1968 (1) TMI 23 - HC - Income Tax

Evidence - Whether the copy of trial balance was admissible in evidence u/s 54 of IT Act - Held yes - suit filed - limitation

Issues Involved:
1. Maintainability of the suit without a succession certificate.
2. Non-production of the promissory notes.
3. Allegation of discharge of the promissory notes.
4. Admissibility of the income-tax return (Exhibit A-1).
5. Whether Exhibit A-1 constitutes an acknowledgment under Section 19 of the Limitation Act, 1908.

Detailed Analysis:

1. Maintainability of the Suit Without a Succession Certificate:
The defendants contended that the plaintiff could not maintain the suit without a succession certificate, citing Section 214(1)(a)(iii) of the Indian Succession Act. However, the court noted that this provision applies only to persons claiming on succession. Since the plaintiff filed the suit as a receiver appointed by the court, the requirement of a succession certificate was inapplicable. The court referenced the Calcutta High Court decision in Harihar Mukherjee v. Harendranath Mukherji, which allowed a receiver, even if an heir, to file a suit without producing a succession certificate. Additionally, the lower court's direction for the plaintiff to execute an indemnity bond safeguarded the judgment-debtor's interests.

2. Non-Production of the Promissory Notes:
The defendants argued that the suit was not maintainable due to the non-production of the promissory notes, invoking Order 7, Rule 16 of the Civil Procedure Code. The court outlined two requirements under this rule: proving the loss of the negotiable instrument and providing an indemnity. The plaintiff satisfied the indemnity requirement as directed by the lower court. Regarding the loss of the promissory notes, the plaintiff consistently claimed that the notes were with her daughter-in-law, who was colluding with the defendants. Despite efforts, including issuing notices and filing applications, the plaintiff could not secure the promissory notes. The court found the plaintiff's explanation credible and consistent, supported by witness testimony. The court concluded that the plaintiff had satisfactorily established the loss of the promissory notes and rejected the defendants' objections.

3. Allegation of Discharge of the Promissory Notes:
The second defendant claimed that the promissory notes were discharged through various payments and set-offs. However, the court found the evidence for these claims unsatisfactory and unreliable. The second defendant failed to produce the discharged promissory notes, and the explanations provided were inconsistent and lacked credibility. The court noted significant discrepancies in the second defendant's statements and the absence of corroborative evidence. Consequently, the court rejected the discharge claim and upheld the lower court's conclusion.

4. Admissibility of the Income-Tax Return (Exhibit A-1):
The defendants contended that Exhibit A-1, a trial balance-sheet enclosed with the income-tax return, was inadmissible under Section 54 of the Income-tax Act, 1922. However, the court noted that the objection was not raised in the lower court, and the document was marked by consent. The second defendant himself referred to Exhibit A-1 in his evidence, indicating a waiver of any privilege. The court emphasized that Section 54(1) does not prohibit the admissibility of such documents but only prevents courts from requiring public servants to produce them. Since Exhibit A-1 was obtained by the third defendant, a partner of the firm, and not from the income-tax department, the court found no basis for the objection. The court also referenced relevant case law supporting the admissibility of such documents when obtained by a partner.

5. Whether Exhibit A-1 Constitutes an Acknowledgment Under Section 19 of the Limitation Act, 1908:
The plaintiff argued that Exhibit A-1 constituted an acknowledgment of the debt, thereby extending the limitation period. The court examined the requirements under Section 19, emphasizing that the acknowledgment must relate to a present subsisting liability. The court referenced Supreme Court decisions affirming this principle. The court found that the balance-sheet in Exhibit A-1, signed by the second defendant on 12th December 1957, acknowledged the debt as subsisting. Citing relevant case law, the court concluded that the date of signing the balance-sheet started a fresh period of limitation, making the suit filed on 6th September 1960 timely.

Conclusion:
The court dismissed the appeal, upholding the lower court's judgment in favor of the plaintiff. The suit was deemed maintainable without a succession certificate, the non-production of the promissory notes was satisfactorily explained, the discharge claim was rejected, Exhibit A-1 was admissible, and it constituted an acknowledgment under Section 19 of the Limitation Act, 1908. The appeal was dismissed with costs awarded to the contesting plaintiff-respondent.

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