DULICHAND OMPRAKASH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This reference is at the instance of the assessee, M/s. Dulichand Omprakash, under Section 256(2) of the Income-tax Act, 1961. The question called for from the Tribunal is :

(2.) The facts found or admitted as appearing in the statement of the case and the annexures thereto may be briefly noted. In the assessment year 1962-63, the Income-tax Officer noticed certain cash credits in the books of account maintained by the assessee. Such cash credits had been noted also in the earlier assessment years. In this reference, we are concerned with one item of such cash credits in the name of one Tarachand Surana to the extent of Rs. 40,000. This amount was added back by the Income-tax Officer to the income of the assessee. During the assessment proceedings for the earlier year, Tarachand Surana could not be served with summons as he was not traceable at the address given by the assessee. Subsequently, a person appeared with the books of accounts of Tarachand Surana and confirmed the transactions of the assessee. Tarachand Surana had also made a confession that he was a name-lender and had accommodated several parties to conceal their income in the guise of hundi loans. The request of the assessee that Tarachand Surana should be summoned for cross-examination was not acceded to. In the earlier assessment year also, the loan of Tarachand Surana was added back.

(3.) Being aggrieved, the assessee went up in appeal before the Appellate Assistant Commissioner against the assessments in both the said assessment years. The Appellate Assistant Commissioner upheld the decision of the Income-tax Officer in adding back the amount credited in the name of Tarachand Surana. He also noted that the cash position of the assessee did not justify the alleged loans from Tarachand Surana. There was a further appeal to the Income-tax Appellate Tribunal for both the assessment years by the assessee. In the meantime, penalty proceedings had been initiated and Tarachand Surana had been examined by the Inspecting Assistant Commissioner and cross-examined on behalf of the assessee. The assessee relied on such evidence and in particular on the admission of Tarachand Surana in his examination that he had in fact given the loans in question to the assessee. On behalf of the revenue, the following points in the evidence of Tarachand Surana were emphasised.'