Kotval, C.J:— Having heard counsel for the department and, the assessee we are satisfied that this rule must be discharged. We would state our reasons somewhat fully not only because the rule was argued at considerable length and because the name of a reputed singer is involved but because the name and reputation of a solicitor who has been disbelieved is involved.

2. The assessee, Lata Mangeshkar, is a well-known playback singer and as such connected with the film world. On 23rd August, 1960, she purchased a flat in “Prabhu Kunj” at Peddar Road in Bombay for a sum of Rs. 45,000. She had another flat at Walkeshwar in Bombay, which she sold off on 12th October, 1960, to one Vasantrai Prabhudas Jobanputra. While enquiring into the purchase and sale the Income-tax Officer found entries pertaining to a sum of Rs. 95,000 in the books of the assessee. A sum of Rs. 95,000 was alleged to have been borrowed by her on hundi loans. The Income-tax Officer called upon her to explain these alleged loans. In answer to that requisition the assessee filed her account books. They appear at exhibit “B” in which there appear entries of borrowings from as many as ten different persons said to be financiers or bankers of hundi loans.

3. The Income-tax Officer decided to check these alleged borrowings. Therefore, he summoned the 10 persons named, under section 131 of the Income-tax Act, but when the summonses were sent by registered post they were returned with the remark “Not claimed” even though they were directed to the addresses given by the assessee herself, except in one case, namely, of the financier Shamdas Amarchand. This alleged financier, however, failed to appear before the Income-tax Officer in response to the summons as required. The Income-tax Officer put these facts on record by his letter dated 2nd February, 1963 (part of exhibit “C” collectively) and required the assessee to produce those financiers. This was the first phase in all these transactions that took place in this case. Until this letter was received the assessee had only filed an account which disclosed that the transactions of borrowings were from the 10 parties in exhibit “B”, but she had not informed the Income-tax Officer that the transactions were put through by her solicitors, Messrs. Thakoredas & Co., whose sole proprietor is one Shantikumar Gandhi. Till the date of the letter, dated 2nd February, 1963, also the assessee did not inform the Income-tax Officer that she did not know any one of the financiers whose names were mentioned in her account, exhibit “B”.

4. In reply to the Income-tax Officer's letter, dated 2nd February, 1963, the assessee's chartered accountants wrote to the Income-tax Officer on 4th March, 1963, and for the first time disclosed:

“… We have been asked to confirm that these loans were taken by our client through M/s. Thakoredas & Co. (partner-Shantikumar R. Gandhi), 8 Nanabhai Lane, Fort, Bombay-1. These loans were taken on two occasions being Rs. 45,000 on or about the 23rd August, 1960, in the name of our client's mother, Smt. Dinanath Mangeshkar…

As regards the other loan of Rs. 50,000 the same was also raised by our client through her solicitors, the said Thakoredas & Co., on or about 10th January, 1961, that is to say, the amount was received by her from her solicitors directly and not from hundi brokers or financiers. This loan of Rs. 50,000 was repaid by our client on 7th October, 1961, by paying Rs. 20,000 from our client's own receipts and raising loans of Rs. 30,000 from M.M Khandwala of Thana through her solicitors, M/s. Thakoredas & Co.”

5. The assessee's chartered accountants also stated in the said letter; “The necessity of taking these loans arose when our client purchased an ownership flat in ‘Prabhu Kunj’ at Peddar Road in the name of her mother. The negotiations for the flat and the legal formalities were put through by our client's solicitors and the amount of Rs. 45,000 was also raised by our client's solicitors through hundi brokers” The assessee's chartered accountants also enclosed with the said letter a supporting letter of Messrs. Thakoredas & Co. dated 29th November, 1962, in which the solicitors stated: “We, therefore, hereby confirm that we had arranged for hundi loans of a sum of Rs. 50,000 through M/s. Nichani & Co., hundi brokers of Bombay, on interest at the rate of one per cent per mensem.”

6. Two things may be noted regarding this letter of 4th March, 1963, firstly, that the assessee disclosed for the first time that these transactions of borrowings going to make up a sum of Rs. 95,000 reflected in her account, were not by her directly but by her solicitor, the said Shantikumar. Secondly, by producing the letter of the solicitor for the first time the assessee also disclosed that the solicitor had arranged a sum of Rs. 50,000 through Messrs. Nichani & Co., hundi brokers of Bombay.

7. Expectedly, the Income-tax Officer called upon the assessee by a letter of 8th March, 1963, to produce the parties from whom she had borrowed the money with their books of account “with the help of her solicitor”. He pointed out that he had reason to believe that the hundi bankers from whom she had borrowed the money were not genuine parties and that on her failure to produce the parties the entire amount of the loans will be taxed in her hands as income from undisclosed sources. At this stage it appears that the assessee's solicitor, Shantikumar Gandhi, appeared before the Income-tax Officer and informed him that “he would contact the brokers regarding producing the financiers”. This would appear from the reply of the chartered accountant on behalf of the assessee dated 11th March, 1963, to the Income-tax Officer. In the same letter the chartered accountants informed the Income-tax Officer that Shantikumar had confirmed at the time of the hearing the statements made in the assessee's letter of 4th March, 1963, and since the Income-tax Officer had not cross-examined Shantikumar they had discharged the onus which was on the assessee though the Income-tax Officer did not agree to that. The assessee took the same stand in the letter on her behalf by the chartered accountants dated 10th April, 1963, but added: “However, without prejudice to this contention our client's solicitor had informed us that he is requesting the broker to see him and he will write to us or to you shortly.” In the letter of 11th June, 1963, written on behalf of the assessee, the Income-tax Officer was for the first time informed that the assessee “does not personally know the financiers and therefore she is not in a position to produce them.” Therefore, on 13th June, 1963, the Income-tax Officer wrote to the solicitor that the assessee having expressed her inability to produce the bankers concerned on the plea that the entire finance was arranged by the solicitor on her behalf and on behalf of her mother and that the amounts were paid back to the solicitor only, the solicitor should appear before him on a date fixed.

8. By this time the Income-tax Officer had also contacted Messrs. Nichani & Co., the brokers, through whom the solicitor said he had negotiated the loans and recorded the statement of its sole proprietor, Kanayalal Hiranand. On 7th October, 1963, the Income-tax Officer informed the assessee that “It is clear from the statement of the said Shri Kanayalal Hiranand that he never did genuine business and is only a name-lender and he did not advance any money to the said Shri Shantikumar solicitor This shows that you have arranged ‘havalas’ through the ‘aforesaid solicitor.” At the same time the Income-tax Officer also enclosed the statement of Kanayalal, the proprietor of M/s. Nichani & Co., and told the assessee that he would like to give her a final opportunity to show cause as to why the amount of Rs. 95,000 should not be treated as her income from undisclosed sources. By reply dated 14th October, 1963, on her behalf her chartered accountants expressed some surprise at the conclusion which the Income-tax Officer proposed to draw and themselves requested the Income-tax Officer “to issue summons to the said Shri Kanayalal Hiranand” asking him to produce his books of accounts, duplicate of his bills for brokerage, his hand pass book and certified copy of a statement or statements referred to by him in reply to question No. 7”. On 24th October 1963, however, the same chartered accountants on behalf of the assessee wrote to the Income-tax Officer attacking the evidence of Kanayalal Hiranand saying that “the testimony of this witness should be entirely discredited since he had lied about several material facts” On 21st November, 1963, again similarly the same chartered accountants on behalf of the assessee wrote a long letter to the Income-tax Officer attack-the evidence of Kanayalal Hiranand and enclosed some correspondence which passed between the latter and the assessee's solicitor and requested the Income-tax Officer to disbelieve Kanayalal. It is in this context that the statement given on oath by the solicitor, Shantikumar, on July 17 1963 October 3, 1963, and in 1964 and 1965 (the dates are not given in the paper book) have to be read.

9. The Income-tax Officer and the Tribunal both disbelieved his evidence. Shantikumar, the solicitor, has stated that the firm of Thakoredas & Co. was a partnership till 31st March, 1961, but from that date it is his own proprietary concern. Formerly, the other partner was one Bhagwandas Vithaldas Khandwala. He admitted that he arranged finance for the assessee and her mother, Smt. Dinanath Mangeshkar. He arranged for one loan in the month of August, 1960, of Rs. 45,000 for Smt. Dinanath Mangeshkar and in the month of January, 1961, a loan of Rs. 50,000 for the assessee and again in the month of October, 1961, for Rs. 30,000 for the assessee. The first two were “procured through Messrs. Nichani & Co., Hundi Brokers, Gandhi Building, Kalbadevi Road, Bombay”. He was subsequently asked whether these amounts of Rs. 45,000 and Rs. 50,000 were given to him by M/s. Nichani & Co. and he said “yes,” (vide answer to question No. 15) and “by cash” (vide answer to question No. 16). Asked about his account books, he admitted that “as regards Rs. 45,000 the said amount was deposited in our client's account with the Central Bank of India Ltd., and as regards Rs. 50,000 there is no entry in our books of account because that amount was paid to Smt. Lata Mangeshkar in cash”. He was asked what evidence was available with him to prove that he passed on Rs. 50,000 in cash to Lata Mangeshkar and his answer was: “There is no documentary evidence”. He was also asked what was the consideration to him for arranging these loans for the assessee and her mother and his answer was: “They were the firm's general clients and we get our bills for the services rendered.”

10. As regards the interest and brokerage from the assessee and her mother for the loans in question, his answer was: “Whatever interest and brokerage were payable on the loans was received by me and paid over to the brokers and they got and handed over the receipts and memos which were handed over to the parties concerned.” Question No. 22 is further relevant as to this pleading. It was as follows:

Question No. 22:

“What is the evidence available with you to prove that you received interest and brokerage from Smt. Lata and her mother and passed on to the broker?”

Answer:

“There is no documentary evidence.”

11. As regards the repayment of these loans he stated that the assessee and her mother returned the amounts in cash to his firm. He was asked what was the evidence regarding these loans and he repeated: “As regards Rs. 45,000 the same was deposited in our clients' account with the Central Bank of India Ltd., and as regards Rs. 50,000 there is no documentary evidence.” Even as regards the amount of Rs. 30,000 the third item (with which we are not really concerned here) he admitted that there was no entry in his books of account. To question No. 28: “Can you establish the fact that this money passed through you?” his answer was: “No evidence except my oral evidence”. He was asked whether the transactions of Rs. 50,000 and Rs. 30,000 were not passed through his books particularly when all other transactions had been entered in his clients' account and his answer was: “It is not customary to enter any transactions in our books of account.” As regards Rs. 45,000 the amount was to be paid to M/s. Tolani & Co. and the said firm asked for a cheque and that is why the amount was entered in our books of account. As regards signing the hundi papers he has stated that the assessee signed hundis for Rs. 50,000 and Smt. Dinanath Mangeshkar for Rs. 45,000. He was asked later on whether he could produce the hundi brokers concerned for the examination of their account books by the Income-tax Officer. His answer was: “I do not know them”

12. Now the Income-tax Officer had also called the proprietor of M/s. Nichani & Co., one Kanayalal Hiranand, and Kanayalal has completely denied that he arranged any loan for either the assessee or her mother. He was thrice examined on July 19, 1963, October 7, 1963, and October 22, 1963. He has in short said that solicitor, Shantikumar, has not arranged loans through him for any of Shantikumar's clients (question No. 23—3rd examination). He was asked whether he had arranged any loan for Shantikumar R. Gandhi of M/s. Thakoredas & Co. and his answer was that he had not (question No. 5 of 1st examination). He was confronted with the evidence of Shantikumar and he has said that what the latter had stated was not true. No doubt Kanayalal had admitted that he was in the habit of procuring hundis by merely lending his name as a person having purchased hundis from various bankers but that if his name appears in the account books of any person to the effect that he had advanced monies on hundis they are all bogus entries meant only to accommodate those persons in whose books such fictitious credit entries were made. No doubt he has also said that he used to charge a small commission of 6 paise per Rs. 100 for giving his brokerage slips by which we understand blank slips to be filled in later on by the party to whom they were sold by Kanayalal. Kanayalal had also stated that he had given printed slips to Shantikumar Gandhi with his name printed on them and for giving the printed slips to him Shantikumar had promised to pay Kanayalal commission but subsequently he backed out. He has also admitted that Shantikumar had promised to get him some commission from the assessee but that had not been done and he did not receive anything.

13. Shantikumar was called again on 3rd October, 1963, and confronted with the evidence of Kanayalal and it was at that stage that the solicitor changed his case and for the first time disclosed that he had never dealt with Kanayalal at all but he had dealt with two other persons, Hariram and Khiaram (vide answer to question No. 2). According to him “there were three persons in that firm, M/s. Nichani & Co.” He was asked whether Kanayalal was not the proprietor of Nichani & Co. and his answer was “Hariram or Khiaram used to come to my office and they brought the brokerage vouchers. Kanayalal rarely came to my office and generally all transactions were put through Hariram or Khiaram”. He has not ???aid in so many words that Hariram and Khiaram were partners of Nichani & Co. but suggested vide answer to question No. 5 that they had some sort of a representative capacity on behalf of Nichani & Co. It was put to him that the brokerage slips were not signed by anybody on behalf of Nichani & Co. and his answer was: “Generally the brokerage slips are never signed”. He has stated that Kanayalal was not telling the truth. Thereafter, Kanayalal was again examined and he has denied that Hariram and Khiaram were his partners though he knows Hariram and Khiaram. They are brokers doing business separately in the same building in which Nichani & Co. are situated, still he did not have in the past nor has in the present any person like Hariram or Khiaram working on his behalf.

14. It appears that before the Appellate Assistant Commissioner, Shanti-kumar was also further examined with reference to the services he rendered to the assessee and he stated that the nature of his services were legal and financial and when it was put to him that as a solicitor he could not render financial service he stated that the arrangement of finances is a normal service rendered by solicitors. As regards his books he stated that transactions relating to arrangement of finances are not entered in solicitors' books unless the payment has been made by cheques. He also admitted that there is no documentary evidence to show that he had arranged these finances for the assessee and her mother and that entries were however made regarding the transaction of Rs. 45,000 for Smt. Dinanath Mangeshkar. Now in this state of the evidence the Tribunal has disbelieved the solicitor and the story of these borrowings from 10 hundi financiers of the amount of Rs. 95,000. We have deliberately dealt with the facts in some detail because in our opinion this finding of the Tribunal is a pure finding of fact. It is supported by the evidence and circumstances:

(1) The assessee herself has not given any evidence. When she first produced her accounts she did not disclose that the transactions disclosed in the accounts were all put through by her solicitor and that she personally had no knowledge of them. It was only after the Income-tax Officer issued summonses to the alleged financiers mentioned in her accounts, failed to secure their presence and informed her of his infructuous attempts that she disclosed for the first time that the loans were taken through her solicitor.

(2) No doubt the assessee has produced her solicitor and his accounts and her accountant to support her own accounts, exhibits “A” and “B”, but in the first place, the account books of these two parties namely the solicitor and his client, do not tally nor support the oral evidence of Shantikumar nor the assessee's own case. According to the story unfolded in the oral evidence of Shantikumar Gandhi, he did not know any one of the financiers but he only knew Nichani & Co., the brokers, and it was through the brokers that he procured the alleged loans from 10 persons mentioned in the account of the assessee. In the assessee's account books the names of all the financiers alone appear, neither the names of the solicitor nor Nichani & Co. appear. It is the solicitor's case that he dealt only with Nichani & Co. It then remains unexplained where the assessee got the names from.

(3) In his own account also the solicitor has mentioned so far as the amount of Rs. 45,000 is concerned, the names of the five financiers from whom Rs. 45,000 were borrowed. What is still more surprising is that the name of Nichani & Co. through whom this amount was borrowed nowhere appears in the account books of the solicitor.

(4) Furthermore, the account books of the solicitor show that Rs. 45,000 were borrowed on 23rd August, 1960, from the five parties mentioned in the account and on the same day Messrs. Tolani & Co. had sold to the assessee the flat in Prabhu Kunj.

(5) Then according to the solicitor's account a sum of Rs. 45,000 was received from Smt. Dinanath Mangeshkar in repayment of the loan borrowed from the five parties and on the very next day, i.e, 14th October, 1960, the five parties were paid off the sum of Rs. 45,000. This is so far as the solicitor's accounts are concerned, but when one turns to the assessee's accounts, exhibit “B”, it is shown in the first five entries the state of the accounts regarding a sum of Rs. 45,000. The persons from whom the amounts are shown to have been borrowed are the same as the five persons mentioned in the account of the solicitor, the date on which the amount is borrowed is also shown as 23rd August, 1960, in each case, but the date of repayment is shown as 19th October, 1960, whereas in the solicitor's account the amount of Rs. 45,000 is said to have been repaid on 13th October, 1960. If the assessee repaid the amount to her solicitor on the 19th as shown in her books then the solicitor could not have repaid the financiers on the 14th as his account book shows. Thus the two accounts do not tally and actually are contradictory of each other.

(6) What is more, the assessee on her part has scrupulously denied in the letters written on her behalf that she had anything to do with the financiers and indeed did not know them. She also has denied that she knew Nichani & Co., the brokers or the financiers, through whom the finance was obtained by the solicitor but in her accounts we find the names of all the 10 financiers clearly mentioned. If the transactions were only with the solicitor and the amounts were only procured for her by the solicitor she would not have mentioned the names of original financiers, whom she now says she did not know at all.

(7) Similarly so far as the solicitor's accounts are concerned, there is no mention whatsoever of Nichani & Co., the brokers through whom he obtained the finances. On the other hand his case also is that he had nothing to do with the financiers but he only dealt with Nichani & Co. and yet in his books of account are mentioned the names of at least five of the financiers from whom the amount of Rs. 45,000 was procured.

(8) As regards the remaining amount of Rs. 50,000 admittedly there are no entries in the accounts of the solicitor at all. We cannot understand this stand of the solicitor having regard to the fact that he is a solicitor and an officer of this court. Under the rules governing his conduct he is bound to maintain a separate account of all amounts received on behalf of his clients and there is no doubt in this case that the assessee and her mother were his clients. Why then was the amount of Rs. 50,000 not mentioned in his books while the amount of Rs. 45,000 appears in his books, stands unexplained. His explanation that the amount of Rs. 45,000 was entered in the books because it was paid by cheque and the amount of Rs. 50,000 was not entered because it was paid in cash, has only to be stated to be rejected. We are not surprised therefore that the Tribunal has disbelieved him and rejected his explanation.

(9) But, the most important circumstance is that in this case in order to explain where these amounts were obtained it was the solicitor who disclosed that they were obtained through the brokers, Nichani & Co., and it was he who furnished the address which was communicated by the assessee to the Income-tax Officer. When, however, the assessee summoned the proprietor of Nichani & Co., namely, Kanayalal, the latter totally denied having anything to do with these transactions or having these alleged loans. It was after Kanayalal made this statement that the solicitor was further examined and it was at that stage that the solicitor came up with the names of Hariram and Khiaram as being the persons who dealt with him on behalf of Nichani & Co. Till then the names of these two persons were totally undisclosed. Thus, the solicitor also improved the story from time to time as occasion demanded.

15. There is absolutely no evidence on the record to show, except the sole word of Shantikumar that Hariram and Khiaram had any connection with Nichani & Co. either as partners or in any other capacity. What is more, there is no challenge to the statement of Kanayalal that Nichani & Co. is his sole proprietary concern. Though he mentioned the names of Hariram and Khiaram as given to him on behalf of Nichani & Co., Shantikumar did not state that they were partners of Nichani & Co. All he said was that generally all transactions were put through by Hariram and Khiaram and, therefore, he was saying that these transactions were also put through one or the other of them, vide his answer to question No. 6 in his examination dated 3rd October, 1963. Kanayalal on his part was asked about Hariram and Khiaram and he has definitely stated that Nichani & Co. had nothing to do with them though he knew them as brokers working in the market. Thus, the position was that on this crucial point the Income-tax Officer and the Tribunal had on the one hand the evidence of Shantikumar Gandhi that he dealt with Nichani & Co. (later improved to say that he dealt with Hariram and Khiaram) and on the other hand the evidence of Kanayalal that he never dealt with Shantikumar Gaadhi in regard to these transactions. The Tribunal believed the story of Kanayalal and disbelieved the story of Shantikumar. If once this question as to from whom the alleged loans were borrowed is determined, then it affects the question whether a sufficient enough explanation had been offered by the assessee as to the alleged loan of Rs. 95,000.

16. No doubt it was urged that Kanayalal of Nichani & Co. was a self-confessed dealer in smuggled gold and, therefore, a man who ought not be believed at all. No doubt Kanayalal cannot be said to be a man of any repute but in this case upon his own evidence and admissions we cannot say that Shantikumar, the solicitor, was any better, and it was a question of believing one or the other. Shantikumar himself introduced the name of Nichani & Co. The Income-tax Officer summoned Nichani & Co. and found that Kanayalal was its sole proprietor. Thus, Kanayalal was, so to say, a witness on behalf of the assessee. Moreover, the solicitor's admissions as to his conduct, vis-a-vis the transactions, leave much to be desired. He has admittedly received the sum of Rs. 50,000 from his clients as clients, but has not entered it in his books of account. Such entries as are found in the books of account regarding the total sum of Rs. 45,000 do not support the story which was subsequently told in the witness box. His account books do not tally with the account books of the assessee. Generally we are somewhat surprised with the conduct of this solicitor who has admitted that he procured finances from certain unknown brokers who in spite of the best efforts of the department are still not found and could not be examined and that he lent himself to such transactions does not speak much in his favour. In some he has merely lent his name and official position as a solicitor to cover up the shady transactions of the assessee. It is between such a person and Kanayalal on the other hand that the Tribunal had to choose and in the circumstances the Tribunal decided to believe Kanayalal's story and disbelieve that of Shantikumar Gandhi (vide paragraph 19 of their order). It is clearly a finding based upon a pure appreciation of evidence, and on the evidence unassailable.

17. Mr. Palkhivala urged that Shantikumar's evidence is supported by documentary evidence and, therefore, ought to be believed. The documentary evidence consists of the alleged hundis and his books of account. We have already said enough to show that his own account books stand discredited and in any case do not support the story which he and his client, the assessee, have ultimately put forth before the Income-tax Officer. So far as the hundis are concerned the mere existence of these hundis does not establish that money which they ostensibly show as borrowed, actually passed between the parties thereto.

18. The other argument advanced was that once the assessee indicated reasonably a source to which the amount of Rs. 95,000 could well be attributed the assessee has discharged the burden of proof on her and it was for the department, thereafter, to show how the amount could not have come as it did from the solicitor. The argument amounts merely to saying this that if a person comes and says that he paid a certain amount to the assessee, the assessee has completely discharged the burden of proving the source of that amount. In our opinion, we cannot entertain such an argument for the simple reason that it is not enough to show that a person says that he paid the money but it must be shown from where the money actually came, i.e, the source. That has not been established in this case.

19. Some errors in the statement of the facts in the order of the Tribunal were pointed out to us. These are merely minor errors which really do not affect the major findings given. Any mistake in the statement of facts does not necessarily vitiate the findings nor turn a question of fact into one of law. We have not been able to find any reason for holding that in giving its finding the Tribunal has either misdirected itself or acted without any evidence or contrary to the materials on record. Certainly, it cannot be said that it is a finding which a person acting judicially would not reasonably have given. In our opinion, all the questions raised in this application for reference are pure questions of fact and so the rule must be discharged.

20. Rule discharged with costs.