Dipak Kumar Sen, J.
1. In this reference under Section 256(2) of the Income-tax Act, 1961, at the instance of the assessee, S. C. Ghosal, the following questions have been directed to be referred :
'1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in Jaw in holding that the Income-tax Officer was not justified in treating the hundi loans of the amount of Rs. 17,500 as the assessee's undisclosed income for the reasons as in the case of other hundi loans ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in placing on the department the onus of proving that it was the assessee's own money which was introduced in his business in the guise of bogus hundi loans ?
3. If the answer to question No. 2 be in the negative, then whether the Tribunal was right in law in holding that there was no justification for treating any of the hundi loans to be the assessee's undisclosed income and in deleting the whole of Rs. 45,000 and the interest claimed thereon retained by the Appellate Assistant Commissioner on this account.'
2. The assessment year involved is 1959-60, the relevant previous year being the calendar year 1958. The facts found and/or admitted are, inter alia, as follows: The assessee is an individual and at the relevant time carried on two separate businesses. The first business was in the name of 'S. C. Ghosal' in which the assessee dealt in scrap iron. The second business was in the name of 'Adhya Sakti Industrial Works'. In this business the assessee manufactured items like ridges, pulleys, etc.
3. In the assessment for this assessment year the Income-tax Officer came across credit entries in the names of five creditors. The said creditors are (1) Ram Chandra Mohanlal, (2) Laxmichand Daulatram, (3) Seth Naraindas Hotchand, (4) Gopaldas Lalchand, and (5) Bhagwandas Purushottamdas,
4. It was the case of the assessee that the entries represented hundi loans obtained by the assessee from the said five persons which were repaid during the accounting year. In support of the assessee's claim the following documents were produced :--(a) discharged hundis, and (b) confirmation letters from four creditors. The fifth creditor, viz., Bhagwandas Purushottamdas, was alleged to be in Bangalore but his address he supplied.
5. The confirmation letters also furnished assessment file numbers of the creditors showing that they were income-tax assessees.
6. The Income-tax Officer was not satisfied with this evidence and issued notices under Section 131 of the Income-tax Act, 1961, calling upon the creditors to produce their books of account and confirm that the said loans were genuine.
7. In response to the said notices the first four creditors again confirmed the loans which had been granted to the assessee but did not produce their books of account. The creditor, Seth Naraindas Hotchand, stated that he did not maintain any books of account but reiterated that the loans had been verified from his documents. The proprietor of Naraindas Hotchand informed the Income-tax Officer that at the time of the service of the summons under Section 131 of the Income-tax Act, 1961, he had left Calcutta but asked for another date for personal appearance.
8. The Income-tax Officer did not fix any date for further appearance of Naraindas Hotchand but completed the assessment. On the basis of the notorious practice prevalent in or about 1958, discovered from a large number of cases that fictitious hundi loans were being relied upon by various assessees to bring into their books of account concealed income, the Income-tax Officer concluded that the creditors in the instant case were not in a position to make the alleged advances to the assessee and, therefore, the accommodation which had been purported to be given by way of hundis and loans were fictitious. All the hundi loans were treated as cash credits and added back to the income of the assessee.
9. Being aggrieved, the assessee appealed to the Appellate Assistant Commissioner. It was found in this appeal that Bhagwandas Purushottamdas, the creditor at Bangalore, had been examined by the Income-tax Officer, Bangalore, and it was verified from the creditor's books of account at Bangalore that there were entries in support of the loan given to the assessee. The Appellate Assistant Commissioner deleted a sum of Rs. 17,500 credited in the name of the party in the assessee's books and reduced the amount of undisclosed income by Rs. 17,500.
10. Against this order of the Appellate Assistant Commissioner both parties went up on further appeal before the Tribunal, The assessee challenged the retention of the balance of the additions and the department contested the reduction allowed.
11. Before the Tribunal the assessee placed the entire history of the founding and financing of his business and filed a statement showing all loans obtained by the assessee from the very inception of his business from various hundi brokers and the manner in which the said loans were utilised. It was submitted that in the absence of adequate security the assessee was not in a position to obtain overdraft loan from any bank and had to depend upon the hundi broker. It was contended that the assessee had discharged the onus of showing that the creditors were real persons who had acknowledged the factum of the loans and thereafter it was for the revenue to prove that the loans were fictitious and represented the concealed income of the assessee. Apart from notice taken of the alleged hundi racket there was no evidence to support the contentions of the revenue.
12. It was contended on behalf of the revenue that in fact a hundi racket had been unearthed and it has been found that there were a large number of bogus persons who were lending their names as money-lenders in support of fictitious loan transactions and that the assessee had disclosed the loans from such persons and thereby could not be said to have discharged this onus.
13. The Tribunal held that though the revenue had relied on the existence of such a racket, no attempt has been made to produce any material or evidence in support of such contention. It was the conclusion of the Income-tax Officer that such hundiwallas were mere name-lenders and did not have the capacity to advance loans and that the absence of the books of account proved that they were not genuine money-lenders. This the Tribunal negatived on the example of the creditor at Bangalore from whose books of account entries in support of the loan given to the assessee were available. On that basis the Tribunal held that there was no justification for the revenue to treat any of the hundi loans as the undisclosed income of the assessee.
14. Mr. S. Sen, learned counsel for the revenue, has contended that the Tribunal has been unable to appreciate the burden of proof in such cases and has wrongly placed the onus of proof of the fictitious character of the disputed loans on the revenue. On a careful consideration of the facts and circumstances we are unable to accept his contentions. It does not appear to us that the Tribunal has decided the matter only on the basis of onus. Positive evidence had been adduced by the assessee which was accepted by the Tribunal. To reiterate, such positive evidence is (a) the existence of the creditors, (b) the assessment file numbers of the creditors, (c) the confirmation letters of the creditors in support of the assessee's claim, and (d) books of account at least in the case of one creditor, i.e., Bhagwandas Purushottamdas of Bangalore, and (e) the discharged hundis. The Tribunal has duly taken note of such positive evidence and the fact that there was no contrary evidence forthcoming from the revenue. The revenue only relied on the prevalent practice of utilising fictitious hundis through bogus persons. It appears to us that the Tribunal accepted the evidence of the assessee as sufficient to discharge their preliminary onus and in that process further noted that there was no further evidence to the contrary. In the absence of any such evidence the contentions of the assessee stood proved.
15. None of the findings of fact, as noted above, has been challenged in this reference and stand concluded. On the basis of such facts, different conclusions are no doubt possible but it cannot be said that the conclusions arrived at by the Tribunal are perverse or entirely unreasonable. In any case the decision of the Tribunal has not been challenged on the ground of perversity.
16. In this view of the matter, the questions in the instant case have to be answered in favour of the assessee. We answer question No. 1 in the affirmative. In view of what has been stated above it appears to us that question No. 2 is academic, and calls for no answer. It does not appear from the order that the Tribunal placed on the revenue the onus of proving that it was the assessee's own money which was introduced in the latter's business in the guise of bogus hundi loans. We answer question No. 3 in the affirmative.
17. In the facts and circumstances of the case, there will be no order as to costs.
18. I agree.