Unsworn income-tax statements and unexplained cash credits may be relied upon when credibility and surrounding facts support the addition.

Statements recorded by an income-tax authority from summoned persons without administering oath remained admissible, because the power to examine under the income-tax law was not defeated by the omission and the evidence could still be acted upon. Affidavits and account entries supporting cash credits were not required to be accepted merely on production; their credibility had to be judged on the totality of the surrounding materials. On the facts, the taxing authorities were justified in rejecting the explanations and treating the cash credits as undisclosed income, and the addition was sustained in favour of the Revenue.

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Issues: (i) Whether statements recorded by the Income-tax Officer from summoned persons without administering oath were admissible and could be relied upon under section 37 of the Indian Income-tax Act read with section 13 of the Indian Oaths Act, 1873; (ii) whether the affidavits and account entries relating to the cash credits of Rs. 85,050 were required to be accepted and, if not, whether the addition as undisclosed income was justified.

Issue (i): Whether statements recorded by the Income-tax Officer from summoned persons without administering oath were admissible and could be relied upon under section 37 of the Indian Income-tax Act read with section 13 of the Indian Oaths Act, 1873.

Analysis: Section 37 conferred powers on the income-tax authorities to enforce attendance and examine a person on oath, but it did not make the administration of oath a mandatory condition for the examination to be valid. The omission to administer oath did not, by reason of section 13 of the Indian Oaths Act, 1873, invalidate the proceeding or render the evidence inadmissible. The statements were therefore material that could legally be acted upon.

Conclusion: The statements were admissible and could be relied upon; the issue was decided against the assessee and in favour of the Revenue.

Issue (ii): Whether the affidavits and account entries relating to the cash credits of Rs. 85,050 were required to be accepted and, if not, whether the addition as undisclosed income was justified.

Analysis: The acceptance of affidavits and account entries depended on the surrounding circumstances and the credibility of the materials placed before the taxing authorities. The Appellate Assistant Commissioner gave reasons for rejecting the affidavits and treating the entries as untrustworthy, and that finding was treated as one of fact. The authorities were entitled to assess the materials as a whole, and there was no rule requiring the Department in every case to adduce separate rebutting evidence before rejecting unsupported explanations of credits.

Conclusion: The affidavits and entries were not required to be accepted, and the addition of Rs. 85,050 as income from undisclosed source was upheld; the issue was decided against the assessee and in favour of the Revenue.

Final Conclusion: The reference was answered wholly in favour of the Revenue, and the assessment of the cash credits as undisclosed income was sustained.

Ratio Decidendi: Under section 37 of the Indian Income-tax Act, the power to examine a person includes the validity of evidence recorded without oath, and the omission to administer oath does not make the evidence inadmissible; questions of credit and genuineness of unexplained cash credits are to be decided on the totality of the materials before the taxing authority.

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