NI Act: Not showing transaction in Income Tax Return would not bar recovery of debt [Read Judgment]

A Delhi Court in, NARENDER VATS VS. DEVI DASS rejected the accused’s contention which said that since the complainant did not disclose the loan amount in ITR, the case for complainant must fail.

Complainant’s case

The accused worked as a driver for complainant. Upon the need for some money, the complainant gave Rs. 6lac to the accused during the period from March 2017 to May 2017, on the promise that such amount would be returned by November 2017. Accused then issued a cheque dated 6/01/2018 in the complainant’s favour for the discharge of his liability. The cheque, however, got dishonored twice upon the insufficiency of funds.

Defence of Accused

The accused denied receipt of any such loan but stated that he hired the complainant’s vehicle for commercial use for a period of two months @ Rs. 22,000/­ per month charges but after one month he secured service of ‘Akram’ for the remaining month. The complainant asked for some security for the same and the accused gave a blank signed cheque for Akram neither had any personal bank account nor any other “proof”. Akram however could not drive after some time upon which the complainant alleged that he suffered a loss for Rs. 1.5 lakh for which he misused the said cheque. The accused admitted to a liability of Rs. 44,000 for the above­stated reasons and he had earlier also issued a cheque to the complainant which had got dishonored.

Findings

Under Section 118(a) read with Section 139 of the NI Act, it is upon the accused to prove via proper evidence that there existed no liability.

Akram admitted the accused’s version but belied on the fact that he did not have a bank account. The accused further had contrary statements in his testimonies regarding the time period for which he had hired the complainant’s vehicle. However, the counsel for the accused argued that the case for complainant must fail as he did not disclose the loan amount in his ITRs nor disclosed his source of income, to which the court held, “It has  been   held  in a catena   of  judgments   that   mere   non  –  disclosure  of  the   loan transaction in the Income Tax Returns or any violation of the provisions of the IT Act concerns only the defaulter and the State”

Upon the question of improbability regarding paying Rs. 2lac in March 2017 in Rs. 2,000 notes due to demonetization the court rejected this argument saying the accused can’t question the same.

Conclusion

The court held that all ingredients u/s 138 of NI Act are fulfilled and the accused is guilty.

Read Judgment @Latestlaws.com