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PETITIONER: KISHINCHAND CHELLARAM

       Vs.

RESPONDENT: THE COMMR. OF INCOME-TAX BOMBAY CITY II, BOMBAY

DATE OF JUDGMENT16/09/1980

BENCH: BHAGWATI, P.N. BENCH: BHAGWATI, P.N. VENKATARAMIAH, E.S. (J)

CITATION:  1980 AIR 2117            1981 SCC  (1) 720

ACT:      Re-opening of assessment-Re-opening made on a letter of the Bank Manager 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.

HEADNOTE:      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 assessment, 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  made 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

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statement 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  the assessee  that the  transaction did not relate to its firm, the Assistant Appellate 721 Commissioner holding  that the  assessee has  not discharged the burden  of proof  lying on  it to  explain  the  amount, rejected the  appeal. Further  appeal 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 leave of the Court.      Allowing the appeal, the Court, ^      HELD: (1)  There was no material evidence at all 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. [731E].      In the face 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  of  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 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. [730H-731D]      The two documents viz. the letters dated 18th February, 1955 and  9th March,  1957 did  not constitute  any material evidence which  the Tribunal  could legitimately  have taken 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 to  Bombay because while the former was not disclosed to the  assessee by the Revenue Authorities till the hearing before the  Tribunal in  regard to  the preparation  of  the supplemental statement  of the  case, giving the assessee an opportunity to  cross-examine the  Manager of  the Bank, the latter was  not disclosed  to the  assessee  at  any  stage. Further, there  is no explanation given by the Revenue as to how  these   two  important  documents  were  not  traceable earlier. Even  if these  two letters  were to  be taken into account, they  did  not  supply  any  reasonable  basis  for

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reaching the finding that it was the assessee which sent the remittance of  Rs. 1,07,350.  There can  be no doubt that if the amount had been remitted by Tilok Chand on behalf of the assessee  he   would  have   signed  the   application   for telegraphic transfer  on behalf  of the  assessee and not in his own  name. This  apart it  is impossible to believe that the Manager  of the  Bank could have failed to appear before the Income  Tax Officer  in answer  to the summons dated 5th March, 1957  and there  is no doubt that this statement must have been  recorded and  the said  statement also  withheld. [729H-730A; 729B, C; 730B, E; 729F-G] 722      (2) It  is true  that the  proceedings under the Income Tax law are not governed by the strict rules of evidence and therefore it  might be  said that  even without  calling the Manager of  the Bank  in evidence  to prove  this letter, it could be  taken into  account as  evidence. But  before  the Income-Tax Authorities  could rely  upon it, they were bound to produce it before the assessee so that the assessee could controvert the  statements contained  in it by asking for an opportunity to  cross-examine the  Manager of  the Bank with reference to  the statements  made by  him.  Moreover,  this letter was said to have been addressed by the Manager of the Bank to  the Income  Tax Officer  on 18th  February, 1955 in relation to  a remittance  alleged to have been sent on 16th October, 1946 and it is impossible to believe in the absence of any  evidence to  that effect, that the Manager who wrote this letter  on 18th  February, 1955 must have been incharge of the  Madras Office  on 16th  October, 1946  so as to have personal knowledge  as to  who remitted  the amount  of  Rs. 1,07,350. The  Revenue authorities ought to have 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. [728A-F]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 2728 of 1972.      Appeal by  Special Leave  from the  Judgment and  Order dated 22-2-1971  of the  Bombay High  Court  in  I.T.R.  No. 76/63.      H. G. Advani, Ashok Advani Bar-at-Law, Hiranandan, Mrs. Sheila Sethi and K. Balasubramaniam for the Appellant.      P.  J.   Francis  and   Miss  A.   Subhashini  for  the Respondent.      The Judgment of the Court was delivered by      BHAGWATI  J.-The   short  question   which  arises  for determination in  this appeal  by special  leave is  whether there was  any material evidence to justify the finding that a sum  of Rs.  1,07,350 was  remitted by  the assessee  from Madras to  Bombay and  that it  represented the  undisclosed income of  the assessee.  The assessee before us is the firm of M/s.  Kishinchand Chellaram  and the assessment year with which we  are concerned  is 1947-48, the relevant accounting year being  the year  ending 6th  April 1947.  The  original assessment of  the assessee  for this  assessment  year  was completed long  back, but it seems that some information was received by  the Income  Tax  Officer  that  a  sum  of  Rs. 1,07,350 was  remitted by  the assessee  from Madras  by two

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telegraphic  transfers  through  the  Punjab  National  Bank Limited and  the Income  Tax Officer therefore addressed two letters dated  14th January  1955 and  10th February 1955 to the Manager  of the  Punjab  National  Bank  Limited  making inquiries about  this remittance.  Neither these two letters nor their copies 723 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 Income Tax Departments  have  not  been  produced  before  us.  The Manager of  the Punjab  National Bank Limited replied to the inquiries made by the Income Tax Officer by his letter dated 18th February  1955 in  which he  stated:  "one  telegraphic 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  Limited was  on the  record of the Income Tax Officer, 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 said to have  been made  by the assessee from Madras to Nathirmal in Bombay.  These two  letters addressed  by the  Income Tax Officer also  make inquiries  in  regard  to  various  other matters besides  the remittance  of  Rs.  1,07,350  and  the assessee replied to these inquiries by its letter dated 24th March 1955 in which amongst other things it pointed out that it was  not able  to trace  any entry in its Madras books in regard to this remittance of Rs. 1,07,350 indicating clearly that no  such remittance  was sent  by  it  from  Madras  to Nathirmal in Bombay. There was no further communication from the Income  Tax Officer  to the  assessee until 2nd February 1955 when  the Income  Tax Officer  once again  addressed  a letter to  the assessee  reiterating  that  one  telegraphic transfer of  Rs. 1,07,350  was sent  by  the  assessee  from Madras on  16th October,  1946 in  favour of Punjab National Bank Limited,  Kalba Devi  Road, Bombay  and this amount was paid to one Nathirmal in cash on the same day and requesting the assessee  to explain  the nature of this transaction and to produce  the relevant proofs of having accounted for this amount in  its books  of account. The assessee reiterated by its reply  dated 9th  February 1956  that it  had once again looked into  its books of account but did not find any entry in regard  to the  remittance of  Rs. 1,07,350  and  in  the absence of  such entry,  it was  not in  a position  to  say anything further  in the matter. Then again there was a lull in the  correspondence for a period of about one year and on 4th March  1957, the Income Tax Officer once again addressed a letter  to the  assessee repeating  its request to explain the nature  of the remittance of Rs. 1,07,350 and to produce relevant books  of account and complaining that the assessee did not seem to have given any reply 724 to  his   earlier  letter  dated  2nd  February  1956.  This complaint was,  of course,  unjustified because the assessee had replied  to the earlier letter of the Income Tax Officer by its  letter dated  9th February  1956. But  even  so  the assessee once again reiterated in its reply dated 13th March 1957 that  no amount  of Rs.  1,07,350 was  remitted by  the assessee from  Madras and  pointed out  that Nathirmal was a common name in the Sindhi community and requested the Income

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Tax Officer  to kindly  give his father’s name to enable the assessee to  look into the matter further and also to inform the assessee  as to  who on behalf of the assessee purported to have  sent the  telegraphic  transfer  from  Madras.  The Income Tax  Officer did  not give any further information to the assessee  and proceeded to make an order of reassessment under section 34 of the Indian Income Tax 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 Income Tax Officer  observed in  the order that the Punjab National Bank Limited 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 16-10-1946, 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 assessee  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 account it must be held to be the undisclosed income of the assessee.      The assessee being aggrieved by the order of the Income Tax Officer  preferred an  appeal to the Assistant Appellate Commissioner. It  was pointed  out on behalf of the assessee at the hearing of the appeal that Nathirmal who was supposed to  have  received  the  amount  of  Rs.  1,07,350  sent  by telegraphic transfer  from Madras  and to  have  signed  the voucher in  regard to  the receipt  of this  amount as ’N.B. Bani’ had  left the  service of the assessee long back and a grievance was  made that  it was not known as to who was the person who  was supposed  to have  made  the  remittance  on behalf of  the assessee,  because in  the  absence  of  this information, it  was not  possible for  the assessee to meet the  case   of  the   Revenue.   The   Appellate   Assistant Commissioner thereupon obtained from the 725 Madras office  of the Punjab National Bank Limited a copy of the telegraphic  transfer application by which the amount of Rs. 1,07,350  was remitted and this copy which was disclosed to the  assessee showed  that the  application was signed by one Tilok  Chand as  follows:  "Tilok  Chand,  C/o  M/s.  K. Chellaram, 181,  Mount Road,  Madras". The  assessee pointed out to  the Appellate Assistant Commissioner that there were two Tilok Chand’s working in the assessee’s office at Madras at the  material time,  one was  Tilok Chand Thadani and the other was  Tilok Chand Chellaram and both these Tilok Chands had left the service of the assessee long back. The assessee informed  the  Appellate  Assistant  Commissioner  that  the whereabouts of Tilok Chand Thadani were not known and so far as Tilok  Chand Chellaram was concerned, he was then at Hong Kong. It  was also  pointed out  to the  Appellate Assistant Commissioner that  the business  in Madras was carried on by the assessee  in the  name of  M/s. K. Kishinchand Chellaram and not  M/s. K.  Chellaram and  that the  remittance of Rs. 1,07,350 said  to have  been made  by Tilok Chand was not on behalf of  the assessee  nor was it sent to the assessee and that its inclusion as undisclosed income of the assessee was not at  all justified.  The Appellate Assistant Commissioner however negatived these contentions of the assessee and held that the  remittance of the amount of Rs. 1,07,350 was by an

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employee of  the assessee from Madras to another employee in Bombay and  the Bank  had also  reported that the remittance related to  the assessee  and hence  the burden  was on  the assessee to  explain and  prove the nature and source of the remittance and  since this  burden was  not discharged,  the inclusion of  the amount  in the  assessment of the assessee was  liable   to  be   sustained.  The  Appellate  Assistant Commissioner 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  Appellate Assistant  Commissioner and the Tribunal, and an extract of it was given in the order of the Appellate Assistant  Commissioner, 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 726 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 1955 addressed by the  manager of  the Bank  to the Income Tax Officer. The Tribunal then proceeded to observe that:-           "The assessee  was not  in a position to show that      the respective  employees in  Madras  and  Bombay  were      carrying on any business and were in a position to send      from one  place to  another such  a large  sum  of  Rs.      1,07,350. The  assessee merely  informed the Income Tax      Officer that  it had nothing to do with this amount. It      would have  been easy for the assessee to have the said      persons examined  so as  to show  that the  sum of  Rs.      1,07,350 cannot  represent any  amount belonging to the      assessee. But  for the  reasons best known to itself it      did not  choose to  do so.  By remitting  the amount as      cash and by not bringing it into its books the assessee      cannot escape the consequences of having to explain the      source for  this and  especially when  the bank through      which the  amount was remitted has in categorical terms      stated that  the remitter from Madras was the assessee.      It would  have been  open to  the assessee to establish      the contrary by showing that the bank’s  statement that      the assessee  did remit  the amount  is not correct and      thus displace  the evidence  on record,  but it did not      choose to  examine the  bank officers with reference to      this aspect  either. Therefore,  this is a case where a      sum of  Rs. 1,07,350  has been remitted by the assessee      as shown  by the  bank’s  letter  from  Madras  to  its      employee in Bombay which has not been brought to books.      In the  said circumstances,  it is  for the assessee to      explain the  source for  the fund  and it cannot escape      the consequence  by merely adopting an attitude of non-      co- operation." The Tribunal  accordingly held  that the  assessee  had  not satisfactorily explained  the source  of the  amount of  Rs. 1,07,350 and  the Income Tax Officer was therefore justified in adding  this amount  as the  undisclosed  income  of  the

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assessee.      This order  of the  Tribunal led  to the  filing of  an application for  a reference  by the  assessee  and  on  the application being  rejected by  the Tribunal,  the  assessee preferred an application to the High Court for directing the Tribunal to  make a  reference and  on this application, the High Court  directed the  Tribunal to  refer  the  following question for the opinion of the High Court: 727           "Whether  there   was  any  material  evidence  to      justify the  findings of  the Tribunal  that the amount      remitted by  an employee  of the  Madras Branch  to  an      employee of  the Bombay  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 Tilokchand 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 the 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  Tilokchand  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 Limited to the Income tax Officer. Now it is  difficult to  see how  this letter  could at  all  be relied upon  by the Tribunal as a material piece of evidence supportive of  its finding.  In the first place, this letter was not  disclosed to assessee by the Income Tax Officer and even though  the Appellate Assistant Commissioner reproduced an extract  from it in his order, he did not care to produce it before the assessee or give a copy of it to the assessee. The same  position also obtained before the Tribunal and the High Court  and it was only when a supplemental statement of the case  was called  for by  this Court  by its order dated 16th August, 1979 that, according to the Income Tax Officer, this letter was traced by him and even then it was not shown by him  to the assessee but it was forwarded to the Tribunal and it  was for  the first  time at  the hearing  before the Tribunal in  regard to  the preparation  of the supplemental statement of  the case  that this  letter was  shown to  the assessee. It  will therefore be seen that, even if we assume that this letter was in fact addressed by the manager of the Punjab National  Bank Limited  to the Income Tax Officer, no reliance could  be placed upon it, since it was not shown to the assessee  until at  the  stage  of  preparation  of  the supplemental statement  of the  case and  no opportunity  to cross-examine the 728 manager of  the Bank could in the circumstances be sought or availed of  by the assessee. It is true that the proceedings under the  Income Tax  law are  not governed  by the  strict rules of  evidence and  therefore it might be said that even without calling the Manager of the Bank in evidence to prove this letter, it could be taken into account as evidence. But before the  Income Tax  Authorities could rely upon it, they

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were bound  to produce  it before  the assessee  so that the assessee could  controvert the statements contained in it by asking for  an opportunity  to cross  examine the Manager of the Bank  with reference  to the  statements  made  by  him. Moreover, this letter was said to have been addressed by the Manager of  the Bank  to the  Income  Tax  Officer  on  18th February 1955  in relation  to a  remittance alleged to have been sent  on 16th  October, 1946  and it  is impossible  to believe in  the absence of any evidence to that effect, that manager who  wrote this  letter on  18th February  1955 must have been  in-charge of  the Madras  Office on  16th October 1946 so as to have personal knowledge as to who remitted the amount of  Rs. 1,07,350.  What the Manager of the Bank wrote in this  letter could  not possibly be based 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 Income Tax Officer. The  statements contained  in this letter addressed by the Manager of the Bank to the Income Tax Officer were in the nature  of hearsay 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 Income Tax Officer 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  reference to  his summons  dated 5-3-      1957. One only T. T. for Rs. 1,07,350 was received with      particulars as  above. Mr.  Nathirmal was identified by      Mr. B. N. Mallaya, the then Officer in our office." 729 This copy  of the  letter dated 9th March 1957 was obviously in the  record of  the Income  Tax Officer  but it  was  not disclosed to  the assessee at any stage and according to the Income Tax Officer, it was not traceable until the case came back to  him for evidence in connection with the preparation of the supplemental statement of the case. He then seemed to trace it  and forwarded  it  alongwith  his  report  to  the Tribunal and  it was  at the  hearing before the Tribunal in connection with  supplemental statement  of the case that it was shown  to  the  assessee  for  the  first  time.  It  is difficult to  understand how  this copy  of the letter dated 9th March  1957 as  also the letter dated 18th February 1955 said to  have been  addressed by  the Manager of the Bank to the Income  Tax Officer were not traceable in the records of the Income  Tax Officer  all this  time and  they came to be traced only  when the supplemental statement of the case was called for  by this  Court. There is no explanation given by the Revenue as to why these two important documents were not traceable and  they were  not disclosed to the assessee. The reason perhaps  was, and this was the suggestion made by the learned counsel  appearing on  behalf of  the assessee, that the Revenue  authorities did not wish to give an opportunity to the  assessee to  call the manager of the Bank for cross- examination, lest the edifice which they wanted to construct for taxing  the assessee on the amount of Rs. 1,07,350 might

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be  jeopardised.   It  is   interesting  to  note  that  the endorsement made at the foot of the copy of the letter dated 9th March  1957 sent to the Income Tax Officer clearly shows that the  Manager of  the Bank  was served by the Income Tax Officer with  a summons  dated 5th  March 1957  and one  can reasonably presume  that the  Manager of  the Bank must have appeared in  answer to  the summons  before the  Income  Tax Officer and  given his  statement. But no such statement has been produced  by the Revenue authorities nor are we told as to what  happened when  the Manager  of the Bank appeared in obedience to  the summons.  It is impossible to believe that the Manager  of the Bank should have failed to appear before the Income Tax Officer in answer to the summons and there is no doubt  that his  statement must  have been  recorded. The question then  is, why  has this statement been kept back by the Revenue  authorities ? Even if we assume that the Income Tax Officer  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 730 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 of Rs. 1,07,350 was  remitted by  the assessee  through the  Madras office of  the Bank,  but this statement which was obviously not based  on the  personal knowledge  of the manager, which was not supported by any documents or papers produced by the manager and  in regard  to which it was not known as to what was the  material on  which it was based, was clearly belied by the  original application for remittance which was signed by Tilokchand  in his  own name  and not  on behalf  of  the assessee. The primary evidence before the Tribunal in regard to the  remittance of  the amount  of Rs.  1,07,350 was  the application  signed   by  Tilokchand  and  this  application clearly showed  that it  was Tilokchand and not the assessee which remitted the amount of Rs. 1,07,350 from Madras. There can be  no doubt  that if  the amount  had been  remitted by Tilokchand on  behalf of  the assessee, he would have signed the application on behalf of the assessee and not in his own name. We fail to appreciate how, in the face of this primary evidence showing  Tilokchand as  the person who remitted the amount of  Rs. 1,07,350  the Tribunal  could possibly accept the unsupported  statement of the Manager of the Bank, based on hearsay,  that the  amount was  remitted by the assessee. Unfortunately,  the  Revenue  authorities  did  not  produce copies of  the letters  dated 14th  January  1955  and  10th February 1955  addressed by  the Income  Tax Officer  to the Manager of  the Bank.  Copies of these letters, if produced, would perhaps have shown that the suggestion that the amount of Rs. 1,07,350 was remitted by the assessee was made by the Income Tax  Officer and taking the cue from this suggestion,

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the  Manager   of  the  Bank  might  have  stated  that  the telegraphic  transfer  of  Rs.  1,07,350  was  sent  by  the assessee. It  is to our mind impossible to hold, in the face of the  application for  remittance signed  in the  name  of Tilokchand, that  this amount  was sent  by the assessee and the finding  to that  effect reached by the Tribunal must be held to  be unreasonable  and perverse.  What at the highest could be  said to be established by the material evidence on record is that Tilokchand remitted the 731 amount of  Rs. 1,07,350  from Madras  and  this  amount  was received by  Nathirmal in  Bombay. Even  if we  accept  that Tilokchand 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 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 Tilokchand,  an employee  of the  assessee, to Nathirmal, another employee  of the assessee. It is quite possible that Tilokchand 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  Tilokchand  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  must therefore  hold  that  there  was  no material evidence at all before the Tribunal 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.      We accordingly allow the appeal, set aside the judgment of the  High Court  and answer  the question referred by the Tribunal in  favour of the assessee and against the Revenue. The Revenue will pay the costs of the assessee throughout. S.R.                                         Appeal allowed. 732