TMI Blog1974 (4) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... ming to the conclusion that the cash balance of Rs. 1,70,038 did not include 140 high denomination notes when they were presented on January 22, 1946, to the bank for encashment ? " The assessee is a registered firm, and the subject-matter of assessment covered by this reference is the assessment year 1946-47 relating to the accounting period November 25, 1944, to February 13, 1946, in accordance with the prevalent practice and manner regularly employed by the assessee for maintaining its books of account. The short facts necessary for the disposal of this reference case may be stated as follows. On August 17, 1946, the assessee filed its return for the relevant assessment year. On November 7, 1946, the assessment proceedings were taken up by the Income-tax Officer when the books of account of the assessee were first examined. An order of assessment was made on October 4, 1948. The assessee took up the matter in appeal to the Appellate Assistant Commissioner of Income-tax, who by his order dated November 14, 1949, set aside the assessment order of the Income-tax Officer and remanded the case to him for reassessment. By an order dated January 27, 1958 (copy marked annexure "A" t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their genuineness was concerned, and the revenue all along proceeded upon the assumption that on January 12, 1946, the crucial date, the assessee had a cash balance of Rs. 1,70,000 odd. The contention put forward on behalf of the assessee all along was that this cash balance of Rs. 1,70,000 odd which it had on that date covered the disputed amount of Rs. 1,40,000, for the notes of the denomination of Rs. 1,000 were legal tender till the 12th of January, 1946, and the assessee was well within the legal limits of its rights in converting notes of small denomination to the notes of high denomination for the purpose of safe keeping and in the interest of security. None-the-less, the contention or the explanation put forward on behalf of the assessee was rejected both by the Income-tax Officer and the Appellate Assistant Commissioner who concurrently held that the assessee had not discharged the onus of proving the source of the high denomination notes. When the appeal was pursued before the Tribunal, the Tribunal again rejected the explanation put forward by the assessee, holding, inter alia, that : (i) There was no custom or practice prevalent in the market for any merchant to keep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicability of the doctrine of onus. The underlying current behind the order of the Tribunal as well as those of the subordinate assessing or appellate authorities seems to be that the assessee must in such cases prove the source of receipt of the high denomination notes. This, in my view, is not the correct position in law. As has been held by an early decision of this court in the case of Sri Nilkantha Naravan Singh v. Commissioner of Income-tax, where account books are accepted by the fact-finding authorities as genuine and there was hence no material upon which the Tribunal could reach the inference that the high denomination notes were not the saving oil the assessee and where the cash balance had not exceeded the amount of the value of the high denomination notes subsequently demonetised, it was not necessary for the assessee to explain the source of receipt of such high denomination notes covered by the cash balance showed. It was held in that case on facts more akin to the facts of the instant case thus : "In my opinion, there is no onus thrown upon the Raja (the assessee) to indicate from whom each note to the value of Rs. 10,000 was received, and no adverse infer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trong suspicion, but it was held that howsoever strong the suspicion may be it would be still within the realm of conjecture and surmises to treat it as a ground for rejecting the explanation which may be probable. As a matter of fact, the facts of the present case stand on a stronger footing than the case of Lalchand Bhagat Ambica Ram, which the Supreme Court was concerned with. Reference in this connection may also be made to a Bench decision of the Allahabad High Court in the case of Kanpur Steel Co. Ltd. v. Commissioner of Income-tax, wherein it was held that the burden of proof lay upon the department to prove that the sum said to be representing the suppressed income of the assessee was from undisclosed sources and the burden was not on the assessee to prove how it had received the high denomination notes, for, until the Demonetisation Ordinance -came into force, high denomination currency notes could be used as freely as notes of any lower denomination and no one had any idea that it would be necessary for him to explain the possession of high denomination currency notes. Again, in the case of Bai Velbai v. Commissioner of Income-tax, the principle was reiterated by the Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as therefore, in my view, no bearing upon the point at issue in the instant case. Mr. Tarkeshwar Prasad, when confronted with this position, submitted that he had placed reliance upon the case of Manna Ramji, for the purpose of showing that the matters with which we are concerned in the instant case were as much matters of fact as were those which were being considered by the Supreme Court in that case and that, therefore, in any event, learned counsel submitted, the finding of the Tribunal must be treated as a finding of fact based upon certain materials discussed by the Tribunal in rejecting the assessee's contention and that no question of law can be said to arise out of the finding or the decision of the Tribunal. I am, however, definitely of the view that the findings of the Tribunal based upon the observations or materials already quoted in detail at an earlier place go to show that the so-called findings of fact, if any, are based upon placing a wrong onus of proof and applying not the correct principles of law governing such cases. On the facts as discussed by the Tribunal and the subordinate appellate or assessing authorities, no tangible material has been brought on the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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