The J&K and Ladakh High Court ruled that non-reflection of transactions in Income Tax Returns (ITRs) does not negate the presumption under Section 139 of the Negotiable Instruments Act. The court clarified that disputed facts must be determined by the trial court, not the HC.
Non-reflection of Transactions in ITR and Presumption under NI Act
The Jammu & Kashmir and Ladakh High Court has clarified that the absence of transactions in Income Tax Returns (ITRs) does not defeat the presumption under Section 139 of the Negotiable Instruments Act (NI Act). This ruling emphasizes that the adjudication of disputes regarding cheque dishonor under Section 138 of the NI Act must be left to the trial court, which is equipped to consider factual evidence.
The court noted that the presumption of liability under Section 139 is a rebuttable one, which shifts the burden of proof to the accused only after the complainant establishes a prima facie case of dishonor of cheque. The High Court stated that conducting a 'mini-trial' to resolve disputed questions of fact was outside its purview.
This judgment reinforces the need for lower courts to adhere to statutory provisions regarding the presumption and burden of proof in cheque dishonor cases. Practitioners should be mindful that any discrepancies in ITRs should not be assumed as a basis to counter claims under the NI Act without a thorough trial examination.
Citations
- J&K and Ladakh HC Order (2026)
