COMMISSIONER OF INCOME-TAX, ORISSA versus ORISSA CORPORATION (P) LTD.

Citation: [1986] 1 S.C.R. 979 · Decided: 19-03-1986 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Dismissed

Judgment (excerpt)

979 
CCJIMISSIONER OF INCOME-TAX, ORISSA 
v. 
ORISSA CORPORATION (P) LTD. 
MARCH 19, 1986 
[R.S. PATHAK AND SABYASACHI MUKffAIUI, JJ.] 
Income Tax Act 1961-ss.68 and 256(2) - Cash credits in 
books of assessee - Onus of proof about source of income. 
High Court refusing to direct Tribunal to state case -
A 
B 
When valid. 
C 
Interference with findings of fact by the Tribunal -
Permissible under what circumstances. 
For the accounting year ending on 31st March, 1961, 
corresponding to the assessment year 1962-63, the Income-tax 
D 
Officer did not accept the assessee 's accounts showing cub 
credit of Rs.1,50,000 said to have been received by way of 
loans from three individual creditors. He produced before the 
Incmae-tax 
Officer, 
discharged 
hundies 
and 
confirmation 
letters from these creditors who were income-tax assessees. 
The assessee made attempts to bring the creditors before the 
E 
Income-tax Officer by issue of notices under s.131 of the 
Income Tax Act, 1961 but failed, as these were returned with 
the endorsement 'left'. The assessee thereafter wante4 fUrther 
opportunity to find out the whereabouts of the lenders. The 
Income-tax Officer observed certain inconsistencies in the 
confirmation letters which did not inspire confidence, and 
F 
being of the view that the alleged creditors were not genuine 
bankers but were mere name lenders, treated the entire uount 
as unproved cash credit and added the same to the income of 
the assessee. The Assistant Appellate Coaal.ssioner dismissed 
the appeal of the assessee. 
In a separate proceeding under s.27l(l)(c) of the Act on 
the basis of the assessment order the Inspecting Assistant 
Coamissioner imposed a penalty of Rs.50,000. 
The Tribunal came to the conclusion that the Revenue was 
G 
II 
A 
B 
980 
SUPREME COURT REPORTS 
[1986] 1 S.C.R, 
not 
justified in drawing adverse inference against the 
assessee. It was of the view that if the assessee could not 
produce the persons alleged to be the creditors, it did not 
lead automatically to the adverse inference that the arount 
represented undisclosed income of the assessee. It found that 
the creditors were income-tax assessees and while being 
assessed they had made statements before the respective 
Income-tax Officers admitting that they were allowing their 
names to be lent, without actually giving loans as creditors 
of different assessees. The Tribunal also could not suatain 
the imposition of penalty. The Revenue sought for statement of 
the case to the High Court on the aspect of addition of 
c 
unproved cash credit to the total income of the assessee, and 
also on the imposition of penalty but the same was refuaed. 
The High Court also refused to accede to the prayers of the 
Revenue in its application under s.256(2) of the Act. 
In the appeals before this Court on behalf of the 
D 
Revenue it was contended that in view of the provisions of 
s. 68 of the Act the onus in these types of cases was on the 
assessee. and in this case the assessee had not discharged 
that onus. 
E 
Dismissing the appeals, the Court, 
Bl!Lll : l.(i) The High Court has no power under s.256(2) 
of the 1961 Act to call upon the Appellate Tribunal to state a 
case if there was 
some evidence to support the finding 
recorded by the Tribunal, even if it appears to the High Court 
that on a re-appreciation of the evidence, it might arrive at 
F 
a conclusion different from that of the Tribunal. (987 D-E] 
(ii) The conclusion reached by the Tribunal in the 
instant case, that the assessee had discharged the burden that 
lay on him could not be said to be unreasonable, or perverse 
or based on no evidence. If the conclusion is based on some 
G 
evidence on which it could be arrived at, no question of law 
as such arises. [987 G-H] 
(iii) The assessee had provided the names and addresses 
of the alleged creditors. It was in the knowledge of the 
Revenue that they were income-tax asseesees. Their index 
H 
numbers were in the files of the department. The Revenue apart 
\. . 
C.I.T. v. ORISSA CORPORATION 
981 
from issuing notices under s. 131 of the Act at the instance 
of the assessee, did not pursue the matter further. It did not 
examine the source of income of the alleged creditors to find 
out whether they were credit-worthy or were such who could 
advance the alleged loans. There was no effort made to pursue 
the so-called alleged creditors. The assessee, therefore, 
could not do any further. (987 E-G) 
2, Section 68 of 196

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