Genuine loan transactions upheld where confirmations and cheque evidence discharged the assessee's initial onus.

Where an assessee supports alleged borrowings with confirmation letters, income-tax file numbers and cheque-based receipts and repayments, the initial onus is treated as discharged. The Tribunal's acceptance of such loans as genuine will not be perverse unless the revenue rebuts the evidence by showing that the creditors lacked capacity or by otherwise producing material undermining the transactions. On the facts considered by the Calcutta HC, the revenue had not verified the creditors' records or disproved their financial ability, so the finding that the amounts were genuine loan transactions, and not income from undisclosed sources, was upheld.

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Issues: Whether the Tribunal's finding that the sum of Rs. 40,000 represented genuine loan transactions and not income from undisclosed sources was perverse or unsupported by the materials on record.

Analysis: The reference arose under the Income-tax Act, 1922, and the court examined only whether the Tribunal's appreciation of evidence could be said to be perverse. The assessee had produced confirmation letters bearing income-tax file numbers, the loans and repayments were made by cheque, and the repayment cheques were cleared through the assessee's bankers. The revenue did not verify the creditors' assessment records or produce material showing that they lacked the financial capacity to advance the amounts. On these facts, the Tribunal's view that the assessee had discharged the initial onus could not be said to be a view that no reasonable judicial mind could take.

Conclusion: The Tribunal's finding was not perverse, and the question referred was answered in the negative, in favour of the assessee.

Ratio Decidendi: Where the assessee adduces prima facie evidence of genuine borrowing, including confirmations and cheque transactions, and the revenue fails to rebut it by showing inability of the creditors to advance the amounts, the Tribunal's acceptance of the loans as genuine is not perverse.

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