Rishi,
Whatever said and done, facts are what remain in court file and before the court.
You say he used to come to your house means you were close friends, frequently coming means like friends, and if is such why can not be presumed that you are also the like. Many months he continued to blackmail you - not true thing. Somewhere your involvement is definitely there.
What is meant by all this is that the lawyer of other party shall have arguements and claims and evidences against you which you should not hide and take care of.
An Income Tax Return is not the requirement for transactions with consent. What you should have done and what you did not or could not shall definitely come in your way while defending the case because the natural or normal action by any prudent person in your circumstances is missing on your behalf.
You have not mentioned what stand or arguement you have taken in your reply to the notice in order to refute his claim and whether or not any thing has been stated or submitted in the court from your side by now.
Section 145(1) allows you to cross-examine the complainant with the permission of the court, and your lawyer will be able to crack the truth if your are honest, but beware, you will be in trouble if the complainant holding any evidence against you which means you have not mentioned or concealed here.
Consider many but take up any one stand like :
1 . Complainant showed you one water bill or electricity bill or credit card bill or telephone bill or any other utility etc to bepaid by cheque and to be dropped in drop-box and he gave you Rs 223 of the bill and took cheque without filling it so that it may become invalid due to overwriting cutting etc. and the name of payee company or date of payment or amount with late fee etc is to be filled up by him later after enquiring at the counter and that he said that he did not have any bank account or any cheque facility in his bank account;
2. Complainant had to send one examination form / application form / booking form etc and that details shall be filled up upon enquiry at the authority /agency / company counter and that the form was to be sent by post - so cheque was needed and you gave him cheque in good faith;
3. Complainant has breached the trust by deceiving you while complainant was simply a carrier / agent to handover the cheque to your sister's place or for that matter any place or to any person and the complainant is a cheat and he has misused the cheque not meant for him although it was not actually stolen by him and it was handed over to him by you yourself but without knowing that he will do this mistrust with you;
4. You yourself had agreed to give a loan of some different or small amount without filling it up fully or of this amount to the complainant on satisfying the pre-condition of approving the loan that he comes back with two known guarantors tomorrow otherwise you will not allow him the loan and because he did not turn up with guarantors etc after taking the cheque, you did not clear the cheque and stopped payment of remaining cheques so as to avoid any inadvertant mistake by the bank staff towards any other cheques in same series;
After knowing your financial status, one relevant and fitting arguement can be developed.
