Bhagwati, J. - (1.) 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 un-disclosed 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 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 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 Department 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 transfer of Rupees 1,07,350/- sent by M/s. Kishinchand Chellaram from Madras was received by us on 16-10-46. I.-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 asessee until 2nd February, 1956 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 Rupees 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 Rupees 1,07,350/- and to produce relevant books of account and complaining that the assessee did not seem to have given any reply 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 Mar., 1957 that no amount of Rupees 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-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 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 account it must be held to be the undisclosed income of the assessee.
(2.) 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 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 Appellant Assistant Commissioner that there were two Tilok Chands working in the assessee's office at Madras at the material time, one was Tilok Chand Thandani 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 Thandani 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. 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 Rupees 1,07,350/- was by an 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.
(3.) 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 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 book. 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 assessee.;