TMI Blog1970 (2) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax Officer. The Income-tax Officer also disallowed a sum of Rs. 1,350 said to have been paid to Arjundas Pokardas by way of interest. He treated the sum of Rs. 61,350 as the income of the assessee from " other sources ". He thus added a total sum of Rs. 1,81,350 to the income returned by the assessee. On appeal by the assessee, the Assistant Commissioner upheld the finding of the Income-tax Officer, but thought that the addition of Rs. 1,20,000 and the addition of Rs. 61,350 may be merged. He said : " In the alternative, it is argued by the representative that as an addition of Rs. 1,20,000 has been made as value of deficit yield of mica, these two additions may be merged and separate additions are not necessary. I think this claim is justified, and, hence, this addition of Rs. 60,000 together with interest thereon will be deleted. The assessee gets a relief of Rs. 61,350. " Both the department and the assessee preferred appeals to the Income-tax Appellate Tribunal. The Tribunal held that the yield of cut mica during the months of September, October and November was not correctly brought out in the books of the assessee and that an estimate was called for. The Tribunal es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edits of Rs. 60,000 appearing in the account of Arjundas Pokardas was from disclosed sources, viz., business ? (2) Whether, on the facts and in the circumstances of the case, was the Appellate Tribunal correct in law in holding that the cash credits were attributable to the concealed income from business when it was not the assessee's case that there was suppression of business income and when it was unable to conclude that the suppression of production occurred before September to November in the previous year ? " The principal question raised by the department before the Tribunal when requesting the latter to state a case was whether the Tribunal having found that the cash credits were unexplained, was justified in holding that there should be only one addition of Rs. 60,000 notwithstanding the fact that the suppression of yield occurred during a period much later than the period during which the cash credits appeared. The Tribunal was of the opinion that the question raised by the Commissioner was a question of law but that the first question suggested by the Commissioner was sufficient to cover the issue between the parties. The Tribunal stated : " The only question that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was a firm and not an individual are relevant facts on the basis of which the Tribunal was entitled to arrive at the conclusion that the cash credits represented income from business and not income from other sources. In Govindarajulu Mudaliar v. Commissioner of Income-tax, the Supreme Court observed : " There is ample authority for the position that where an assessee fails to prove satisfactorily the source and nature of certain amount of cash received during the accounting year, the Income-tax Officer is entitled to draw the inference that the receipts are of an assessable nature. " In Kale Khan Mohammad Hanif v. Commissioner of Income-tax, the Supreme Court said : " It is well-established that the onus of proving the source of a sum of money found to have been received by the assessee is on him. If he disputes liability for tax, it is for him to show either that the receipt was not income or that if it was, it was exempt from taxation under the provisions of the Act. In the absence of such proof, the Income-tax Officer is entitled to treat it as taxable income. " The Supreme Court then proceeded to state that the taxing authorities were not precluded from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he presumptions is on the assessee. In Parimisetti Seetharamamma v. Commissioner of Income-tax, their Lordships of the Supreme Court pointed out that a conclusion recorded by the Income-tax Appellate Tribunal by wrongfully throwing the burden of proof on the assessee cannot be regarded as binding upon the High Court under section 66 of the Income-tax Act. It follows, conversely, that a conclusion recorded by the Tribunal by wrongfully throwing the burden of proof upon the department cannot also be regarded as binding upon the High Court in a reference under section 66 of the Income-tax Act. In the present case, while the authorities are clear that the burden of proving that the cash credits do not come under the head " income from other sources " was on the assessee, the Tribunal squarely threw the burden on the department and said : " Unless the circumstances are clear and compelling to show that the monies did not come from the business they need not be added separately. In a case of this type where the assessee is a firm, where there is no ostensible business or source and where the correctness of the books of account and the results disclosed thereby are found not acceptable, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case having regard to the onus and presumption to which we have already referred. Earlier, we referred to the decisions of their Lordships of the Supreme Court in Kale Khan Mohammad Hanif v. Commissioner of Income-tax and Commissioner of Income-tax v. Devi Prasad Vishwanath Prasad, where it was pointed out that it was open to an Income-tax Officer in an appropriate case to tax both the cash credit, the source and nature of which was not satisfactorily explained and the business income estimated by him under section 13 of the Income-tax Act. Therefore, the mere fact that in the present case the Income-tax Officer estimated the income of the assessee would not preclude him from adding the cash credit to the income as estimated by him. In the present case the Income-tax Officer accepted the results shown in the books of the company for all the months except September, October and November during which period there was an unexplained fall in the production of cut mica. The yield of cut mica had to be estimated only for the months of September, October and November. The cash credits appeared in the months of June, July and August and, therefore, could not possibly be connected with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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