 28-5-1981 sufficient funds were deposited in that account enabling the assessee to draw the amounts. 3. The Income-tax Officer found these will be suspicious features when there was no cash balance on the date of issue of cheques, if cash was introduced on 20-5-1981 and immediately thereafter the assessee presents his cheque and draws the money. That amount deposited in the bank on 20-5-1981 would have been normally sent only by the creditor by demand draft. But, contrary to this, the Income-tax Officer was told that the creditor came to Hyderabad for the purpose of the crediting this sum of Rs. 25,000. 4. The suspicious were further strengthened when the Income-tax Officer found that the amounts were repaid to the creditor by bearer cheques which were found to have been encashed by the assessee's own Accountant Mohd. Hussain. 5. With these suspicious regarding the genuineness of the cash credits, the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee's submission that the amount was received initially as a deposit for agency of agarbathies manufactured by the assessee. Since the assessee did not give the agency the creditor had raised the interest payable by the assessee on these amounts from 12 per cent to 18 per cent. With regard to the encashment of the amounts could return by bearer cheque, he accepted the assessee's explanation that it was for convenience of the creditor that the Accountant was asked to encash the cheque. He found fault with the Income-tax Officer for not having examined the Accountant Hussain for disproving this claim. In any event, according to the Commissioner, the Accountant had not stated that the impugned amounts were handed over to the assessee. The fact that the transactions could not be verified because the creditor's books were lost cannot be a ground for presuming that the amounts were not genuine. He further held that there was no evidence at all to show that the amount credited to the creditor's bank account during the intervening period represented the assessee's own funds and not that of the creditor. He dismissed the finding of the Income-tax Officer that creditor was heavily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at he had granted the loans. But, the Income tax Officer found that on the dates on which he had issued the cheques, there was not sufficient funds in the bank account of the creditor in Hyderabad. Monies had been deposited in the creditors bank account just a day before the assessee presented the cheques for encashment. During the relevant period, the creditor was in Akola. Yet cash had been deposited in his accounts. The question then is who deposited this cash in the creditor's bank account. It was stated that the creditor came to Hyderabad just for the purpose of crediting this amount. It would be quite natural in the case of a creditor who has business connections in Hyderabad, requiring his presence here very often. But the Income tax Officer has established that the creditor did not have connections in Hyderabad. There was only one transaction in December, 1980. This had not been controverted. That being so, it will be very strange that, the creditor comes very obligingly to Hyderabad just to credit in his own account, thus enabling the assessee to present his cheque. Now this is a strange feature. It has to be taken not of in evaluating the genuineness of the credits. 11. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by him. The Income tax Officer found that, none of these amounts are properly reflected in the books maintained by the creditor. There are some entries made in memorandum type of book. This is what the Income tax Officer observed regarding the books of the creditor. "When the Income tax Officer went to Akola the alleged creditor produced the books of account for the period subsequent to 03.09.1982 and they were found to be in the nature of Memorandum where no entries are made day after day and no cash balance was struck at all. The entries were made in the book produced on the monthly basis without giving the dates. But the alleged creditor has furnished a copy of my assessee's A/c in his books with a covering letter dated 31.01.1984 giving different dates for the credits and debits when the books produced never before the dates. When the alleged creditor was questioned he stated that, he has given the dates on an estimate basis which is not acceptable." The above evidence has some relevancy in determining the genuineness of the loan. 13. We agree with the Commissioner on the point regarding the destruction of the books of account of the creditor up to 03.09.1982. No adverse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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