Law: Income Tax Act, 1961

Section: 256

[Indian Income Tax Act, 1961]...........Section 256 --Reference to High Court Question of law or fact-Question whether cash credits represented undisclosed income of assessee-Burden of proof-Finding of Tribunal that initial onus of assessee discharged-Whether finding of fact-Held yes-Weather reference lies from finding of Tribunal-Held no. The Income Tax officer rejected the returns tiled by the assessee as he found cash credits in the books of the assessee and added them to the total income of the assessee; The assessee filed confirmation letters and the discharged hundi papers but the Income Tax Officer called upon the assessee to produce the creditors along with their books of accounts in support of the genuineness of the loans. The assessee having Failed to do so, the Income Tax Officer issued notices to the creditors of the assessee. All the creditors wrote back to the Income Tax Officer expressing their inability to furnish detailed particulars of the transactions because of non-maintenance of books of account and also stated that the transactions can be confirmed "only upon production of the discharged hundi which are lying with the party concerned". They also failed to appear personally before the Income Tax Officer. The Income Tax officer, thereafter, made local enquiries and found that the impugned loans were bogus and the letters written by the creditors to the Income Tax department were alleged confessions. On appeal, the Appellate Assistant Commissioner upheld the additions made by the Income Tax Officer. The assessee contended before the Appellate Tribunal that the identity of the creditors had been proved and since the whereabouts of the creditors were not known, the assessee could not be held guilty of non-production of the creditors. The Tribunal held that, on a proper appraisal of the evidence, the initial burden cast on the assessee had been discharged. On an application by the revenue for a reference: Held, that the conclusion of the Tribunal was reached on a consideration of the totality of the evidence placed on the record. It was open to the Tribunal to form an opinion that the explanation offered by the assessee was satisfactory in…

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