ASHIM KUMAR BANERJEE J.

( 1 ) THIS appeal is directed against the judgment of the learned Tribunal dated January 24, 2000.

( 2 ) THE basic issue raised by the appellant in this appeal is whether the genuineness of the loan in question can be considered under the block assessment, though the loan in question has been duly accounted for in the regular books of account found" during the time of search.

( 3 ) THE assessee being an individual obtained loan from a limited company under the Companies Act, 1956, who is also an assessee under the said Act, 1961, There had been search and seizure resulting in block assessment of the assessee. During the block assessment, the assessee was called upon to explain the advance taken, the assessee has filed the confirmation letter of loan including its income-tax file numbers of the creditor of the limited company which advanced the loan to the assessee.

( 4 ) THE authority, however, being not satisfied with such explanation wanted details of the persons from whom the money was taken by the said limited company without reopening the assessment with regard to the said limited company and ultimately held that the said loan was a fictitious one and was to be considered as undisclosed income of the asses-see during the block period under consideration. The order of assessment was challenged before the Tribunal on the ground that since the source of the money had been proved, the assessee should not be made responsible, even if the loan creditor was not able to prove its source.

( 5 ) BEFORE the Tribunal the question was also raised to the extent whether the said loan could be treated as undisclosed income under the Chapter XIV-B of the 1961 Act. The Tribunal was of the view that the Assessing Officer had the power under Section 158ba of the 1961 Act to tax the amount and it makes no difference whether the material is found during the course of search or is brought on record subsequently or whether it has a connection with the material available or found in the course of search.

( 6 ) BEING aggrieved by the order of the Tribunal, this court has been approached by the assessee under Section 260a of the said Act of 1961 and on being approached the following questions have been framed for consideration :"1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law and had material to hold that the loan of Rs. 50,000, which was genuinely borrowed by the assessee from a private limited company, Trientra Commerce and Trade Pvt. Limited, allegedly represented the undisclosed income of the assessee for the block period as defined in Section 158b (a) of the Income-tax Act, 1961 ?2. Whether, on the facts and in the circumstances of the case, the Tribunal has any material to justify its finding and conclusion that the assessee has failed to discharge the onus to prove the genuineness of the said loan creditor amounting to Rs. 50,000 by endorsing the view of the Assessing Officer that the loan creditor was used only as shadow company and the money had come from some individual who had no means to advance the money ?3. Whether, on the facts and in the circumstances of the case, the Tribunal relied on irrelevant materials and ignored relevant evidence in holding that the sum of Rs. 50,000 was the income of the assessee from undisclosed sources for the said block period on the alleged ground of failure of the assessee to prove the source of the source and whether such finding is otherwise unreasonable and/or perverse ?"

( 7 ) TWO questions now evolve herein which, according to us, are relevant for consideration :1. Is the Assessing Officer entitled to question the loan which is a subject-matter of a regular assessment, while making block assessment ? 2. Even if the Assessing Officer is entitled to question the said transaction whether it can be decided against the assessee, on the ground that the assessee has failed to prove the creditworthiness of the source of the source.

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