Full Judgment Text
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PETITIONER:
KISHINCHAND CHELLARAM
Vs.
RESPONDENT:
THE COMMR. OF INCOME-TAX BOMBAY CITY II, BOMBAY
DATE OF JUDGMENT16/09/1980
BENCH:
BHAGWATI, P.N.
BENCH:
BHAGWATI, P.N.
VENKATARAMIAH, E.S. (J)
CITATION:
1980 AIR 2117 1981 SCC (1) 720
ACT:
Re-opening of assessment-Re-opening made on a letter of
the Bank Manager addressed to the Income Tax Officer-Income-
tax Act, 1922, section 34-Evidence Act applicability of tax
cases-Burden of proof on whom lies in cases of re-opening of
assessment.
HEADNOTE:
The appellant firm M/s. Kishinchand Chellaram was
assessed to tax for the assessment year 1947-48, the
relevant accounting year being the year ending 6th April,
1947. The concerned Income Tax Officer on an information
that a sum of Rs. 1,07,350 purported to have been sent by
the assessee by a telegraphic transfer through the Punjab
National Bank Ltd., Madras, to its Bombay Branch favouring
one Nathirmal on 16-10-1946, has escaped assessment, called
upon the assessee, through his letters dated 24th February,
1955 and 4th March, 1955 to explain the same. The Income Tax
Officer did not refer to the letters dated 14th January,
1955 and 10th February, 1955 addressed by him to the Bank
Manager nor the reply of the Manager dated 18th February,
1955 in the said two letters addressed to the assessee. Nor
were the copies supplied to the assessee nor even made
available on record before all authorities including the
Supreme Court. The assessee through its letter dated 24th
March, 1955 replied that as per its records no such
remittance was ever sent by it from Madras to Nathirmal in
Bombay. On 2nd February, 1956, the Income Tax Officer for
the second time called the very same particulars to which
the assessee by its letter dated 9th February, 1956 once
again denied the remittance by it. Despite this, by his
letter dated 4th March, 1957 addressed to the assessee, the
Income Tax Officer repeated his earlier request to it to
explain about the remittance, complaining at the same time
of silence by the assessee to his letter dated 2nd February,
1956. The assessee in its reply dated 13th March, 1957 while
inviting attention to its earlier replies dated 24th March,
1955 & 9th February, 1956 reiterated that no amount of Rs.
1,07,350 was remitted by it from Madras to Nathirmal.
Disbelieving it, the Income Tax Officer, by his order
brought to tax the amount of Rs. 1,07,350 on the ground that
it represented the concealed income of the assessee and
observed that "there was no reason to doubt the banker’s
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statement that the amount was remitted by M/s. Kishinchand
Chellaram from Madras".
The assessee preferred an appeal to the Assistant
Appellate Commissioner. At this stage, it came to light that
the purported telegraphic transfer was applied for by one
"Tilok Chand C/o M/s. K. Chellaram, 181, Mount Road, Madras"
and it was received at Bombay by one "N.B. Bani". In spite
of the plea of the assessee that the transaction did not
relate to its firm, the Assistant Appellate
721
Commissioner holding that the assessee has not discharged
the burden of proof lying on it to explain the amount,
rejected the appeal. Further appeal to the Tribunal and a
reference called for by the High Court at the instance of
the assessee was also answered against it. Hence the appeal
after obtaining special leave of the Court.
Allowing the appeal, the Court,
^
HELD: (1) There was no material evidence at all on the
basis of which the Tribunal could come to the finding that
the amount of Rs. 1,07,350 was remitted by the assessee from
Madras and that it represented the concealed income of the
assessee. [731E].
In the face of the application for remittance signed in
the name of Tilok Chand, that this amount was sent by the
assessee and the finding to that effect reached by the
Tribunal is unreasonable and perverse. What at the highest
could be said to be established by the material evidence on
record is that Tilok Chand remitted the amount of Rs.
1,07,350 from Madras and this amount was received by
Nathirmal in Bombay. Even if it is accepted that Tilok Chand
and Nathirmal were employees of the assessee as held by the
Tribunal, the utmost that could be said is that an employee
of the assessee in Madras remitted the amount of Rs.
1,07,350 to another employee in Bombay. But, from this
premise it does not at all follow that the remittance was
made by the employee in Madras on behalf of the assessee or
that it was received by the employee in Bombay on behalf of
the assessee. The burden was on the Revenue to show that the
amount of Rs. 1,07,350 said to have been remitted from
Madras to Bombay belonged to the assessee and it was not
enough for the Revenue to show that the amount was remitted
by Tilok Chand, an employee of the assessee, to Nathirmal,
another employee of the assessee. It is quite possible that
Tilok Chand had resources of his own from which he could
remit the amount of Rs. 1,07,350 to Nathirmal. It was for
the Revenue to rule out this possibility by bringing proper
evidence on record, for the burden of showing that the
amount was remitted by the assessee was on the Revenue.
[730H-731D]
The two documents viz. the letters dated 18th February,
1955 and 9th March, 1957 did not constitute any material
evidence which the Tribunal could legitimately have taken
into account for the purpose of arriving at the finding that
the amount of Rs. 1,07,350 was remitted by the assessee from
Madras to Bombay because while the former was not disclosed
to the assessee by the Revenue Authorities till the hearing
before the Tribunal in regard to the preparation of the
supplemental statement of the case, giving the assessee an
opportunity to cross-examine the Manager of the Bank, the
latter was not disclosed to the assessee at any stage.
Further, there is no explanation given by the Revenue as to
how these two important documents were not traceable
earlier. Even if these two letters were to be taken into
account, they did not supply any reasonable basis for
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reaching the finding that it was the assessee which sent the
remittance of Rs. 1,07,350. There can be no doubt that if
the amount had been remitted by Tilok Chand on behalf of the
assessee he would have signed the application for
telegraphic transfer on behalf of the assessee and not in
his own name. This apart it is impossible to believe that
the Manager of the Bank could have failed to appear before
the Income Tax Officer in answer to the summons dated 5th
March, 1957 and there is no doubt that this statement must
have been recorded and the said statement also withheld.
[729H-730A; 729B, C; 730B, E; 729F-G]
722
(2) It is true that the proceedings under the Income
Tax law are not governed by the strict rules of evidence and
therefore it might be said that even without calling the
Manager of the Bank in evidence to prove this letter, it
could be taken into account as evidence. But before the
Income-Tax Authorities could rely upon it, they were bound
to produce it before the assessee so that the assessee could
controvert the statements contained in it by asking for an
opportunity to cross-examine the Manager of the Bank with
reference to the statements made by him. 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 the Manager who wrote
this letter on 18th February, 1955 must have been incharge
of the Madras Office on 16th October, 1946 so as to have
personal knowledge as to who remitted the amount of Rs.
1,07,350. The Revenue authorities ought to have called upon
the Manager of the Bank to produce the documents and papers
on the basis of which he made the statements contained in
his letter and confronted the assessee with those documents
and papers but instead of doing so, the Revenue authorities
chose to rely merely on the statements contained in the
letter and that too, without showing the letter to the
assessee. [728A-F]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2728 of
1972.
Appeal by Special Leave from the Judgment and Order
dated 22-2-1971 of the Bombay High Court in I.T.R. No.
76/63.
H. G. Advani, Ashok Advani Bar-at-Law, Hiranandan, Mrs.
Sheila Sethi and K. Balasubramaniam for the Appellant.
P. J. Francis and Miss A. Subhashini for the
Respondent.
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. 1,07,350 was remitted by the assessee from
Madras to Bombay and that it represented the undisclosed
income of the assessee. The assessee before us is the firm
of M/s. Kishinchand Chellaram and the assessment year with
which we are concerned is 1947-48, the relevant accounting
year being the year ending 6th April 1947. The original
assessment of the assessee for this assessment year was
completed long back, but it seems that some information was
received by the Income Tax Officer that a sum of Rs.
1,07,350 was remitted by the assessee from Madras by two
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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. Neither these two letters
nor their copies
723
appear to have been brought on record and it was common
ground between the parties that they were at no time
disclosed to the assessee and even now the copies of these
two letters which ought to be in the record of the Income
Tax Departments have not been produced before us. 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 sent by M/s.
Kishinchand Chellaram from Madras was received by us on 16-
10-46. 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." Though this letter of the Manager of the Punjab
National Bank Limited was on the record of the Income Tax
Officer, he did not disclose it to the assessee nor 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 said
to have been made by the assessee from Madras to Nathirmal
in Bombay. These two letters addressed by the Income Tax
Officer also make inquiries in regard to various other
matters besides the remittance of Rs. 1,07,350 and the
assessee replied to these inquiries by its letter dated 24th
March 1955 in which amongst other things it pointed out that
it was not able to trace any entry in its Madras books in
regard to this remittance of Rs. 1,07,350 indicating clearly
that no such remittance was sent by it from Madras to
Nathirmal in Bombay. There was no further communication from
the Income Tax Officer to the assessee until 2nd February
1955 when the Income Tax Officer once again addressed a
letter to the assessee reiterating that one telegraphic
transfer of Rs. 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 assessee reiterated by
its reply dated 9th February 1956 that it had once again
looked into its books of account but did not find any entry
in regard to the remittance of Rs. 1,07,350 and in the
absence of such entry, it was not in a position to say
anything further in the matter. Then again there was a lull
in the correspondence 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. 1,07,350 and to produce
relevant books of account and complaining that the assessee
did not seem to have given any reply
724
to his earlier letter dated 2nd February 1956. This
complaint was, of course, unjustified because the assessee
had replied to the earlier letter of the Income Tax Officer
by its letter dated 9th February 1956. But even so the
assessee once again reiterated in its reply dated 13th March
1957 that no amount of Rs. 1,07,350 was remitted by the
assessee from Madras and pointed out that Nathirmal was a
common name in the Sindhi community and requested the Income
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Tax Officer to kindly give his father’s 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. The
Income Tax Officer did not 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 on the ground that it
represented the concealed income of the assessee. The Income
Tax Officer observed in the order that the Punjab National
Bank Limited had stated that one telegraphic transfer of Rs.
1,07,350 was sent by M/s. Kishinchand Chellaram from Madras
and received by them on 16-10-1946, and "there was no reason
to doubt the banker’s statement that the amount was remitted
by M/s. Kishinchand Chellaram from Madras." It was also
stated in the order that the telegraphic transfer was
encashed by one Nathirmal who was identified by an officer
of the bank and whose address was the same as that of the
Bombay office of the assessee, and it was found from
assessee records that this Nathirmal was an employee of the
assessee in the relevant accounting year and, therefore, the
conclusion was irresistible that the telegraphic transfer
was sent by the assessee from its Madras office and encashed
by the assessee’s employee on its behalf in Bombay and since
it was not accounted for in the books of account it must be
held to be the undisclosed income of the assessee.
The assessee being aggrieved by the order of the Income
Tax Officer preferred an appeal to the Assistant Appellate
Commissioner. 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. 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 not 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 not possible for the assessee to meet
the case of the Revenue. The Appellate Assistant
Commissioner thereupon obtained from the
725
Madras office of the Punjab National Bank Limited a copy of
the telegraphic transfer application by which the amount of
Rs. 1,07,350 was remitted and this copy 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 pointed
out to the Appellate Assistant Commissioner that there were
two Tilok Chand’s working in the assessee’s 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 assessee
informed the Appellate Assistant Commissioner that the
whereabouts of Tilok Chand Thadani were not known and so far
as Tilok Chand Chellaram was concerned, he was then at Hong
Kong. 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 not M/s. K. Chellaram and that the remittance of Rs.
1,07,350 said to have been made by Tilok Chand was not on
behalf of the assessee nor was it sent to the assessee and
that its inclusion as undisclosed income of the assessee was
not at all justified. The Appellate Assistant Commissioner
however negatived these contentions of the assessee and held
that the remittance of the amount of Rs. 1,07,350 was by an
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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 not discharged, the
inclusion of the amount in the assessment of the assessee
was liable to be sustained. The Appellate Assistant
Commissioner accordingly rejected the appeal and confirmed
the assessment of the assessee.
The assessee thereupon preferred a further appeal to
the Tribunal but this appeal was also unsuccessful. 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 not produced
before the assessee nor was a copy of it given to the
assessee. 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
726
through their Madras office. This letter was admittedly
written by the manager of the Bank to the assessee in reply
to the assessee’s letter dated 7th March 1957 but obviously
it did not 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. The
Tribunal then proceeded to observe that:-
"The assessee was not 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. The assessee merely informed the Income Tax
Officer that it had nothing to do with this amount. It
would have been easy for the assessee to have the said
persons examined so as to show that the sum of Rs.
1,07,350 cannot represent any amount belonging to the
assessee. But for the reasons best known to itself it
did not choose to do so. By remitting the amount as
cash and by not bringing it into its books the assessee
cannot escape the consequences 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.
It would have been open to the assessee to establish
the contrary by showing that the bank’s statement that
the assessee did remit the amount is not correct and
thus displace the evidence on record, but it did not
choose to examine the bank officers with reference to
this aspect either. Therefore, this is a case where a
sum of Rs. 1,07,350 has been remitted by the assessee
as shown by the bank’s letter from Madras to its
employee in Bombay which has not been brought to books.
In the said circumstances, it is for the assessee to
explain the source for the fund and it cannot escape
the consequence by merely adopting an attitude of non-
co- operation."
The Tribunal accordingly held that the assessee had not
satisfactorily explained the source of the amount of Rs.
1,07,350 and the Income Tax Officer was therefore justified
in adding this amount as the undisclosed income of the
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assessee.
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:
727
"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 ?"
The Tribunal thereupon drew up a statement of the case
and referred the above-question to the High Court. The
entire evidence in the case was considered by the High Court
and taking the view that there was material evidence to
justify the finding that the amount of Rs. 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. The assessee thereupon
preferred the present appeal with special leave obtained
from this Court.
The sole question which arises for determination in the
appeal is whether there was any material evidence to justify
the findings of the Tribunal that the amount of Rs. 1,07,350
said to have been remitted by Tilokchand from Madras
represented the undisclosed income of the assessee. The only
evidence on which the Tribunal could rely for the purpose of
arriving at this finding was the letter dated 18th February
1955 said to have been addressed by the Manager of the
Punjab National Bank Limited to the Income tax Officer. Now
it is difficult to see how this letter could at all be
relied upon by the Tribunal as a material piece of evidence
supportive of its finding. In the first place, this letter
was not 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 not care to produce
it before the assessee or give a copy of it to the assessee.
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 not 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. It will therefore be seen that, even if we assume
that this letter was in fact addressed by the manager of the
Punjab National Bank Limited to the Income Tax Officer, no
reliance could be placed upon it, since it was not shown to
the assessee until at the stage of preparation of the
supplemental statement of the case and no opportunity to
cross-examine the
728
manager of the Bank could in the circumstances be sought or
availed of by the assessee. It is true that the proceedings
under the Income Tax law are not governed by the strict
rules of evidence and therefore it might be said that even
without calling the Manager of the Bank in evidence to prove
this letter, it could be taken into account as evidence. But
before the Income Tax Authorities could rely upon it, they
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were bound to produce it before the assessee so that the
assessee could controvert the statements contained in it by
asking for an opportunity to cross examine the Manager of
the Bank with reference to the statements made by him.
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. 1,07,350. What the Manager of the Bank wrote
in this letter could not possibly be based on his personal
knowledge and it does not appear from the letter as to what
were the original documents and papers from which he
gathered the information conveyed by him to the Income Tax
Officer. The statements contained in this letter addressed
by the Manager of the Bank to the Income Tax Officer were in
the nature of hearsay evidence and could not be relied upon
by the Revenue authorities. The Revenue authorities could
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 contained in his letter and confronted
the assessee with those documents and papers but instead of
doing so, the Revenue authorities chose to rely merely on
the statements contained in the letter and that too. without
showing the letter to the assessee. There is also one other
important circumstance which deserves to be noted. It
appears that when the letter dated 9th March 1957 was
addressed by the manager of the Bank to the assessee, a copy
of it was forwarded by the manager to the Income Tax Officer
and this copy contained 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. One only T. T. for Rs. 1,07,350 was received with
particulars as above. Mr. Nathirmal was identified by
Mr. B. N. Mallaya, the then Officer in our office."
729
This copy of the letter dated 9th March 1957 was obviously
in the record of the Income Tax Officer but it was not
disclosed to the assessee at any stage and according to the
Income Tax Officer, it was not traceable until the case came
back to him for evidence in connection with the preparation
of the supplemental statement of the case. 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
connection with supplemental statement of the case that it
was shown to the assessee for the first time. It is
difficult to understand how this copy 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 not 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. There is no explanation given by
the Revenue as to why these two important documents were not
traceable and they were not disclosed to the assessee. The
reason perhaps was, and this was the suggestion made by the
learned counsel appearing on behalf of the assessee, that
the Revenue authorities did not wish to give an opportunity
to the assessee to call the manager of the Bank for cross-
examination, lest the edifice which they wanted to construct
for taxing the assessee on the amount of Rs. 1,07,350 might
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be jeopardised. It is interesting to note that the
endorsement made at the foot of the copy of the letter dated
9th March 1957 sent to the Income Tax Officer clearly shows
that the Manager of the Bank was served by the Income Tax
Officer with a summons dated 5th March 1957 and one can
reasonably presume that the Manager of the Bank must have
appeared in answer to the summons before the Income Tax
Officer and given his statement. But no such statement has
been produced by the Revenue authorities nor are we told as
to what happened when the Manager of the Bank appeared in
obedience to the summons. It is impossible to believe that
the Manager of the Bank should have failed to appear before
the Income Tax Officer in answer to the summons and there is
no doubt that his statement must have been recorded. The
question then is, why has this statement been kept back by
the Revenue authorities ? Even if we assume that the Income
Tax Officer did not record the statement of the Manager of
the Bank, it is difficult to appreciate why he should not
have done so and probed into the matter further with a view
to finding out what was the basis on which the manager had
made the statement that the remittance was sent by the
assessee. We are clearly of the view that the letters dated
18th February 1955 and 9th March 1957 did not constitute any
material evidence which
730
the Tribunal could legitimately take into account for the
purpose of arriving at the finding that the amount of Rs.
1,07,350 was remitted by the assessee from Madras, and if
these two letters are eliminated from consideration, it is
obvious that there was no material evidence at all before
the Tribunal which could support this finding.
But even if these two letters dated 18th February 1955
and 9th March 1957 were to be taken into account, we do not
think they supply any reasonable basis for reaching the
finding that it was the assessee which sent the remittance
of Rs. 1,07,350. It is undoubtedly true that the Manager of
the Bank stated in these two letters that the amount of Rs.
1,07,350 was remitted by the assessee through the Madras
office of the Bank, but this statement which was obviously
not based on the personal knowledge of the manager, which
was not supported by any documents or papers produced by the
manager and in regard to which it was not known as to what
was the material on which it was based, was clearly belied
by the original application for remittance which was signed
by Tilokchand in his own name and not on behalf of the
assessee. The primary evidence before the Tribunal in regard
to the remittance of the amount of Rs. 1,07,350 was the
application signed by Tilokchand and this application
clearly showed that it was Tilokchand and not the assessee
which remitted the amount of Rs. 1,07,350 from Madras. There
can be no doubt that if the amount had been remitted by
Tilokchand on behalf of the assessee, he would have signed
the application on behalf of the assessee and not in his own
name. We fail to appreciate how, in the face of this primary
evidence showing Tilokchand as the person who remitted the
amount of Rs. 1,07,350 the Tribunal could possibly accept
the unsupported statement of the Manager of the Bank, based
on hearsay, that the amount was remitted by the assessee.
Unfortunately, the Revenue authorities did not produce
copies of the letters dated 14th January 1955 and 10th
February 1955 addressed by the Income Tax Officer to the
Manager of the Bank. Copies of these letters, if produced,
would perhaps have shown that the suggestion that the amount
of Rs. 1,07,350 was remitted by the assessee was made by the
Income Tax Officer and taking the cue from this suggestion,
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 10
the Manager of the Bank might have stated that the
telegraphic transfer of Rs. 1,07,350 was sent by the
assessee. It is to our mind impossible to hold, in the face
of the application for remittance signed in the name of
Tilokchand, that this amount was sent by the assessee and
the finding to that effect reached by the Tribunal must be
held to be unreasonable and perverse. What at the highest
could be said to be established by the material evidence on
record is that Tilokchand remitted the
731
amount of Rs. 1,07,350 from Madras and this amount was
received by Nathirmal in Bombay. Even if we accept that
Tilokchand and Nathirmal were employees of the assessee as
held by the Tribunal, the utmost that could be said is that
an employee of the assessee in Madras remitted the amount of
Rs. 1,07,350 to another employee in Bombay. But from this
premise it does not at all follow that the remittance was
made by the employee in Madras on behalf of the assessee or
that it was received by the employee in Bombay on behalf of
the assessee. The burden was on the Revenue to show that the
amount of Rs. 1,07,350 said to have been remitted from
Madras to Bombay belonged to the assessee and it was not
enough for the Revenue to show that the amount was remitted
by Tilokchand, an employee of the assessee, to Nathirmal,
another employee of the assessee. It is quite possible that
Tilokchand had resources of his own from which he could
remit the amount of Rs. 1,07,350 to Nathirmal. It was for
the Revenue to rule out this possibility by bringing proper
evidence on record, for the burden of showing that the
amount was remitted by the assessee was on the Revenue.
Unfortunately, for the Revenue, neither Tilokchand nor
Nathirmal was in the service of the assessee at the time
when the assessment was reopened and the assessee could not
therefore be expected to call them in evidence for the
purpose of helping the Revenue to discharge the burden which
lay upon it. We must therefore hold that there was no
material evidence at all before the Tribunal on the basis of
which the Tribunal could come to the finding that the amount
of Rs. 1,07,350 was remitted by the assessee from Madras and
that it represented the concealed income of the assessee.
We accordingly allow the appeal, set aside the judgment
of the High Court and answer the question referred by the
Tribunal in favour of the assessee and against the Revenue.
The Revenue will pay the costs of the assessee throughout.
S.R. Appeal allowed.
732