TMI Blog1967 (2) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... e came up for hearing before a Bench consisting of G. D. Khosla and Harnam Singh JJ. on March 24, 1955. After hearing the counsel for the parties, their Lordships opined that it would be necessary to call for a supplementary statement under section 66(4) of the Act, as the Tribunal had not given any finding as to whether the cheques, with which we are concerned in this case, were sent to the assessee by post and whether the assessee had given any directions in that regard to the Government of India. They, accordingly, called for a supplementary statement. The assessee, aggrieved by the order of the High Court, calling for a supplementary statement, took up the matter in appeal to the Supreme Court in Zoraster Co. v. Commissioner of Income-tax. The Supreme Court dismissed that appeal on August 17, 1960. Thereafter, the Appellate Tribunal submitted the supplementary statement called for, on March 18, 1961. On receipt of the supplementary statement, the case was numbered as Income-tax Reference No. 7 of 1961. The facts material for the purpose of answering the question submitted to this court are these : The assessee is a firm consisting of three partners, namely, Sohanmal, Mehtab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see sent its bills. One of the columns in those bills read as follows : -------------------------------------------------------------------------------------------------------------------------------------------------- " (In words) Rupees Total : ........................ (to be made out to the nearest rupee) -------------------------------------------------------------------------------------------------------------------------------------------------- One anna receipt Please pay by stamp on original cheque to Self Bank Received copy only --------- on ----------------- payment Bank Treasury at ........................... Contractor's Contractor's signature. name in full. " -------------------------------------------------------------------------------------------------------------------------------------------------- After the receipt of the goods, the Government of India made payments to the assessee by means of cheques. Those cheques were received by the assessee at Jaipur. Those cheques were drawn on the Reserve Bank of India at Bombay. S. Zoraster Co. collected the moneys due under those cheques at Bombay. It is not established how those cheques we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact, the cheques in question were cashed at Bombay, is not at all relevant. Dealing with that aspect, this is what S. R. Das J. (as he then was) observed : " The assessee contends that on the facts found by the Tribunal, it must be held that it received the cheques in full and unconditional discharge of its claims for the price of goods sold and delivered by it to the Government and not conditionally subject to realisation. That a sum of money may be received in more ways than one cannot be doubted. It may be received by the transfer of coins or currency notes or a negotiable instrument which represents and produces cash and is treated as such by businessmen. (See per Lord Lindley in Gresham Life Assurance Society v. Bishop). Reference in this connection may also be made to the decisions in Commissioner of Income-tax v. Kameshwar Singh ; Raghunandan Prasad v. Commissioner of Income-tax ; and Commissioner of Income-tax v. Maheshwari Saran Singh. Learned Solicitor-General does not dispute this proposition but he argues that, in the absence of any agreement, express or implied, to the contrary, a payment by a negotiable instrument is always understood to be conditional. He ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, in keeping with the usual practice of Government departments. Therefore, we have in this case, according to the learned Solicitor-General, nothing more than a term in the contract for payment by cheques and the status of the drawer and drawee of the cheques. These two circumstances, so submits the Solicitor-General, are not sufficient to establish the fact of the acceptance of the cheques as unconditional discharge. He contends that, in the absence of an express agreement, it is only when the creditor elects to take a bill or cheque having it in his power to obtain payment in cash, that is to say, takes a bill or cheque by choice or preference instead of cash that an agreement may be implied that he took it as an unconditional and absolute payment of the debt. (Robinson v. Henry Reid and Anderson v. Hillies). Such cases must be rare, for the creditor is not ordinarily likely to give up the advantage of having a double remedy, namely, one on the bill or cheque and the other, on dishonour of the bill or cheque, on the original cause of action. He points out that in this case there is no finding of any special agreement in this behalf and, therefore, submits the learned Solicitor-G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervations made by the Supreme Court in Zoraster Co. v. Commissioner of Income-tax, referred to earlier, should be considered as indicating that the payments with which we are concerned in this case were made within the taxable territories. We are unable to accept that contention. In that case, all that the Supreme Court had to consider was, whether the High Court was justified in calling for a supplementary statement on the facts of the case. It negatived the contention of the assessee that the High Court erred in law in calling for the supplementary statement in question. For pronouncing on the question before it, it had to go into the facts of the present case as well as on the law bearing on the subject. We do not think that in that case the Supreme Court, in any manner, differed from the views expressed in Ogale Glass Works' case. Shri Kapur next placed reliance on a decision of the Supreme Court in Commissioner of Income-tax v. Patney Co. We fail to see what assistance the revenue can get from the said decision. Therein, it was found as a fact that the assessee had required its customers to make all payments at Secunderabad, which was outside the taxable territories. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ier, in the instant case, there is no evidence to show that those cheques were sent by post. Hence, the question of assessee's consent, implied or otherwise, does not arise for consideration. For these reasons, we do not think that the rule laid down by the Supreme Court in Shri Jagdish Mills' case has any bearing on the point under consideration. It may be, or we may go further and say, it is likely that the Government of India was sending cheques to the assessee through post. But the fact remains that there is no such finding by the Tribunal. The revenue has failed to place any material before the Tribunal to prove that the cheques in question were being sent by the Government through post. The burden of proving that the assessee received any income, gain or profit, within the taxable territories is on the revenue. It cannot ask the court to presume facts and circumstances in its favour. The factum of the cheques having been sent through post must be proved. The contention of Shri Gopal Singh, learned counsel for the assessee, that the circumstance that the cheques were cashed at Bombay is irrelevant, is well founded. The realisation of the cheques at Bombay does not alter th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
