1999 (4) TMI 56 - HC - Income Tax

Tribunal Upholds Decision on Hundi Loans, Burden of Proof on Assessee

The Tribunal's decision regarding the genuineness of the hundi loans was upheld, with the burden of proof resting on the assessee, who failed to discharge ... Reassessment, Cash Credits Issues Involved: The judgment involves the following issues: 1. Whether the Tribunal was right in law in holding that there was no failure on the part of the Commissioner of Income-tax (Appeals) to carry out the mandate contained in the Tribunal's order dated July 23, 1975Rs. 2. Whether the several findings of the Tribunal on which its conclusion is based are perverse and/or unsupported by any evidenceRs.Details of the Judgment:Issue 1:The assessee, a private limited company, was assessed for the assessment year 1960-61 with certain credits on account of hundi loans. The assessment was reopened under section 147(a) of the Income-tax Act, 1961, as it was brought to the notice that the hundi loans were not genuine. The Income-tax Officer reassessed the income by adding the hundi loans at Rs. 2,65,912. The Appellate Assistant Commissioner initially cancelled the assessment order, but the Tribunal found the reopening to be in accordance with the law. The Commissioner of Income-tax (Appeals) dismissed the appeal as the assessee failed to prove the genuineness of the loans. The Tribunal's finding that the genuineness of the hundi loans was not proved by the assessee was upheld.Issue 2:The Tribunal clarified that the statements of some creditors were used only as 'information' for reopening the assessment and were not used to determine the genuineness of the hundi loans. The burden of proving the genuineness of the loans lay on the assessee, who failed to establish the identity of the creditors, their capacity to advance loans, and the genuineness of the transactions. The Tribunal's conclusion that the hundi loans were non-genuine and rightly added to the assessee's income was upheld. The judgment was in favor of the Revenue and against the assessee on both issues.In conclusion, the Tribunal's decision regarding the genuineness of the hundi loans was upheld, and the burden of proof rested on the assessee, who failed to discharge it satisfactorily. The judgment affirmed the findings of the lower authorities and ruled in favor of the Revenue on both issues.