RAM KUMAR JALAN Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) UNDER S. 256(2) of the IT Act, 1961, the following question of law is referred for our determination :

(2.) THE assessee is a registered firm consisting of seven partners all of whom belong to the family of Jalan. The question relates to the asst. year 1949 50, for which the relevant accounting year is Samvat year 2004. For this year, the ITO assessed the firm by an order dt. 29th March, 1954, on the total income of Rs. 1,46,331 which, inter alia, included a sum of Rs. 25,000 as assessee's income from undisclosed sources. This amount was found as a deposit in the account of one Shankerlal Matadin in the books of account of the assessee. The entries in the books of account showed that it was first deposited on 6th April, 1948, then withdrawn on 3rd July, 1948, and again redeposited on 20th July, 1948. The contention of the assessee was that this amount was a genuine loan taken from Shankerlal Matadin and interest amount of Rs. 375 was duly paid thereon and also brokerage of Rs. 25 was paid to one Dalamchand. The ITO was not satisfied with the explanation offered on behalf of the assessee as regards the genuineness of this loan and called upon the assessee to furnish the particulars of the depositor. Pursuant to this request of the ITO, the assessee by its letter dt. 26th Dec., 1953, furnished the particulars. In this letter it is stated that M/s. Shankerlal Matadin from whom the loan was taken were carrying on business at 177, Harrison Road, Calcutta, and the loan was taken through a finance broker, Dalamchand, who may be summoned under S. 37 to prove the genuineness of the loan. In view of this information given by the assessee a summons was sent through post but it was returned unserved with a postal remark that the addressee is "not known". This fact was brought to the notice of the assessee by the ITO by his letter dt. 11th Feb., 1954. After receipt of this letter, on 2nd March, 1954, the assessee wrote a letter informing the ITO that the firm (meaning Shankerlal Matadin) belonged to M/s Ramchandra Biseswarlal at the address already given and they deal in old ready made clothes and so a fresh summons may be issued accordingly. The name of the broker was also reiterated but it was stated that he was away from Calcutta. As the address given of the depositor was identical with the one furnshied earlier, and as the summons which was attempted to be served at the same address was returned with the postal remark that the addressee was not known, the ITO did not consider it necessary to issue afresh summons pursuant to the second letter of the assessee. As no corroborative evidence was produced by the assessee in support of his contention the ITO rejected the correctness of the entry in the books of the assessee and treated it as income from undisclosed sources.

(3.) THE argument of Mr. Kaka on behalf of the assessee is that in view of a subsequent letter written by the assessee on 2nd March, 1954, it was incumbent upon the ITO to issue a fresh summons either on Shankerlal Matadin or on the firm of M/s. Ramchandra Biseswarlal even though the address was identical with the one furnished earlier. His submission was that an omission to issue a fresh summons indicates that due and proper enquiries were not made by the ITO and he was, therefore, not justified in coming to the conclusion that the sum of Rs. 25,000 represented income of the assessee from undisclosed sources. We find ourselves unable to accept this contention. A question of issuing a fresh summons in view of the second letter can possibly arise only if the address given earlier was erroneous. Even if it is accepted as stated in the second letter of the assessee that the firm of Shankerlal Matadin belonged to M/s. Ramchandra Biseswarlal and if the address given was genuine then any letter addressed to M/s Shankerlal Matadin at the address given should normally be received by the addressee. This is not a case where the package is returned with the postal remark "not found". The endorsement of the postal authorities is "not known". That presupposes that at the specific address furnished by the assessee the addressee cannot be traced. When the second letter was writen though the name of the broker was mentioned it was clearly stated that he was outside Calcutta and so no question of calling him could have arisen by the taxing authorities. On these facts, we are unable to take the view that the taxing authorities did not make requisite enquiry before coming to the conclusion that the sum Rs. 25,000 represented income of the assessee from undisclosed sources.