9911796707
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Issues:
Assessment of undisclosed income outside the books for the years 1944-45 and 1945-46. Analysis: The judgment involves two cases consolidated into one, raising questions on the addition of undisclosed income outside the books by the Income-tax authorities. The primary issue revolves around the correctness of confirming additions of specific amounts in the assessments for the years 1944-45 and 1945-46. The Income-tax Appellate Tribunal referred the case to the High Court for final hearing, focusing on whether the Tribunal was justified in upholding the additions of Rs. 10,291 and Rs. 10,000 for the respective years. The facts leading to this question stem from the Income-tax Officer's orders for the relevant years, citing undisclosed assets and cash outside the books as reasons for the additions. The High Court scrutinized the basis of the assessments, emphasizing the reliance on past history by the Income-tax authorities to estimate undisclosed income. The Court highlighted that mere past history is insufficient to justify assessments for a particular year and emphasized the need for legitimate material to draw reasonable inferences of income earned during the accounting year. The judgment critiqued the authorities' presumption that the burden of proof lies on the assessee to show the disappearance of past capital, stating that the initial burden rests on the Income-tax authorities to provide material supporting the assessment. Furthermore, the Court referenced a previous case to illustrate the necessity of evidence from the accounting year to estimate income from undisclosed sources accurately. The judgment concluded that the Income-tax authorities erred in confirming the additions based solely on past history without substantial material related to the accounting years in question. The Court rejected the notion of assuming interest income from past capital without proper evidence and ruled in favor of the assessee, directing that the additions for the years 1944-45 and 1945-46 were not justified. In the final decision, the High Court answered the reference by stating that the Tribunal was wrong in confirming the additions of undisclosed income for the specified years. The judgment also awarded costs to the assessee and concluded with the agreement of the second judge, Mohapatra, J., thereby resolving the issues raised in the consolidated cases.
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