TMI Blog1982 (12) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... y application for registration of the dead of partnership and, therefore, it was treated as an association of persons by the ITO, who was the assessing authority. This fact is borne out from the assessment order of the ITO, which has been appended as annex. A forming part of the statement of the case. The assessee started its business from February 14, 1967. On that date, four of the five partners brought a capital of Rs. 5,001 each, and this amount was credited in the books of the firm on the first day of its business. This fact is borne out, apart from the statement of the case as submitted to this court by the Tribunal, by the appellate order of the Tribunal, which has been appended to the statement of the case as annex. C thereto. The fifth partner did not subscribe anything, presumably because he was supposed to be a working partner. The ITO, in his brief order, held that the evidence in respect of Rs. 3,300 was satisfactory, but not being satisfied with the balance of Rs. 16,700, held that the balance of Rs. 16,700 was the assessee's income from undisclosed sources. This was disputed by the assessee before the AAC, but the contention did not find favour with him. The AAC he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the aforementioned facts, the Tribunal deleted the amount of Rs. 16,700. The appellate order of the Tribunal has been marked annex. C, forming part of the statement of the case. It is in this background of admitted facts that we are called upon to record our opinion with regard to the correctness or otherwise of the decision of the Tribunal. Section 68 of the Act reads thus: " Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Income-tax Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. " It is now well settled that there was no provision in the Indian I.T. Act, 1922 (hereinafter to be referred to as " the 1922 Act "), corresponding to this section. The section merely gives statutory recognition to the nature and source of cash credits where they stand in the assessee's account or in the account of a third party. The question of burden of proof cannot be made to depend exclusively upon the fact of a credit entry in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear for such income. Section 68 of the Act enacts that if a sum is found credited in the books of an assessee maintained for any previous year (which may be different from the financial year), the cash credits may, in cases where it is assessed as undisclosed income, be treated as the income of the previous year, and the financial year may not be taken as the previous year for such a cash credit even if the undisclosed income is not found to be from the assessee's regular business for which the books are maintained. Although s. 68 of the Act provides that the previous year for which the books are maintained may be taken as the previous year for assessing the cash credits, it does not further provide that the cash credits should necessarily be deemed to be the profits of the business for which the books are maintained; the cash credits may be assessed either as business profits or as income from other sources. The other distinction of paramount importance is this. Under the 1922 Act, it was held that where large amount of cash is credited on the very first day of the accounting year, and considering the extent of the business it is not possible that the assessee earned a profit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sen as to whether a cash credit found in particular accounting year of the assessee could be taken to be the income of that accounting year or whether it should be taken to be of a separate previous year according to the financial year. This matter has been set at rest by section 68 which says that in all events the income of the assessee has to be treated of that previous year in which the cash credit has been found. Another dispute which had cropped up in various cases was as to whether the amounts found deposited on the very first day of the accounting year could be treated as the secreted income of the assessee of that accounting year. That matter has also been set at rest by section 68. But on the main question the argument advanced on behalf of the assessee before us that the section has not brought about any change in law seems to be correct." Thereafter, the law as it stood before the insertion of s. 68 of the Act and as it stood after its being incorporated in the 1961 Act has also been highlighted. So far as the question of principle is concerned, the other two decisions referred to above, namely, those of the Allahabad High Court (118 ITR 741) and the Calcutta High C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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