TMI Blog1980 (9) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the year ending 6th April,1947. The original assessment of the assessee for this assessment year was completed long back, bat it seems that some information was received by the ITO that a sum of Rs. 1,07,350 was remitted by the assessee from Madras by two telegraphic transfers through the Punjab National Bank Ltd. and the ITO, therefore, addressed two letters dated 14th January, 1955, and 10th, February, 1955, to the manager of the Punjab National Bank Ltd. making inquiries about this remittance. Neither these two letters nor their copies 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 IT. dept. have not been produced before us. The manager of the Punjab National Bank Ltd. replied to the inquiries made by the ITO, by his letter dated 18th February, 1955, in which he stated : " One 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. " Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom Madras and pointed out that Nathirmal was a common name in the Sindhi community and requested the ITO 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 ITO did not give any further information to the assessee and proceeded to make an order of reassessment under s. 34 of the Indian I.T. 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 ITO observed in the order that the Punjab National Bank Ltd. 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 October 16, 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 the assessee's records that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yee of the assessee from Madras to another employee la 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 AAC, 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 AAC and the Tribunal, and an extract of it was given in the order of the AAC, 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal 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? " 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 Tilok chand 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 this 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 Tilok chand from Madra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he absence of any evidence to that effect, that the 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 ITO. The statements contained in this letter addressed by the manager of the bank to the ITO were in the nature of here say 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 appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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 ITO 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 ITO 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 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 the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial 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 we accept 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 assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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