TMI Blog1966 (10) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... denomination notes could not form part of such balance - Held, no - - - - - Dated:- 3-10-1966 - Judge(s) : M. H. BEG., S. C. MANCHANDA. JUDGMENT The judgment of the court was delivered by MANCHANDA J. - This is a case stated under section 66(2) of the Indian Income-tax Act, 1922 (hereinafter referred to as the Act). The question referred is : "Whether there was material before the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee encashed 28 high denomination notes of Rs. 1,000 each. The Income-tax Officer required the assessee to explain the source of the notes. The explanation was that the assessee had a closing balance, in respect of the account maintained for its business, of Rs. 38,406-8-6 on 11th January, 1946. In other words, the explanation was that these 28 notes had come out of the aforesaid closing cash bal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contention and upheld the inclusion of Rs. 28,000 in the total income of the assessee as income from an undisclosed source. In the second appeal, the Tribunal was duly impressed by the fact that there was a large cash balance but then proceeded to find out how much, out of the daily cash balance with the assessee, could have been in the form of high denomination notes. In such an exercise unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... high denomination notes and not 61 as claimed by the assessee was based on pure surmises and the explanation of the assessee, which was a reasonable one, could not have been rejected. This court in Kanpur Steel Company v. Commissioner of Income-tax also categorised the finding of the Tribunal such as the one in the present case as based on surmises and conjectures. In that case, out of 32 high de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion did not exceed Rs. 399 did not preclude the possibility of payment in high denomination notes for such transactions. It was, therefore, held that the Tribunal had rejected the explanation of the assessee on surmises, and there was no material for the Tribunal to hold that the sum of Rs. 25,000 represented suppressed income of the assessee from undisclosed sources. The position in the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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