LexKISHINCHAND CHELLARAM versus THE COMMR. OF INCOME-TAX BOMBAY CITY II, BOMBAY
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720 .' A B c D E F G KISHINCHAND CHELLARAM v. THE COMMR. OF INCOME-TAX BOMBAY CITY II, BOMBAY September 16, 1980 [P. N. BHAGWATI AND E. S. VENKATARAMIAH, JJ.] Re-opening of assessment-Re-opening made on a letter of the Bank Mana- ger addressed to the Income Tax Officer-Income-tax Act, 1922, section 34- Evidence Act applicability of tax cases-Burden of proof on whom lies in cases of re-opening of assessment. The appellant firm M / s. Kishinchand Chellaram was assessed to tax for the assessment year 1947-48, the relevant accounting year being .the year ending 6th April, 1947. The concerned Income Tax Officer on an information that a sum. of Rs. 1,07,350 purported to have been sent by the assessee by a telegraphic transfer through the Punjab National Bank Ltd., Madras, to its Bombay .Branch favouring one Nathirmal on 16-10-1946, has escaped assess- ment, called upon the assessee, through his letters dated 24th February, 1955 and 4th March, 1955 to explain the same. The Income Tax Officer did not refer to the letters dated 14th January, 1955 and 10th February, 1955 addressed by him to the Bank Manager nor the reply of the Manager dated 18th February, 1955 in the said .two letters addressed to the assessee. Nor were the copies supplied to the assessee nor even madf~ available on record before all authorities including the Supreme Court. The assessee through its letter dated 24th March, 1955 replied that as per its records no such remittance was ever sent by it from Madras to Nathirmal in Bombay. On 2nd February, 1956, the Income Tax Officer for the second time called the very same particulars to which the assessee by its letter dated 9th February, 1956 once again denied the remittance by it. Despite this, by his letter dated 4th March, 1957 addressed to the assessee, the Income Tax Officer repeated his earlier request to it to explain about the remittance, complaining at the same time of silence by the assessee to his letter dated 2nd February, 1956. The assessee in its reply dated 13th March, 1957 while inviting attention to its earlier replies dated 24th March, 1955 & 9th February, 1956 reiterated that no amount of Rs. 1,07,350 was remitted by it from Madras to Nathirmal. Disbelieving it, the Income Tax Officer, by his order brought to tax the amount of Rs. 1,07 ,350 on the ground that it represented the concealed income of the assessee and observed that "there was no reason to doubt the banker's st;itement that the amount was remitted by M / s. Kishinchand Chellaram from Madras". The assessee preferred an appeal to the Assistant Appellate Commissioner. At this stage, it· came to light that the purported telegraphic transfer was applied for by one "Tilok Chand C/o M/s. K. Chellaram, 181, Mount Road, Madras" and it was received at Bombay by one ·"N.B. Bani". In spite of the plea of H the asse5see that the transaction did not relate to its firm, the Assistant Appellate .A "-· KISHINCHAND. CHELLARAM ·v.:C.I.T •. (Bhagwati, J.) -Commissioner holding that the assessee has not discharged the burden of proof ,lying on it to explain the amount, rejected the appeal. Further :ippeal to the Tribunal and. a reference called for by the 'High Court at the instance of the assessee was also answered against it. Hence the appeal after obtaining special foave of the Court. Allowing the appeal, the Court, HELD : (I) There was no material evidence at ail on the basis of which the Tribunal could come to the finding that the amount of Rs. 1,07,350 was ·remitted by the assessee from Madras and that it represented the concealed income of the assessee. [73 lE]. In the faee of the application for remittance signed in the name of Tilok ·Chand, that this amount was sent by the assessee and the finding to that effect reached by the Tribunal is unreasonable and perverse. What at the .highest ·could be said to be established by the. material evidence on record is that 'Tilok Chand remitted the amount ~f Rs. 1,07,350 from Madras and this amount was received· by Nathirmal in Bombay. Even if it is accepted that Tilok •Chand and Nathirmal were employees of the assessee as held by the Tribunal, the ·utmost that could be said is that an employee of the assessee in Madras remitted 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 i
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