The statement by a hundi banker must have a relation to the particular credit of the assessee in order to constitute as "material" for reopening the assessment under section 147.

RAMASWAMI J.

The assessment of the assessee, a cine actor, for the assessment year 1960-61 was reopened under s. 147(a) of the I.T. Act, 1961. During the previous year ending December 31, 1959, relevant for the assessment year 1960-61, the assessee had shown as having raised the following hundi loans :

Rs.

1. From Dwarkadas Chaithram 20, 000

2. From Seth Jethanand Moolchand 20, 000

3. From Seth Paleraj Govindram 15, 000

The interest paid on these loans was Rs. 3, 484. The original assessment was completed on April 29, 1961, accepting the returns and treating the loans as genuine borrowings. On the ground that the ITO came to know that the borrowings from hundi bankers were not genuine, he reopened the assessment and assessed the entire loan amount of Rs. 55, 000 and interest of Rs. 3, 484 paid thereon as the income of the assessee from undisclosed sources. The assessee preferred an appeal to the AAC and contended that there was no material whatsoever on which the ITO could have come to the conclusion that the borrowings were not genuine. The AAC, after noting that the prevailing hundi racket at the relevant time gave a reasonable inference that some assessees were introducing their own secret profits into their accounts in this manner, observed that in that context, it was but reasonable to presume that the assessee too was one among them especially because he too had borrowed from the very same bankers. The AAC further held that the onus of proving that he was a solitary exception to this, squarely lay on the assessee and that he had not discharged that onus by producing the bankers for examination or even confirmatory letters from them. However, on the ground that the assessee was not given a reasonable opportunity of proving the genuine nature of the loans, he set aside the assessment and referred the matter back to the ITO for making a fresh assessment after further detailed enquiry with adequate opportunities to the assessee. The assessee preferred a further appeal to the Tribunal contending that he was not guilty of omission or failure to fully and truly disclose all the materials relevant to the assessment and that he had given full details of the creditors at the time of the original assessment itself and the ITO had reopened the assessment merely on suspicion. The Tribunal observed :

"In the instant case, as a result of investigation and raids conducted by the department from time to time, a number of bankers made admissions in writing that they did havala business and on the basis of such admissions a list pertaining to Madras area was compiled giving the names of such hundi brokers. The name of the hundi banker, Seth Paleraj Govindram, who is alleged to have given a hundi loan of Rs. 15, 000 on 2-1-1959 to the appellant, finds a place in the list. A statement has been recorded from the said hundi banker on 9-2-1965 wherein he has categorically admitted that he has been doing havala business. Another list of hundi bankers in Madras, who have not themselves made admission in writing but in respect of whom certain borrowers had stated in writing that their loan transactions with these bankers were bogus, was complied and in this list the name of Dwarkadas Chaithram, who is alleged to have given a loan of Rs. 20, 000 to the appellant on 6-3-1959 finds a place. It is on the basis of these investigations conducted by the Income-tax Department, the Income-tax Officer came to know that the hundi borrowals made by the appellant were not true and genuine." *

The Tribunal then proceeded to state, relying on the decision of this court in M. Varadarajulu v. ITO that though the appellant had disclosed the names of hundi bankers at the time of making the original assessment, it cannot be stated that he had made a full and true disclosure of all the material facts relating to hundi loans. Accordingly, the Tribunal held that the ITO had sufficient reason to believe that the income chargeable to tax had escaped assessment as a