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TMI Blog1972 (6) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income-tax Officer called upon her to explain these alleged loans. In answer to that requisition the assessee filed her account books. They appear at exhibit " B " in which there appear entries of borrowings from as many as ten different persons said to be financiers or bankers of hundi loans. The Income-tax Officer decided to check these alleged borrowings. Therefore, he summoned the 10 persons named, under section 131 of the Income-tax Act, but when the summonses were sent by registered post they were returned with the remark " Not claimed " even though they were directed to the addresses given by the assessee herself, except in one case, namely, of the financier Shamdas Amarchand. This alleged financier, however, failed to appear before the Income-tax Officer in response to the summons as required. The Income-tax Officer put these facts on record by his letter dated 2nd February, 1963 (part of exhibit " C " collectively) and required the assessee to produce those financiers. This was the first phase in all these transactions that took place in this case. Until this letter was received the assessee had only filed an account which disclosed that the transactions of borrowings w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transactions of borrowings going to make up a sum of Rs. 95,000 reflected in her account, were not by her directly but by her solicitor, the said Shantikumar. Secondly, by producing the letter of the solicitor for the first time the assessee also disclosed that the solicitor had arranged a sum of Rs. 50,000 through Messrs. Nichani & Co., hundi brokers of Bombay. Expectedly, the Income-tax Officer called upon the assessee by a letter of 8th March, 1963, to produce the parties from whom she had borrowed the money with their books of account " with the help of her solicitor ". He pointed out that he had reason to believe that the hundi bankers from whom she had borrowed the money were not genuine parties and that on her failure to produce the parties the entire amount of the loans will be taxed in her hands as income from undisclosed sources. At this stage it appears that the assessee's solicitor, Shantikumar Gandhi, appeared before the Income-tax Officer and informed him that " he would contact the brokers regarding producing the financiers ". This would appear from the reply of the chartered accountant on behalf of the assessee dated 11th March, 1963, to the Income-tax Officer. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e summons to the said Shri Kanayalal Hiranand, asking him to produce his books of accounts, duplicate of his bills for brokerage, his hand pass book and certified copy of a statement or Statements referred to by him in reply to question No. 7 ". On 24th October, 1963, however, the same chartered accountants on behalf of the assessee wrote to the Income-tax Officer attacking the evidence of Kanavalal Hiranand saying that " the testimony of this witness should be entirely discredited since he had lied about several material facts ". On 21st November, 1963, again similarly the same chartered accountants on behalf of the assessee wrote a long letter to the Income-tax Officer attackthe evidence of Kanayalal Hiranand and enclosed some correspondence which passed between the latter and the assessee's solicitor and requested the Income-tax Officer to disbelieve Kanayalal. It is in this context that the statement given on oath by the solicitor, Shantikumar, on July 17, 1963, October 3, 1963, and in 1964 and 1965 (the dates are not given in the paper book) have to be read. The Income-tax Officer and the Tribunal both disbelieved his evidence. Shantikumar, the solicitor, has stated that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 the same was deposited in our clients' account with the Central Bank of India Ltd., and as regards Rs. 50,000 there is no documentary evidence." Even as regards the amount of Rs. 30,000 the third item (with which we are not really concerned here) he admitted that there was no entry in his books of account. To question No. 28 : " Can you establish the fact that this money passed through you ? " his answer was : " No evidence except my oral evidence ". He was asked whether the transactions of Rs. 30,000 and Rs. 30,000 were not passed through his books particularly when all other transactions had been entered in his clients' account and his answer was : " It is not customary to enter any transactions in our books of account." As regards Rs. 45,000 the amount was to be paid to M/s. Tolani & Co. and the said firm asked for a cheque and that is why the amount was entered in our books of account. As regards signing the hundi papers he has stated that the assessee signed hundis for Rs. 50,000 and Smt. Dinanath Mangeshkar for Rs. 45,000. He was asked later on whether he could produce the hundi brokers concerned for the examination of their account books by the Income-tax Officer. His an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce and generally all transactions were put through Hariram or Khiaram ". He has not said in so many words that Hariram and Khiaram were partners of Nichani & Co. but suggested vide answer to question No. 5 that they had some sort of a representative capacity on behalf of Nichani & Co. It was put to him that the brokerage slips were not signed by anybody on behalf of Nichani & Co. and his answer was : " Generally the brokerage slips are never signed " He has stated that Kanayalal was not telling the truth. Thereafter, Kanayalal was again examined and he has denied that Hariram and Khiaram were his partners though he knows Hariram and Khiaram. They are brokers doing business separately in the same building in which Nichani & Co. are situated, still he did not have in the past nor has in the present any person like Hariram or Khiaram working on his behalf. It appears that before the Appellate Assistant Commissioner, Shantikumar was also further examined with reference to the services he rendered to the assessee and he stated that the nature of his services were legal and financial and when it was put to him that as a solicitor he could not render fiancial service he stated that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... borrowed. What is still more surprising is that the name of Nichani & Co. through whom this amount was borrowed nowhere appears in the account books of the solicitor. (4) Furthermore, the account books of the solicitor show that Rs. 45,000 were borrowed on 23rd August, 1960, from the five parties mentioned in the account and on the same day Messrs. Tolani & Co. had sold to the assessee the flat in Prabhu Kunj. (5) Then according to the solicitor's account a sum of Rs. 45,000 was received from Smt. Dinanath Mangeshkar in repayment of the loan borrowed from the five parties and on the very next day, i e., 14th October, 1960, the five parties were paid off the sum of Rs. 45,000. This is so far as the solicitor's accounts are concerned, but when one turns to the assessee's accounts, exhibit " B ", it is shown in the first five eitries the state of the accounts regarding a sum of Rs. 45,000. The persons from whom the amounts are shown to have been borrowed are the same a, the five persons mentioned in the account of the solicitor, the date on which the amount is borrowed is also shown as 23rd August, 1960, in each case, but the date of repayment is shown as 19th October, 1960, whereas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n where these amounts were obtained it was the solicitor who disclosed that they were obtained through the brokers, Nichani & Co., and it was he who furnished the address which was communicated by the assessee to the Income-tax Officer. When, however, the assessee summoned the proprietor of Nichani & Co., namely, Kanayalal, the latter totally denied having anything to do with these transactions or having these alleged loans. It was after Kanayalal made this statement that the solicitor was further examined and it was at that stage that the solicitor came up with the names of Hariram and Khiaram as being the persons who dealt with him on behalf of Nichani & Co. Till then the names of these two persons were totally undisclosed. Thus, the solicitor also improved the story from time to time as occasion demanded. There is absolutely no evidence on the record to show, except the sole word of Shantikumar that Hariram and Khiaram had any connection with Nichani & Co. either as partners or in any other capacity. What is more, there is no challenge to the statement of Kanayalal that Nichani & Co. is his sole proprietary concern. Though he mentioned the names of Hariram and Khiaram as given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that he procured finances from certain unknown brokers who in spite of the best efforts of the department are still not found and could not be examined and that he lent himself to such transactions does not speak much in his favour. In some he has merely lent his name and official position as a solicit or to cover up the shady transactions of the assessee. It is between such a person and Kanayalal on the other hand that the Tribunal had to choose and in the circumstances the Tribunal decided to believe Kanayalal's story and disbelieve that of Shantikumar Gandhi (vide paragraph 19 of their order). It is clearly a finding based upon a pure appreciation of evidence, and on the evidence unassailable. Mr. Palkhivala urged that Shantikumar's evidence is supported by documentary evidence and, therefore, ought to be believed. 'The documentary evidence consists of the alleged hundis and his books of account. We have already said enough to show that his own account books stand discredited and in any case do not support the story which he and his client, the assessee, have ultimately put forth before the Income-tax Officer. So far as the hundis are concerned the mere existence of these hundi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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