TMI Blog1990 (4) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... It is therefore. necessary to go into the past. 4. This case has a chequered history. It is stated in the Commissioner's order and is not in dispute. The material part of it is from the period relevant to the asst. year 1956-57 there were hundi loans in the assessee's books and the peak thereof amounting to Rs. 17,66,500 was reached in the period relevant to the asst. year 1962-63. Out of this the dispute before the Income-tax Officer related only to Rs. 10 lakhs for the asst. years 1960-61 and 1961-62. The assessee made disclosures of this amount under the Schemes of 1965 and 1975 and paid the tax thereon. 5. The first assessment was made, in 1966 and the fourth and last in 1982 three earlier assessments having been set aside by the Commissioner for various reasons which explains the long time gap between the relevant assessment period and the last assessment order. The addition was made on the basis of difference between the peak of the present year and that of the preceding year. 6. The learned Commissioner has correctly framed the questions : (a) whether the Income-tax Officer has properly taken into account the disclosures, and (b) whether the additions in respect of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd made that addition. According to him, (i) although all hundi khokhas were available, the genuineness of the transaction was not proved until the signatory was produced before him and admitted the signature, and (ii) production of copies of confirmatory letters was not sufficient because originals were not produced and in any case signatures on the originals were not proved. 12. The IAC has observed :-- "There is no denial of the fact that over two decades have elapsed since the events took place and the assessee has found it virtually impossible at this stage to discharge the burden enjoined on it. However, it has to be remembered that the assessments were originally made well within the time limits and even at that stage the assessee had failed to avail itself of the opportunities for establishing the genuineness of the impugned loans transactions. The assessments were no doubt set aside twice on account of certain infirmities, but it is not the Income-tax Officer who was responsible for such infirmities. It is significant to note that the assessee had accepted the finding of the Income-tax Officer for four earlier assessment years (1956-57 to 1959-60), that similar loan tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have actually passed through than. From the remaining 87 parties as per Annexure 'C' there are some borrowings which are discounted through Bank. A show-cause notice was issued to the assessee on 5-2-66 explaining the position regarding the borrowings from such persons and to adduce conclusive evidence in support of the borrowings. The assessee was also informed that persons in Annexure-B have given clean admission and as regards the persons in Annexure C the assessee was informed that these parties have no financial capacity and, therefore, they were only doing name lending, business for nominal commission. The assessee was also informed that most of the parties are not available at the addresses furnished by the assessee and probably as their bogus game is out, they have completely vanished from the scene. In this connection, the assessee vide his letter dated 8-2-66 replied that these parties may be summoned u/s. 131 so as to allow him an opportunity of cross examining them. It was explained to the assessee that their confirmatory letters given to parties on earlier occasions are immaterial as they were only name lenders and they have clearly admitted that they were doing only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant for his comments nor any opportunity for examining these parties was granted to the appellant." Thus the assessment order was unsatisfactory. This state of affairs continued till the last assessment when it was too late to ascertain which of the parties was not available at the addresses given and which had no financial capacity and on what basis. 16. The second assessment was made u/s. 144 on the ground that the assessee was absent because of a religious function and the Income-tax Officer could not wait any longer since it was pending for a very long time. The Income-tax Officer observed that the assessee had not established the genuineness of the Hundi loans in question. The assessment was reopened u/s. 146 and the third assessment order was passed on 19-10-1977. The Income-tax Officer mentioned therein the two disclosures made by the assessee and also that an amount of Rs. 9,98,000 had been offered for assessment. The Income-tax Officer has stated that although opportunities were given to the assessee to explain the loan the assessee has not availed of them but had preferred to approach the C.B.D.T. and the Commissioner. He has tried to show the conduct of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the Department's case and examining the evidence on which the Revenue proposed to rely. The assessee has in his letters repeatedly pointed out that he had given the addresses of the lenders and has also indicated the evidence which was supplied at the initial stage itself. The assessee vide its letter dated 6th February, 1965 pointed out that the shroffs from whom the family had borrowed the moneys were not co-operating with the Department and some of the shroffs were reluctant to produce their books of accounts to prove the genuineness of the transactions. In this letter also the assessee stated that address of the lenders had been given but since the lenders were not co-operating, which may involve long litigation, the assessee had requested settlement. This indicates the possible difficulty experienced from the very beginning and seems to be probable. In his letter dated 25-8-1977 he has inter alia stated as follows :-- "In this connection we have produced at the time of assessment proceedings original hundi khokhas, interest payment slips, proofs regarding discounted hundies, confirmatory letters from most of the shroffs from whom we have borrowed money as primary evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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