TaxTMI 
TaxTMI 
1976 (4) TMI 107
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....ice, in the course of assessment proceedings for the asst. yr. 1968-69, the ITO noticed credits in the account of the assessee in the name of Ramkrishna Menon. The peak of such credits worked out to Rs. 34,200. Besides there were two credits for Rs. 1,000 each in the assessee's account under dt. 13th Jan., 1968 and 16th Jan., 1968. The ITO called upon the assessee to establish the genuineness of the transaction evidenced by the credit entries. The assessee, by his letter dt. 28th Jan., 1970, stated that moneys were borrowed from Ramkrishna Menon of Calicut for the purpose of the business of the aforesaid firm, that they were entered in his account in the books of the firm, that later an account in the name of Ramkrishna Menon was opened in ....
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....ling to acknowledge having lent moneys to the said firm and consequently he had voluntarily agreed to treat the peak credit as his income for assessment purposes. As regards the two credits of Rs. 1,000 it was represented that they were genuine borrowings, but that he was unable to recollect the names of the parties from whom such borrowings had been made. The IAC was not satisfied with the explanation and hence levied a penalty of Rs. 36,200. 4. Aggrieved by such levy of penalty, the assessee has preferred the above appeal. He has also filed a Miscellaneous Petition No. 49 (Mds)/73-74 seeking to raise the additional ground that "the order of the IAC of IT levying a penalty of Rs. 36,200 is illegal and without jurisdiction and invalid in l....
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....rom Ramakrishna Menon and that he way agreeable to the peak of such credits being assessed in his hands only because Ramakrishna Menon was not willing to come forward and acknowledge the transactions. Hence, by its order dt. 13th March, 1974, the Tribunal directed the IAC to examine Ramakrishna Menon and submit a report. 6. In pursuance of the above order of the Tribunal, the IAC examined Ramakrishna Menon on 3rd May, 1974 and 4th May, 1974. He was also cross-examined by the assessee's learned counsel. In the course of the cross examination several discharged promissory notices executed by the assessee in favour of the Ramakrishan Menon and also various letters admittedly written by the latter were produced and Ramakrishna Menon was questi....
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....nt due for the next week. In the letter dt. 5th Nov., 1968 mention was made about adjustment of new loans. In the letter dt. 3rd Feb., 1968 admittedly written by him it was stated that the loan of Rs. 5,000 dt. 1st Nov., 1967 stood closed on 31st March, 1968 and they "were prepared to renew it". When questioned about it, he was not able to give any satisfactory answer. The above letters clearly shown that the assessee's version that he had borrowed moneys from Ramakrishna Menon for the purpose of the business of the firm, Rajalakshmi Motor Service, and that as agreed upon the repayments were made on daily basis is true. As already stated, the assessee also confronted Ramakrishna Menon with various promissory notes executed by him in favour ....