A witness who claims there was loyalist gunfire during the Ballymurphy shootings is bidding to give inquest evidence from behind a screen.
Witness X is also seeking anonymity before he delivers his second-hand and contested account of what happened.
Mrs Justice Siobhan Keegan is investigating the shooting dead of 10 people in the Ballymurphy area of west Belfast in August 1971 when internment without charge was introduced.
Karen Quinlivan QC, representing the family of shot priest Father Hugh Mullan and other victims, told the Belfast inquest that Witness X was seeking to falsely claim her clients were associated with the IRA and that they were shot by loyalists rather than soldiers.
She said: "This witness is essentially a liar and we are entitled to have the matter properly dealt with."
If Witness X was not granted screening and subsequently refused to give evidence before the inquest he should be compelled to appear so his account can be cross-examined by lawyers, she added.
Witness X's evidence involves second-hand accounts given to him, known as hearsay, a lawyer said.
A ballistics expert has found no evidence that a weapon the witness identified was fired in Ballymurphy, barrister for the coroner Sean Doran QC said.
Ms Quinlivan said: "This witness has sought to put information deeply prejudicial to my clients before the court... in circumstances where we don't have an opportunity to test the evidence.
"This exercise is simply an exercise in trying to denigrate the next of kin. That needs to be dealt with."
Mr Doran said the witness cannot give direct evidence of the events.
Another witness, C3, gave evidence to the inquest about events when he was aged 16.
He said he saw eight men with weapons running for cover, and that the person at the back of the group was armed, was shot by the Army and fell.
He said he overheard an Army officer identify the person as a gunman and order one of the soldiers to shoot him.
C3 said he saw a priest, later identified as Fr Mullan, giving last rites to the victim and claimed the clergyman moved his weapon. At that point the priest was also shot, the witness said.
He added: "I heard a soldier (an officer) say, 'I have identified a gunman', and fired a shot at him.
"I am certain that only two shots were fired from the Army who were positioned in and around the Ferret (an armoured vehicle)."
He said he did not hear any automatic gunfire and did not believe loyalists were responsible for the killings.
The inquest has previously been told the first man to be shot was unarmed and that the priest tending to him had not lifted any weapon.