“hundi transaction”
The decision most relied on for hundi transaction is CIT v. Sant Lal (118 Taxmann.com 432), cited in 154 judgments on BharatTax.
Leading authorities on hundi transaction
An addition to income cannot be made solely on the basis of entries in a diary seized from a third party if the diary is not found in the assessee's premises, not in the assessee's handwriting, and the revenue fails to provide corroborative evidence linking the assessee to the diary.
Additions to income cannot be made solely based on entries in seized material, such as loose papers, found at a third party's premises. Independent corroborative evidence, specifically proving the actual transfer of money, is essential to sustain such additions during search assessments.
Evidence is critically important to corroborate entries found in seized material, especially when they indicate payments or loan/interest transactions. Specific reference to the actual transfer of money from a third party to the named recipient is required.
