9911796707
TMI Blog1981 (9) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... being Rs. 4,45,000 representing the assessee's undisclosed income. In the reassessment proceedings the ITO asked the assessee's representative to furnish the present addresses of the hundi bankers for verification. He replied on 6th Nov., 1978 that the addresses were already furnished at the original assessment and filed a copy of letter dt. 24th Dec., 1969 and the sworn copy of letter dt. 24th Dec., 1969 and the sworn statement of the managing partner late M.K. Meeran Sahib recorded on 12th Sept., 1966 when he was alive. The letters issued by the ITO to the 12 hundi bankers at the addresses furnished by the assessee were returned unserved by postal authorities with an endorsement "Left". The assessee was asked to furnish the present addresses of the 12 impugned hundi bankers, as also of two others whose addresses were not furnished originally the details of which were as under: Sl. No. Dated Name of banker Amount. . . . Rs. 1. 8-12-1960 Seth Thankurlal Tikkamdos, 210, NSC . . . Bose Rd., Madras. Rs. 50,000 . . 8-12-1960 -do- Rs. 50,000 1,00,000 2. 8-12-1960 Seth Hariram Ramdos, 7-Narayana Chetty Lane, Madras-3 50,000 3. 8-12-1960 Vasudev Biharilal, 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under: "The original assessment in this case was completed on 14th March, 1962. The order sheet entry dt. 6th March, 1962 inter alia reads as under: 'The firm has borrowed large amounts from Multani bankers and these have been advanced to the allied firm of Saheb Trading Co. The net result is a loss as the interest payments exceed receipts. The interest amounts are deducted even at the time of lending by the bankers and consequently the interest paid will be allowed in full. Interest receipts are only for the proportionate period up to 31st March,1961. I have obtained full address of the creditors to whom interest has been paid. Office will please issue IT 93 slips furnishing the loan amounts taken and the interest paid. 3. In the proposal for reopening the assessment under s. 147 submitted to the CBDT, the ITO has stated as under: 'The original assessment for 1961-62 was completed on 14th March, 1962 on a total loss of Rs. 21,056. Later while examining the account for the asst. yr. 1964-65 and 1965-66 it was found that the assessee-firm had indulged in Hawala Hundi transactions during the asst. yr. 1962-63. Peak credit on account of hundi loans during the year 1962-63 amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o all the affairs of the firm. Two of the partners are affairs of the firm. Two of the partners are ladies. The 4th partner Sri M.K. Mohamed Hussain is almost always in Ceylon. The working partner Sri M.K. Meeran Sahib had appeared before you and had given a sworn statement on 12th Sep., 1966. Unfortunately he died in his 44th year on 2nd Sept., 1967 all of a sudden. Even before his death this firm had been dissolved, i.e. w.e.f. 31st March, 1967. Now the position is that the remaining partners are absolutely in the dark since Sri M.K. Meeran Sahib was attending to every item of the business of this concern. He was dealing with all these hundi transactions parties directly and he has also submitted before you that he could identify all the Saits. Now that he is no more it may not be possible for the remaining partners to bet at these same parties. Moreover, the entire loans to these Hundial parties were discharged by the working partner while he was alive from out of the amounts received under the National Defence Remittance Scheme by the same partners and their relations. In the circumstances of the case, we feel that it will be better to purchase peace by coming to some settlem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is understood that there will be no penal action whatsoever on any account for any of these years. (5) It is understood that the amounts will not be capitalised. (6) For payment of tax to be levied time will be granted in easy instalments. We submit once again that we are agreeing for these terms and conditions only with a view of purchasing peace to avoid all legal litigations and complications. This appeal coming to you from the lady partners and the minor children will be hope evoke the sympathy and consideration of that Begign Government. Thanking you, Sankarankovil, Yours faithfully, 25th March,1968 Sd/- Sabooral Beevi. (7) The conclusion of the ITO that the Hundi loans are mere hawala transactions and not genuine loans is based on certain confessional statements made by the Hundi Bankers before the ITO, Central Circle VI. Madras. The ITO in his report dt. 29th Sep., 1973 to the CIT regarding proposal under s. 147(a) has stated that no specific enquiry or examination was conducted by the ITO, Central Circle IV, Madras regarding the Hundies in this case. The confessional statements were of a general nature. I have gone through some of the confessional statements, mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ready on record, the ITO was justified in resorting to the provisions of s. 147(a). Since the assessee had not disclosed fully and truly all the material particulars necessary for the assessment. In reply the ld. Counsel for the assessee submitted that consequent on the death of the managing partner Shri M.K. Meeran Sahib who died on 2nd Sept., 1967 the surviving partners not being in the full knowledge of the affairs of the firm had offered the settlement with a view to purchase peace even though "each and every item of hundi loan was a genuine one", as stressed in the settlement petition itself and that the intention in offering the settlement was only to avoid protracted legal proceedings and this settlement petition did not contain any admission of bogus hundi loans. 4. We have considered the rival submissions and are unable to find any merit in the Revenue's appeal. It is an admitted position that the ITO had initiated reassessment proceedings under s. 147(a)(with the approval of the CBDT)only because of the general statement given by the hundi bankers that they were indulging in hawala transactions. Also no material has been placed before us to show that any of the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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