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TMI Blog1952 (7) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee so far as one of those questions was concerned, but felt that the other questions raised by him and overruled by the Income-tax Appellate Tribunal required further consideration by this Court. Those questions have now been consolidated into one by the Income-tax Appellate Tribunal and the question that has now been referred for our decision is as follows:- Whether on the facts and in the circumstances of the case, the Tribunal was right in confirming the additions of ₹ 10,291 and ₹ 10,000 in the assessments for the years 1944-45 and 1945-46 respectively? The facts which gave rise to this question are as follows:-During the two assessment years in question, the Income-tax authorities added the above mentioned a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ussed in the last year's assessment order and it has been proved that the assessee has got business activities not disclosed to the Department. From year to year he has been requested to file a wealth statement, but through a written statement he has stated that it is not possible, to prepare and file it, and thus compels me to make an addition for omissions of income for activities kept outside the books. On the basis of past history I add back a sum of ₹ 10,000 as net income from such activities. Thus, the assessment under this head in 1945-46 merely refers back to 1944-45 and the assessment of the year 1944-45 refers back to what has been done in 1943-44. At our suggestion, and with the consent of both sides the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disappeared it necessarily had to be assumed that that source was still available to the assessee in the account years. In that view of the matter it confirmed the additions of ₹ 10,291 and ₹ 10,000. Copies of the relevant portions of the Tribunal's order dated 11th November, 1948, marked annexures 'A' and 'A-1' are appended herewith and form part of the case. We have no doubt that this view taken by the Income-tax authorities based on the alleged presumption is erroneous in law. Past history may be legitimate material, but that: is not sufficient by itself without more, to justify assessment in a particular year. There must be some material relatable to the accounting year which taken with the past ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut on legitimate material from which a reasonable inference of income having been earned during the accounting year in question can be drawn, and that the initial burden of finding such material, however slight, is on the Income-tax authorities and not on the assessee. In the present case all the materials before the Income-tax authorities are (i) the existence of past capital and (ii) the fact that the assessee has not filed a wealth statement for the accounting year though called upon to do so. We do not think that these facts are sufficient to shift the burden of proof on to the assessee. The facts do not necessarily justify any prima facie inference that the past capital produced income during the accounting year. Before such an infer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence of all his purchase transactions during the year and of the financial results thereof, which he apparently made no attempt to do. Having regard to the facts of the case before the Privy Council, these dicta can only be taken to mean that the burden shifted to the assessee, because there was material relating to the accounting year, for instance, (the admission of receipt of some income from the mortgage loan business for the particular accounting year) from which an inference of income from the undisclosed source during that year could reasonably be drawn, and which therefore required to be estimated, because the assessee did not place all the relevant materials before the taxing authorities. We are satisfied that the questio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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