1971 (12) TMI 47

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.... The amounts were taken in cash and payments had also been made in cash but the interest had been paid by cheques. Both the creditors are on the record of the IT Department any they have got their income tax file numbers. The ITO held that the loans taken by the assessee from these two parties were bogus hundi loans as these creditors were blacklisted by the Department and the assessee failed to produce the parties and that the creditors had left the premises an notices issued to them under s. 131(1) of the Act had come back with the remarks that they had left their business places. The assessee requested the ITO to summon the Bank account of these two parties and these two parties had bank account with the Bank of India and Dena Bank. The ....

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....of Hawalas in hundi transactions, litigations are fostered between the assesses and the Revenue and the litigations are almost coextensive with the businessman's life. There is ellusive boundry line between a genuine hundi loan and Hawala in a hundi transaction and each decision will depend upon facts of each case. In the case the assessee has proved identity of the creditors while stating that interest had been paid by cheques. But this evidence is not enough as this could be treated as creation of evidence. In this case the bank accounts of the parties in question which had been collected by the Department would go to show that there were huge transactions. The Department has failed to find out nexus between the loans given by the credito....