TaxTMI 
TaxTMI 
1981 (11) TMI 34
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....ount year, relevant to the assessment year 1972-73, there were entries to show that the assessee had borrowed money on hundis from a number of Multani bankers. The assessee produced the discharged hundi papers in support of the genuineness of the transactions. The ITO, however, was disposed to reject this evidence, for two reasons. One was that the hundis had not been discounted by the lenders with scheduled banks. The other was that the lenders were notorious for indulging in havala transactions, that is to say, transactions which made it appear on fabricated evidence that there were loans advanced by them and repaid to them, without any money passing either way. At this stage of the assessment, to cut further proceedings short and to achi....
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....made only on the basis of the assessee's offer to treat the peak credit in the hundi loan account as its income, and this offer was made not on an admission on the assessee's part that the hundi loans were hot genuine and they represented its own income, but with view to cut short further proceedings and achieve finality in the assessment. The Tribunal further observed that, apart from rejecting the assessee's explanation about the hundi loans, the Department had no independent evidence to show that Rs. 69,000 represented the assessee's concealed income. The Tribunal pointed out that even this amount of Rs. 69,000 was only an estimate of the peak credit, which was reduced by the Commissioner himself in revision. These were the reasons adduc....
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...., inverted the burden of proof laid down by the courts. But this inverted onus under the Explanation applied only up to a point, and also not in all cases, but only in those cases where the returned income is found to be lower than 80% of the assessed income. In such cases, the Explanation lays down only an initial presumption that the assessee had concealed his income as respects the difference between the returned income and the assessed income. But even this initial presumption the assessee can always rebut, by showing that the higher figure adopted in the assessment order was not because of his returning a lower figure of income in his return or was owing to any fraud or neglect on his part, but was owing to a misunderstanding of the ta....
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....ve. They have found that the gap between the assessee's return of income and the officer's order of assessment was solely due to the addition of Rs. 65,000, which was made solely on the basis of the assessee's offer to settle the figure of assessment. The assessee's letter in that regard, which the Tribunal has quoted verbatim in their order, does not contain any admission that the hundi loans disclosed in its accounts are havala transactions. In the absence of an admission to that effect by the assessee, a finding of concealment, or, for that matter, a finding that the cash credits represent the assessee's income, can only be come to on the basis of materials. In this case, however, on the materials on record, the only thing which was said....