COMMISSIONER OF INCOME TAX Vs. GANI SILK PALACE

JUDGEMENT

(1.) THE only question that is referred to this court for consideration is as follows :

(2.) THE assessee which is a partnership firm is carrying on business in the purchase and sale of piece goods, both in wholesale and retail, with its head office at Madurai. In the course of assessment proceedings for the assessment years 1963-64, 1964-65 and 1965-66, the Income-tax Officer found some credit entries in the books of the assessee in the names of Multani bankers at Madras. THE assessee explained that such entries represented loans taken by the firm from those bankers for the purpose of the business. In support of the claim of the assessee, the discharged hundis and vouchers showing payment of interest were produced by the assessee. THE Income-tax Officer observed that most of the bankers had accepted that they had not lent moneys but had only lent their names and on that footing refused to accept the case of the assessee and included those amounts under the head "Other sources".

(3.) IT is contended by learned counsel for the Revenue that the assessee had not discharged its initial burden of proving that there were loans incurred. IT is argued that unless the assessee discharged its burden, it was not necessary for the Income-tax Officer to have examined the Multani bankers. IT is also urged that the rules of the Evidence Act would not strictly apply to the proceedings before the Income-tax Officer.