There is numberexplanation given by the Revenue as to why these two important documents were number traceable and they were number disclosed to the assessee.
1,07,350 was sent by the assessee from Madras on 16th October, 1946 in favour of Punjab National Bank Limited, Kalba Devi Road, Bombay and this amount was paid to one Nathirmal in cash on the same day and requesting the assessee to explain the nature of this transaction and to produce the relevant proofs of having accounted for this amount in its books of account.
The statements companytained in this letter addressed by the Manager of the Bank to the Income Tax Officer were in the nature of hearsay evidence and companyld number be relied upon by the Revenue authorities.
Then again there was a lull in the companyrespondence for a period of about one year and on 4th March 1957, the Income Tax Officer once again addressed a letter to the assessee repeating its request to explain the nature of the remittance of Rs.
The assessee merely informed the Income Tax Officer that it had numberhing to do with this amount.
1,07,350 on the ground that it represented the companycealed income of the assessee.
This companyplaint was, of companyrse, unjustified because the assessee had replied to the earlier letter of the Income Tax Officer by its letter dated 9th February 1956.
Appeal by Special Leave from the Judgment and Order dated 22 2 1971 of the Bombay High Court in I.T.R. No.
1,07,350 and the Income Tax Officer was therefore justified in adding this amount as the undisclosed income of the assessee.
The Revenue authorities companyld have very well called upon the manager of the Bank to produce the documents and papers on the basis of which he made the statements companytained in his letter and companyfronted the assessee with those documents and papers but instead of doing so, the Revenue authorities chose to rely merely on the statements companytained in the letter and that too.
1,07,350 said to have been made by the assessee from Madras to Nathirmal in Bombay.
It was also pointed out to the Appellate Assistant Commissioner that the business in Madras was carried on by the assessee in the name of M s. K. Kishinchand Chellaram and number M s. K. Chellaram and that the remittance of Rs.
The Appellate Assistant Commissioner accordingly rejected the appeal and companyfirmed the assessment of the assessee.
What the Manager of the Bank wrote in this letter companyld number possibly be based on his personal knowledge and it does number appear from the letter as to what were the original documents and papers from which he gathered the information companyveyed by him to the Income Tax Officer.
But for the reasons best known to itself it did number choose to do so.
1,07,350 was remitted and this companyy which was disclosed to the assessee showed that the application was signed by one Tilok Chand as follows Tilok Chand, C o M s. K. Chellaram, 181, Mount Road, Madras.
The assessee being aggrieved by the order of the Income Tax Officer preferred an appeal to the Assistant Appellate Commissioner.
The Appellate Assistant Commissioner however negatived these companytentions of the assessee and held that the remittance of the amount of Rs.
The assessee informed the Appellate Assistant Commissioner that the whereabouts of Tilok Chand Thadani were number known and so far as Tilok Chand Chellaram was companycerned, he was then at Hong Kong.
The Income Tax Officer did number give any further information to the assessee and proceeded to make an order of reassessment under section 34 of the Indian Income Tax Act, 1922 bringing to tax the amount of Rs.
1,07,350.
without showing the letter to the assessee.
The assessee pointed out to the Appellate Assistant Commissioner that there were two Tilok Chands working in the assessees office at Madras at the material time, one was Tilok Chand Thadani and the other was Tilok Chand Chellaram and both these Tilok Chands had left the service of the assessee long back.
The Tribunal then proceeded to observe that The assessee was number in a position to show that the respective employees in Madras and Bombay were carrying on any business and were in a position to send from one place to another such a large sum of Rs.
1,07,350 sent by M s. Kishinchand Chellaram from Madras was received by us on 16 10 46.
1,07,350 sent by telegraphic transfer from Madras and to have signed the voucher in regard to the receipt of this amount as N.B. Bani had left the service of the assessee long back and a grievance was made that it was number known as to who was the person who was supposed to have made the remittance on behalf of the assessee, because in the absence of this information, it was number possible for the assessee to meet the case of the Revenue.
1,07,350 and in the absence of such entry, it was number in a position to say anything further in the matter.
1,07,350 was sent by M s. Kishinchand Chellaram from Madras and received by them on 16 10 1946, and there was numberreason to doubt the bankers statement that the amount was remitted by M s. Kishinchand Chellaram from Madras.
The Tribunal relied on the letter of the Bank dated 18th February 1955 to which we have already referred earlier, and surprisingly enough, though this letter was strongly relied upon both by the Appellate Assistant Commissioner and the Tribunal, and an extract of it was given in the order of the Appellate Assistant Commissioner, it was number produced before the assessee number was a companyy of it given to the assessee.
The Appellate Assistant Commissioner thereupon obtained from the Madras office of the Punjab National Bank Limited a companyy of the telegraphic transfer application by which the amount of Rs.
This letter was admittedly written by the manager of the Bank to the assessee in reply to the assessees letter dated 7th March 1957 but obviously it did number carry the matter any further since it was in the same terms as the letter dated 18th February 1955 addressed by the manager of the Bank to the Income Tax Officer.
By remitting the amount as cash and by number bringing it into its books the assessee cannot escape the companysequences of having to explain the source for this and especially when the bank through which the amount was remitted has in categorical terms stated that the remitter from Madras was the assessee.
1,07,350 was sent by the assessee.
The Judgment of the Court was delivered by BHAGWATI J. The short question which arises for determination in this appeal by special leave is whether there was any material evidence to justify the finding that a sum of Rs.
He then seemed to trace it and forwarded it alongwith his report to the Tribunal and it was at the hearing before the Tribunal in companynection with supplemental statement of the case that it was shown to the assessee for the first time.
Copies of these letters, if produced, would perhaps have shown that the suggestion that the amount of Rs.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
Moreover, this letter was said to have been addressed by the Manager of the Bank to the Income Tax Officer on 18th February 1955 in relation to a remittance alleged to have been sent on 16th October, 1946 and it is impossible to believe in the absence of any evidence to that effect, that manager who wrote this letter on 18th February 1955 must have been in charge of the Madras Office on 16th October 1946 so as to have personal knowledge as to who remitted the amount of Rs.
But before the Income Tax Authorities companyld rely upon it, they were bound to produce it before the assessee so that the assessee companyld companytrovert the statements companytained in it by asking for an opportunity to cross examine the Manager of the Bank with reference to the statements made by him.
The same position also obtained before the Tribunal and the High Court and it was only when a supplemental statement of the case was called for by this Court by its order dated 16th August, 1979 that, according to the Income Tax Officer, this letter was traced by him and even then it was number shown by him to the assessee but it was forwarded to the Tribunal and it was for the first time at the hearing before the Tribunal in regard to the preparation of the supplemental statement of the case that this letter was shown to the assessee.
T.T. receipt was issued by us on the same day in favour of one Mr. Nathirmal and paid in cash on the same day.
1,07,350 was by an employee of the assessee from Madras to another employee in Bombay and the Bank had also reported that the remittance related to the assessee and hence the burden was on the assessee to explain and prove the nature and source of the remittance and since this burden was number discharged, the inclusion of the amount in the assessment of the assessee was liable to be sustained.
In the first place, this letter was number disclosed to assessee by the Income Tax Officer and even though the Appellate Assistant Commissioner reproduced an extract from it in his order, he did number care to produce it before the assessee or give a companyy of it to the assessee.
The Manager of the Punjab National Bank Limited replied to the inquiries made by the Income Tax Officer by his letter dated 18th February 1955 in which he stated one telegraphic telegraphic transfer of Rs.
1,07,350 was remitted by the assessee from Madras by two telegraphic transfers through the Punjab National Bank Limited and the Income Tax Officer therefore addressed two letters dated 14th January 1955 and 10th February 1955 to the Manager of the Punjab National Bank Limited making inquiries about this remittance.
1,07,350 said to have been made by Tilok Chand was number on behalf of the assessee number was it sent to the assessee and that its inclusion as undisclosed income of the assessee was number at all justified.
These two letters addressed by the Income Tax Officer also make inquiries in regard to various other matters besides the remittance of Rs.
The assessee before us is the firm of M s. Kishinchand Chellaram and the assessment year with which we are companycerned is 1947 48, the relevant accounting year being the year ending 6th April 1947.
1,07,350 was remitted by the assessee from Madras and pointed out that Nathirmal was a companymon name in the Sindhi companymunity and requested the Income Tax Officer to kindly give his fathers name to enable the assessee to look into the matter further and also to inform the assessee as to who on behalf of the assessee purported to have sent the telegraphic transfer from Madras.
J. Francis and Miss A. Subhashini for the Respondent.
The Tribunal also placed reliance on another letter dated 9th March 1957 addressed by the Bank to the assessee where it was stated by the manager of the Bank that they had received one telegraphic transfer from Madras office on 16th October 1946 favouring Nathirmal and this amount was remitted by the assessee through their Madras office.
It is difficult to understand how this companyy of the letter dated 9th March 1957 as also the letter dated 18th February 1955 said to have been addressed by the Manager of the Bank to the Income Tax Officer were number traceable in the records of the Income Tax Officer all this time and they came to be traced only when the supplemental statement of the case was called for by this Court.
The Income Tax Officer observed in the order that the Punjab National Bank Limited had stated that one telegraphic transfer of Rs.
Unfortunately, the Revenue authorities did number produce companyies of the letters dated 14th January 1955 and 10th February 1955 addressed by the Income Tax Officer to the Manager of the Bank.
1,07,350.
1,07,350 was remitted by the assessee from Madras to Bombay and that it represented the undisclosed income of the assessee.
Neither these two letters number their companyies appear to have been brought on record and it was companymon ground between the parties that they were at numbertime disclosed to the assessee and even number the companyies of these two letters which ought to be in the record of the Income Tax Departments have number been produced before us.
It appears that when the letter dated 9th March 1957 was addressed by the manager of the Bank to the assessee, a companyy of it was forwarded by the manager to the Income Tax Officer and this companyy companytained the following endorsement Copy to Mr. T. K. Surendran, 2nd Income tax Officer, Income Tax Office, C IV Ward, Bombay for information with reference to his summons dated 5 3 1957.
G. Advani, Ashok Advani Bar at Law, Hiranandan, Mrs. Sheila Sethi and K. Balasubramaniam for the Appellant.
There is also one other important circumstance which deserves to be numbered.
One only T. T. for Rs.
1,07,350 cannot represent any amount belonging to the assessee.
2728 of 1972.
1,07,350 was received with particulars as above.
The original assessment of the assessee for this assessment year was companypleted long back, but it seems that some information was received by the Income Tax Officer that a sum of Rs.
The assessee thereupon preferred the present appeal with special leave obtained from this Court.
The assessee thereupon preferred a further appeal to the Tribunal but this appeal was also unsuccessful.
Mr. Nathirmal was identified by Mr. B. N. Mallaya, the then Officer in our office.
The Tribunal thereupon drew up a statement of the case and referred the above question to the High Court.
This order of the Tribunal led to the filing of an application for a reference by the assessee and on the application being rejected by the Tribunal, the assessee preferred an application to the High Court for directing the Tribunal to make a reference and on this application, the High Court directed the Tribunal to refer the following question for the opinion of the High Court Whether there was any material evidence to justify the findings of the Tribunal that the amount remitted by an employee of the Madras Branch to an employee of the Bombay Branch was the income of the firm of M s. Kishinchand Chellaram from undisclosed source ?
It was pointed out on behalf of the assessee at the hearing of the appeal that Nathirmal who was supposed to have received the amount of Rs.
It would have been easy for the assessee to have the said persons examined so as to show that the sum of Rs.
But even so the assessee once again reiterated in its reply dated 13th March 1957 that numberamount of Rs.
76/63.
1,07,350 remitted by Tilokchand to Nathirmal was the undisclosed income of the assessee, the High Court answered the question in favour of the Revenue and against the assessee.
1,07,350 and to produce relevant books of account and companyplaining that the assessee did number seem to have given any reply to his earlier letter dated 2nd February 1956.
Though this letter of the Manager of the Punjab National Bank Limited was on the record of the Income Tax Officer, he did number disclose it to the assessee number did he make any reference to it in the letters dated 24th February 1955 and 4th March 1955 which he addressed to the assessee making inquiries about the remittance of Rs.
1,07,350 the Tribunal companyld possibly accept the unsupported statement of the Manager of the Bank, based on hearsay, that the amount was remitted by the assessee.
