Procedure by a written show-cause notice to prove the nature and source of the cash credits.

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....oses that while some benches have upheld the action of the ITO in adding loans as income other benches have taken a contrary view. The department has failed because of the faulty procedure followed in dealing with the evidence. The fault lies in admitting uncorroborated Hundis Khokas affidavits and confirmatory letters as evidence and in the ITO taking upon himself the onus proving the case credit....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....duction of the alleged lender. The ITO need not and should not summon the alleged lender on his own initiative but after in writing to summon him and should do so if the assessee makes a request to that effect. The assessees failure to produce or to apply for summmoning the alleged lender will be valid ground for the ITO to reject the hundis khokas the affidavit or the confirmatory letter as inadm....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....essional statement. If it is intended to prosecute the assessee and if the ITO is confident of contacting the lenders who have made confessional statements it may be desirable to summon them and offer them for cross-examination to the assessee. 5. What is true of Hundi loans is equally true of other loans, credits and even purchases. But the procedure of throwing the onus on the assessee should....