COMMISSIONER OF INCOME TAX Vs. GOPAL AND CO

JUDGEMENT

(1.) THE following two questions have been referred by the Appellate Tribunal at the instance of the Revenue under Section 256 of the Income-tax Act, 1961, for the periods 1974-75, 1975-76 and 1976-77, respectively :

(2.) THE assessee is a trading Hindu undivided family doing business. THE assessee's account for the assessment year 1974-75 showed cash borrowings of a total amount of Rs. 85,000 on six different dates from Messrs. S.K. Verma and Co., Dibrugarh. THE Income-tax Officer required the assessee to adduce evidence regarding the borrowings. THE assessee produced a letter of confirmation from the creditor. THE assessee explained that Rs. 25,000 was paid on two separate dates through Askaran Verma and the balance amount was paid on four different occasions by Mahabir Prasad Soni, one of the two then partners of the creditor-firm. THE Income-tax Officer recorded the statement of Askaran Verma who affirmed payment of Rs. 25,000 on two different occasions but did not remember as to who instructed him to pay and who handed over the money to him. THE Income-tax Officer recorded the statement of Mrs. Santoshi Devi Verma, a partner of the creditor-firm, who stated that she did not know about the day-to-day activities of the firm but she had gone through the file accounts and was satisfied that Rs. 85,000 had been advanced to the assessee. THE Income-tax Officer wanted to record the statement of Mahabir Prasad Soni who meanwhile retired from the partnership and, according to the assessee, returned to Rajasthan to which place he belongs. Summons were issued to the assessee to produce the retired partner. THE assessee was not able to produce him. THE Income-tax Officer is said to have made enquiries with the police who reported that there was no such person in the particular place suggested by the assessee. THE accounts of the creditor-firm mentioned the payments made to the assessee. THE creditor was assessed to income-tax on the basis of the accounts. For the two succeeding years, the assessee's account showed payment of Rs. 6,000 per year as interest to the creditor. THE accounts of the creditor show receipt of these payments. THE assessment of the creditor's income for the three years was finalised and for the later two years assessment was made on the basis that Rs. 6,000 formed part of the creditor's income.

(3.) WHEN there is suspicion about entries regarding the alleged borrowings of substantial amounts, it is for the assessee to show that the entries are genuine and represented borrowings from a genuine concern. If the assessee produced prima facie evidence in discharging the burden, the onus shifted to the Revenue to make out a case that the entries were not genuine. The weight to be attached to various documents is a matter of appreciation of evidence and circumstances depending on a variety of circumstances, such as, existence or absence of a relationship between the concerns of the assessee and the creditor or the members of the assessee's Hindu undivided family and partners of the creditor-firm, existence or absence of other personal relationship between them and other documentary or oral evidence. The reference court is not expected to reappreciate the evidence and circumstances and to arrive at a finding on such appreciation and differ with the conclusion of the statutory authority or the appellate authority. That the reference court on a consideration of the entirety of the circumstances would have been inclined to arrive at a finding different from the finding of the statutory authority or the appellate authority is no justification to entertain with such conclusion.