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TMI Blog1980 (9) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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. " Though this letter of the manager of the Punjab National Bank Ltd. was on the record of the ITO, he did not disclose it to the assessee nor did he make any reference to it in the letters dated 24th February, 1955, and 4th March, 1955, which he addressed to the assessee making inquiries about the remittance of Rs. 1,07,350 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 this Nathirmal was an employee of the assessee in the relevant accounting year and, therefore, the conclusion was irresistible that the telegraphic transfer was sent by the assessee from its Madras office and encashed by the assessee's employee on its behalf in Bombay and, since it was not accounted for in the books of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment 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 this amount was remitted by the assessee through their Madras office. This letter was admittedly written by the manager of the bank to the assessee in reply to the assessee's letter dated 7th March, 1957, but obviously it did not carry the matter any further since it was in the same terms as the letter dated 18th February, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 Madras represented the undisclosed income of the assessee. The only evidence on which the Tribunal could rely for the purpose of arriving at this finding was the letter dated 18th February, 1955, said to have been addressed by the manager of the Punjab National Bank Ltd. to the ITO. Now, it is difficult to see how this letter could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed 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 appears that when the letter dated 9th March, 1957, was addressed by the manager of the bank to the assessee, a copy of it was forwarded by the manager to the ITO and this copy contained the following endorsement : " Copy to, Mr. T. K. Surendran, 2nd Income-tax Officer, Income-tax Office, C-IV Ward, Bombay, for information with ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 these two letters dated 18th February, 1955, and 9th March, 1957, were to be taken into account, we do not think they supply any reasonable basis for reaching the finding that it was the assessee which sent the remittance of Rs. 1,07,350. It is undoubtedly true that the manager of the bank stated in these two letters that the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 assessee was on the revenue. Unfortunately, for the revenue, neither Tilok chand nor Nathirmal was in the service of the assessee at the time when the assessment was reopened and the assessee could not, therefore, be expected to call them in evidence for the purpose of helping the revenue to discharge the burden which lay upon it. We mu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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