TMI Blog2006 (11) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... t clear whether and under what provision of the Act the income was assessed but that is not material to the controversy before us and suffice to note that the Assessing Officer issued a notice of reassessment under section 148 on 28-5-2001 in response to which the assessee stated that the return already filed on 31-3-1993 may be taken as the return filed in response to the above notice. In the reassessment proceedings, on the basis of the diaries seized from one S.K. Jain, managing director of Bhilai Engineering Corporation Ltd. on 3-5-1991 in the course of a search conducted by the CBI in his business and residential premises, the Assessing Officer took the view that the assessee had received Rs. 10,00,000 from S.K. Jain and proposed to assess the same as the income of the assessee. A statement under section 131 was recorded from the assessee on 25-1-1996 in the course of which he was asked whether he received any money from S.K. Jain. The assessee replied that during the election of April/May 1991 S.K. Jain met him with late Shri Kamal Singh, who was the assessee s election agent, that Kamal Singh informed him that Jain had come to help the assessee in the election, that he could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... selectively relying on the statement which suited his purpose. The statement has to be considered as a whole. ( d )The fact that the assessee would have had to incur the expenditure himself had he not received the money from Jain does make the receipt the income of the assessee. It was the burden of the Assessing Officer to prove that the receipt had all the ingredients of income and only then the burden would shift to the assessee to show that it was exempt under some provision. The ruling in A. Govindarajulu Mudaliar s case was not applicable; the ruling of the Supreme Court in Parimisetti Seetharamamma v. CIT [1965] 57 ITR 532 was applicable under which it was the burden of the department to prove first that the receipt was of income nature. ( e )The receipt was not income, much less in the hands of the assessee. When the money was received, the assessee was an ordinary political worker. No services were either sought for by or rendered to S.K. Jain. There was no quid pro quo. Even the Assessing Officer has no case that the assessee rendered any help or service or any favour to S.K. Jain. The assessee did not even know Jain personally. ( f )The amount could at best b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng submissions for our consideration : ( a )The question for consideration is whether the amount received by the assessee is "income". It may be a receipt, but not necessarily "income". Every receipt is not taxable as income. None of the ingredients commonly embedded in the concept of "income" is present. ( b )At the relevant time, the assessee was a worker of the Congress Party and was not occupying any post of a public servant from where he could do any favour to S.K. Jain. There was no quid pro quo. ( c )The money was not used for the benefit of the assessee in the sense of acquiring any movable or immovable properties in his name or in the names of his family members or for his foreign travel expenses or personal expenses. ( d )The receipt cannot be brought to tax as income since politics is a service to the community at large and is neither a business nor a profession. The Assessing Officer has not specified the head of income under which the amount has been brought to tax. He has not also made out a case that the receipt was taxable as the income from the profession or business of the assessee. ( e )The provisions of section 56 also do not apply. In order that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to give him money. It is also true that the assessee did not personally receive the money but he having not denied the fact that Kamal Singh received the money and had also told him so (Answer to question No. 6 of the statement under section 131) it is beyond doubt that the money was received only on his behalf by Kamal Singh. The quantum of money received cannot also be in doubt because in reply to question No. 6 the assessee stated under section 131 that the amount "should be reasonably substantial sum and certainly not Rs. 10,000". The entry in the diary of Jain was to the effect that the disbursement to RP (the assessee) was 10.00. That this cannot refer to Rs. 10,000 has been admitted by the assessee himself; the next higher amount signified by the entry can only be Rs. 10,00,000. It could even signify Rs. 10 crore, but that is nobody s (including the department) case; in fact it may be an unreasonable inference and rightly not drawn by the Assessing Officer. Therefore, it is safe to assume that the amount received was Rs. 10 lakhs. The assessee has also stated why the amount was given by Jain. He further stated under section 131 that in April/May 1991 he did not know Jain o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it is of income nature. The burden to show that the receipt of income nature is on the income-tax authorities as held by the Supreme Court in Parimisetti Seetharamamma s case ( supra ). In this case, the earlier judgment of the Supreme Court in the case of A. Govindarajulu Mudaliar ( supra ) was considered and explained. The following observations in the judgment settle the position : "By sections 3 and 4 the Act imposes a general liability to tax upon all income. But the Act does not provide that whatever is received by a person must be regarded as income liable to tax. In all cases in which a receipt is sought to be taxed as income the burden lies upon the department to prove that it is within the taxing provision. Where however a receipt is of the nature of income, the burden of proving that it is not taxable because it falls within an exemption provided by the Act lies upon the assessee." (page 536-537) With regard to the earlier judgment in A. Govindarajulu Mudaliar s case ( supra ), on which the revenue had placed reliance to contend that "where an assessee fails to prove satisfactorily the nature of the receipt, it is open to the Income-tax Officer to infer th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
