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TMI Blog2003 (5) TMI 210X X X X Extracts X X X X X X X X Extracts X X X X ..... plaint is said to have informed the Deptt. that the payment paid to three companies was in fact withdrawn from their bank account and, thereafter paid back to the assessee. In this background it was informed that the payment of commission was not genuine. Consequent to the receipt of information, proceedings under section 148 were initiated and the statement of one Mr. M.K. Meattle who as stated above are the common MD of the three companies referred to above, was recorded. 2. Apart from the statement of Mr. Meattle, the statement of another person, namely, Mr. A.K. Jhunjhunwala who is stated to be the Chartered Accountant and claimed to be relative of Mr. M.K. Jajodia the MD of the assessee company was also recorded. The gist of the statement of these two persons were that the payment of commission to these three companies, namely EIP, TIP and BCP was not genuine and the basis as to how commission was not genuine was explained by these persons. In their statement recorded these persons explained that the amount of cheques for commission were deposited in the bank account(s) of the three companies and, thereafter, the amounts were withdrawn and paid back to Mr. Jajodia. During th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. Having lost at two places the assessee filed appeals before this Tribunal for the 3 assessment years separately which appeals of the assessee were disposed of by this Tribunal vide order dated24th December, 1993with the following observations:-- "We have carefully considered rival submissions of the parties. We have also gone through request of the assessee dated13-3-1990filed before the Assessing Officer seeking time to cross-examine Shri Meattle. In our considered opinion, the Assessing Officer on peculiar facts of the case should have granted some more lime to assessee to gather material needed for proper cross-examination of Shri Meattle. The request made appears to be bona fide and should have been accepted. We further find from the record that assessee raised a grievance in its written submissions to the CIT(A) that reasonable opportunity was not provided by the Assessing Officer and the same be now provided. The aforesaid request should have been accepted to meet the ends of justice; but as already noted, learned CIT(A) rejected the request and confirmed the disallowance. It is thus clear that disallowance of commission in the three years is mainly based on the state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pires that they were asked to cross-examine Mr. Jhunjhunwala. On being asked by the Assessing Officer to cross-examine Mr. Jhunjhunwala, they categorically refused to cross-examine on the ground that he was stranger to the transaction and without questioning Mr. Meattle there was, according to the assessee, no useful purpose is going to be served by cross-examining Mr. Jhunjhunwala and in this background they declined to cross-examine Mr. Jhunjhunwala. Mr. Meattle any how did not turn up till4 PM. Before the Assessing Officer, the counsel for the assessee stated that they cannot wait for long for Mr. Meattle to appear and in this background left the office of the Assessing Officer at4.05 PM. From the facts on the accord it transpires that as far as Mr. Meattle was concerned, the summons sent to him at his last known address was received back unserved. As the summons were received back unserved the Assessing Officer made a request to the DDI (Inv.), Bombay to trace these witnesses and ask them to attend before the Assessing Officer for the purpose of cross-examination. Anyhow before the dates were fixed for cross-examination which was27th February, 1996the ADDI (Inv.),Bombayinformed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer the entire proceedings emanating from the order of the Assessing Officer by which he had made the reassessment to the order of the CIT(A) and so on and so forth is a nullity and void ab initio. Mr. Ganeshan further contended that in this background the original assessment made under section 143(3) needs to be confirmed. In support of his contentions Mr. Ganeshan relied upon various judgments:-- 1. Bhopal Sugar Industries Ltd. v. ITO [1960] 40 ITR 618 (SC) 2. Dwarka Nath v. ITO [1965] 57 ITR 349 (SC) 3. C. Vasantlal Co. v. CIT [1962] 45 ITR 206 (SC) 4. Dhakeshwari Cotton Mills v. CIT 1955 SCR 941 (SC) 5. CIT v. East Coast Commercial Co. Ltd. [1967] 63 ITR 449 (SC) 6. Chuharmal v. CIT [1988] 172 ITR 250 (SC) 7. Vimal Chandra Golecha v. ITO [1982] 134 ITR 119 (Raj.) 8. Addl. CIT v. Jay Engg. Works Ltd. [1978] 113 ITR 389 (Delhi) 9. STO v. Uttareswari Rice Mills [1975] 89 ITR 6 (SC) 10.StateofMysorev. Shivabasappa Shivappa Makapur AIR 1963 SC 375 11. M.K. Thomas v. State ofKerala[1977] 40 STC 278 (Ker.) 12. State ofKeralav. K.T. Shaduli Yusuff [1977] 39 STC 478 (SC) 13. Mahindra Nath Chatterjee v. Collector of Central Excise 1977 Tax LR 1754 (Cal.) 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicating authority to determine and not for the parties to decide. The ld. DR submitted that whenever a witness is produced his testimony is either to be accepted or rejected. The submission of the ld. DR was that if the testimony is not dislodged by cross-examination it has to be taken as correct which is the case here. Having not done so, the ld. DR contended that it does not lie in the mouth of the assessee that a statement cannot be read in. The ld. DR pressed into services in support of his arguments the provisions of sections 137 and 138 of the Evidence Act. The ld. DR contended that though the provisions of Evidence Act are not applicable, but the principles so led in the Evidence Act can be applied. The submission of the ld. DR was that the recording of the statement which is called Examination-in-Chief and an opportunity to cross-examine fall within the ambit of the Evidence Act. The assessee having not availed of the opportunity to cross-examine the consequences so enunciated in the Act and the law laid down by various court that the statement will be read as a whole to be correct shall be attracted. Referring to the non-availability of Mr. Meattle, the ld. DR would conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions and no others. After having drawn our attention to the section 33 of the Evidence Act and also to the fact that the assessee had been granted an opportunity in the earlier stages of the proceedings to cross-examine, having not availed of the same, it is the assessee who is to be blamed and suffer the consequences of the statement made. The ld. DR in support of his contention submitted that though the Evidence Act in turn does not apply but the principles enunciated therein apply. The ld. DR would contend that to cover up such like situations, the principles of the Evidence Act need to be adopted otherwise Jot many good cases shall fail because there are no provision in the Income-tax Act which covers such like situations. 14A. Mr. Ganeshan in rejoinder reiterated the submissions made earlier. 15. We have heard the parties and taken ourselves through the record. Though the issue in this case is very short, but it has taken 20 years already in the corridors of tax authorities, without attaining any finality. We, therefore, feel that the issue must attain its finality. In this background when we examine the issues involved in these appeals, we find that they revolves around t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m. He said that M/s.Rogerswill give a business of Rs. 1 crore commission and my hawala charges of 1% shall be paid at the time of final check of Roger to any of my companies. He and myself used to come toDelhiby morning flight of6 AMand used to go by evening flight together and these can be verified from the Indian Airlines records. Regarding bank A/cs I opened a current A/c inPNB Barakhamba Road,New Delhiand SBI, Kasturba Gandhi Marg,New Delhiof M/s. Excavator M/s. Triveni and the A/c of M/s. Bahri Co. was opened in Union Bank ofIndia, Church Gate Branch,Bombay. M/s. Roger also had a/c in all these three banks named above. I do not remember the A/c No. because my records were destroyed in the collapse of Akashdeep buildings on 5th of August, 1983 when the entire building collapsed. In this premises all these three companies had branch office. The exact amount of commission received by my companies can be obtained from my bank account which were specifically opened for the purpose of adjustment as staled above. The modus operandi was Mr. A.K. Jhunjhunwala used to take a blank signed cheque from me and fill up the figure by his own handwriting as well as on the pay in slips for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... --------------- 21,86,041.75 --------------- (2) M/s. Triveni International Productions (P.) Ltd. Ch. No. Date Bank Amount 508887 23-7-1981 SBI, New Delhi 17,10,894.08 508891 12-8-1981 SBI, New Delhi 16,19,268.40 --------------- 33,30,162.48 --------------- 657160 16-3-1982 11,45,982.90 --------------- (3) M/s. Bahri Co. (P.) Ltd. Ch. No. Date Bank Amount 412054 19-10-1981 UBI, Bombay 7,00,000.00 412055 19-10-1981 UBI, Bombay 3,47,810.60 --------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counts in the three banks, i.e., PNB, Barakhamba Road, SBI, KG Marg and UBI, Church Gate, Bombay of the three companies i.e., EIP, TIP and BIC were opened and in all these three bank branches M/s. Rogers had its accounts. Mr. Meattle also in his statement had explained that the working arrangement which, according to him, was that Mr. Jhunjhunwala used to take blank signed cheque from him and fill up the figures by his own handwriting. Mr. Meattle admitted that the paying slip for depositing the cheques issued byRogersused to be filled in by Mr. Jhunjhunwala. Mr. Meattle confirmed that the cheques issued byRogersfor. commission were deposited by Mr. Jhunjhunwala himself. Mr. Meattle admits that the three bank accounts of his companies were opened in the same bank whereRogershad its account for the simple reason that there is no clearing, but only a transfer entry. Mr. Meattle explained that the blank signed cheques issued by him from his companies which were available with Mr. Jhunjhunwala were utilized and the amounts were withdrawn by cash and the cash was paid to the assessee. From the perusal of the above statement it is also clear that Mr. Meattle had admitted that he was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saction here atBombay? Ans. No. Qn. 8. Have you even helped M/s. Roger Enterprises Pvt. Ltd.,Delhiin doing any banking transactions such as deposit or withdrawal of cash/cheque atBombayor in some bank branch inBombay? Ans. Yes, at the instruction of Shri M.K. Jajodia. Qn. 9. How did Mr. M.K. Jajodia give instruction to you? Did he write to you in a letter form? Ans. Mr. M.K. Jajodia give instruction on phone. Qn. 10. Did he talk to you on phone fromDelhior fromBombay? Ans. Since it's very old therefore I don't remember. Qn. 11. What did you do exact at the instruction of Shri Jajodia ? Did you deposit or did you withdraw? Ans. Some cheque was deposited and cash was withdrawn. Qn. 12. The cheque was deposited and cash was withdrawn in which Account? Ans. It was neither my account nor Jajodia's account. It was some third account. Qn. 13. How did you withdraw the cash amount from the third party's account? Did you have any authority to withdraw the same? Ans. I was handed over a bearer cheque by one of the man of Shri M.K. Jajodia and I withdrew the cash amount and handed over to that man as per the telephonically instructions of Shri Jajodia. Since it was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve two cheques. Qn. 28. Did you yours use these two cheques for the withdrawal of cash or not? Ans. I can't say with certainty but if I am shown the back side of the cheque, I can confirm. Qn. 29. Have you ever withdrawn any money from the Ale of M/s. Roger Enterprises Pvt. Ltd. at Union Bank ofIndia, Church Gate,Bombay? Ans. I don't think so. But there was one loan transaction through cheque with A.K. Jhunjhunwala HUF. Qn. 30. A.K. Jhunjhunwala HUF had taken loan or given loan fromlto M/s. Roger Enterprises Pvt. Ltd.? Ans. I can verify and I shall let you know. Qn. 31. Do you know one Shri M.K. Meattle? Ans. Yes. Qn. 32. What is your relation with him? How do you know him? Ans. No relative. I met him in some party. Qn. 33. Was he involved in any way with the accounts from which you withdraw cash? Ans. Yes. The account must be his account. Whatever has been stated above is true to the best of my knowledge and belief. I have given the statement without any threat, coercion or force. Sd/-XX 30-11-1990 (A.K. Jhunjhunwala) Before me. Sd/-XX 30-11-1990 (Abhay K. Sinha) ADIT (Inv.) HQ-II, Aayakar Bhawan,Bombay" Statement under section 131 "St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposited into the Ale of M/s. Triveni International Productions Pvt. Ltd. on the backside, the cheque No. 305899 of SBI Kasturba Gandhi is written. Can you identify the handwriting used here? Ans. This is in my handwriting. I have filled in this pay-in-slip. Qn. 10. This pay-ill-slip is for depositing cheque in the A/c. of M/s. Triveni International Products Pvt. Ltd. Whose A/c is this? How did you fill in this name? Ans. I don't know whose about M/s. Triveni International Products Pvt. Ltd., but since I was given a bearer cheque by Shri M.K. Jajodia or by Shri Loknath (of M/s. Rogers Enterprises Pvt. Ltd.) which was blank and signed by signatory of M/s. Triveni International Products Pvt. Ltd. I was asked to fill in the same name for depositing a cheque (A/c payee) issued by M/s. Rogers Enterprises Pvt. Ltd. into the A/c of M/s. Triveni International Products Pvt. Ltd. and then using the blanked signed cheque to withdraw the cash from the same A/c. And as I have already stated earlier, I was instructed by Shri Jajodia to withdraw the cash and handover to him, which I did. Qn. 11. I show you the photocopies of following: (i) Cheque No. B/A06/50 399452, SBI,Kasturba Gandhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id statement reveals that Mr. Jhunjhunwala knows the existence of M/s. Roger Enterprises Pvt. Ltd., its Director Mr. M.K. Jajodia with whom he claimed to be having a relationship. Mr. Jhunjhunwala admits as is evident from the aforesaid statement that he has helped Mr. Jajodia in depositing/withdrawing cash/cheque from some bank branches inBombay. That apart, Jhunjhunwala admits of having acted at the instructions of Mr. Jajodia and has deposited cheques in the bank and withdrawn the cash and the amount was withdrawn from the bank accounts not belonging to either Jajodia or Jhunjhunwala. From the above statement it gets revealed that Jhunjhunwala has admitted of having been handed over bearer cheques by Mr. M.K. Jajodia drawn on companies of Mr. Meattle and he used to withdraw the amount and handed over the same to one Mr. Jajodia whose name is Lok Nath who was introduced to him by Mr. Jajodia. Mr. Jhunjhunwala gives the name of the Branches from where he had withdrawn the amounts and also admits having given Jajodia. 20. A perusal of the statement of two witnesses reproduced above and the gist of which has been taken reveals that these two witnesses are the witnesses of the tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held by the Courts that where a particular material assertion is made in examination-in-chief and the witness is cross-examined in this respect of that assertion then it will be taken that the party affected admits the truth of that assertion. The provisions of section 138 came in for interpretation before the Patna High Court in Kamidan Sarda v. Sailaja Kanta Mitra AIR 1940 Pat. 683, and thePunjabHigh Court in Ganpat Rani Khosla v. Kishan Lal 1958 (60)PunjabLR 349. Considering the law laid down it those case I am of the view that where cross-examination is not directed against the positive material assertion effecting the opposite party, it would amount to the affected party accepting the truthfulness of that assertion unless there is some exceptional proof to the contrary." Another judgment on this issue which we may with respect refer to is the one reported in AEG Carapiet v. A.Y. Derderian AIR 1961Cal.1359. The law is clear on the subject. Wherever the opponent has declined to avail himself of the opportunity to put his essential and material case in CE, it must follow that he believed that the testimony given could not be disputed at all. It is wrong to think that this is m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ituation the help of the principles of Evidence Act in the proceedings before the assessing authorities can be taken. For this, we may refer to the judgment of theApex Courtin case of Chuhannal wherein theApex Courthas held that in case the Income-tax Authorities are desirous of invoking the principles of Evidence Act in proceedings before them, they can do so. 25. In the light of the judgment of the Apex Court and in the circumstances in which these proceedings are placed, we feel that to decide as to whether the evidence of Mr. Meattle can be read in or not help can be taken from section 33 of the Indian Evidence Act on which ld. DR has placed reliance which section reads as under:-- Section 33:-- "Where the evidence of a witness is recorded before an authority authorised to record the evidence and that statement so recorded is so relevant in subsequent judicial proceeding or in the same judicial proceedings, but the witness who has made this statement is not available or cannot be found or is dead, then the true fact which it states can be relied upon provided the following conditions are fulfilled:-- (i) Proceedings are between the same parties; (ii) That the advers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be rejected." 27. In the light of what has been laid down by Hon'ble Lahore High Court, we may say that evidence of Mr. Meattle was recorded. Mr. Meattle was a witness to the fact. Mr. Meattle says that the amount of commission was deposited in his companies. He had signed blank cheques and given it to Jhunjhunwala. Neither he deposited the cheque nor he withdrew the cash. The amount has ultimately rolled back to the assessee. The only interest he had he was to get one per cent commission on-a business of one crore. The business was never complete and the assessee did not make him the payment. Mr. Meattle also says that as the assessee did not make him payment he neither disclosed it in the books of account nor in the return. But being aggrieved by the breach of promise by the assessee he ma complaint to the authorities. As far as the statement of Mr. Meattle concerned, we may say that his statement is substantially complete. 28. What more can be expected from a witness who is also a party to the transaction in which the assessee is involved. He has narrated the entire facts on which facts the assessee refused to cross-examine when opportunity was granted earlier. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal, but it is the assessee who in legal wrangles want to exploit a situation and want to take advantage of his own wrong. We, therefore, feel that this judgment so relied upon by the assessee does not advance the case of the assessee. 32. The next judgment on which the reliance has been placed by the assessee is the case of Dwarka Nath. This judgment is cited for the proposition that a writ of Mandamus can be issued if the Revenue authorities below do not carry out the directions of this Tribunal. We feel that there cannot be a quarrel on the proposition that if an authority which is expected to discharge certain function fails to discharge the same, then a writ of mandamus can be issued. But, in this case the directions of the Tribunal have been implemented by the authority and it is the assessee who is not co-operated with the authorities below. In this background we may say that this judgment also does not advance the case of the assessee. 33. The next judgment relied upon by the assessee is the one in C. Vasant Lal's case. The ratio of this judgment is that the ITO is not bound by the rules of evidence. It is open to him to collect the material to facilitate assessment b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made on suspicion. To the contrary we shall be wrong in saying, if we say that the rules of natural justice have not been followed or that the assessment is based on suspicion. 36. Another judgment of theApex Courtin the case of East Coast Commercial Co. Ltd. was also relied upon by assessee. This judgment was relied upon by the assessee apparently for the proposition that the IT authorities are not bound by the rules of evidence, but in case they intend to rely on a particular evidence the assessee must be confronted with the same and should be given an opportunity to meet the same. Facts available on the record depict that full opportunity has been given to the assessee to rebut the material found against him, but the assessee has avoided to make use of the opportunity and we may with respect say that it is a case of refusal to avail the opportunity and not a case of denial of opportunity and, therefore, this judgment also does not help the assessee and cited out of the context. 37. The next judgment on which the assessee placed reliance was the one in the case of Chuharmal. Before adverting to the judgment we may refer to the relevant paragraphs in the said judgment which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce admissible under the Evidence Act for the purpose of making an order of assessment. Courts often take judicial notice of certain facts, which need not be proved while administrative and quasi-judicial authorities can take "official notice" of wider varieties of facts, which need not be proved before, them. Thus, not only in respect of the relevancy but also in respect of proof, the material which can be taken into consideration by the Income-tax Officer and other authorities under the Act is far wider than the evidence which is strictly relevant and admissible under the Evidence Act. Income-tax Officers have to deal with such numerous cases of assessment that they can accept as correct books of account maintained in regular course of business without such a formal proof." 42. A perusal of the aforesaid para leaves no room to doubt that even this judgment does not advance the case of the assessee. 43. Another judgment relied upon by the ld. AR in Uttareswari Rice Mills' case for the proposition that the material gathered by the assessing authority against an assessee for re-assessment proceedings must be brought to the notice of the person concerned and the person concerned m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine or not depends upon the facts and circumstances of the case and it very largely depend upon the adjudicating authority who is not guided by the rules of evidence as such. He must however afford such opportunity as would ensure to party concerned appropriate opportunity to defend himself. It is well-known that in these matters the Revenue or the Excise Authorities are entitled to make their independent inquiries and also reply upon such inquiries provided the result of such inquiries are indicated to the person concerned against whom such inquiry sought to be relied upon and he is given an opportunity to contradict any evidence adduced in such inquiry. Even this judgment in the facts and circumstances of the present case does not help the assessee. 48. Another judgment on which the assessee placed reliance is the one T. Devasahaya Nadar's case. We may say that this judgment was also relied upon by the Revenue. The ratio of this judgment as culled out in the head note which we may reproduce:-- "An Income-tax Officer occupies the position of a quasi-judicial Tribunal and is not bound by the rules of the Evidence Act, but he must act in consonance with natural justice, and one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial placed on record nor has our attention been drawn to any material which would demonstrate without doubt the nature of services rendered by these three companies. Keeping in mind these facts, we feel that the assessee has miserably failed to demonstrate the services rendered and has thus failed to discharge the onus. 53. As the assessee has failed to discharge the onus, he is not entitled to the claim of commission paid. 54. On this account also we are not prepared to disturb the findings of the authorities below. 55. In view of the discussion above, we feel that the claim of the commission was rightly disallowed by the authorities below and have, therefore, no hesitation in dismissing the appeals filed by the assessee. 56. After the matter was heard and the parties were heard for two days, an application has been moved by the assessee for rehearing of the matter. The application was forwarded to the ld. DR whose comments have also been obtained. We have examined the contents of the application, the comments of the ld. DR and also given her anxious thoughts as to whether application so filed by the assessee needs to be allowed or not. After considering the matter, we f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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