TMI Blog1965 (4) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... d a return of her income for the assessment year 1947-48 and disclosed in a statement dated August 26, 1949, that Sita Devi---Maharani of Baroda---had between November 10, 1945, and February 11, 1948, out of natural love and affection given to her some jewellery and four amounts of money which aggregated to ₹ 5,20,000. The Income-tax Officer, Special Circle, Vijayawada, accepted the appellant's statement and did not treat the money and jewellery received by her as taxable income. In the course of assessment proceedings for the year 1951-52, the Income-tax Officer was inclined to treat the money and jewellery given to the appellant as remuneration for services rendered to Sita Devi as a maid-servant. He accordingly issued a notice under section 34 of the Income-tax Act and called upon the appellant to submit an explanation adducing all documentary and other evidence in her possession relating to the receipt of assets admitted by her in her statement dated August 26, 1949, and relating to other cash amounts and cheques received by her between August 25, 1948, and October 23, 1952, and to other assets possessed by the appellant and disclosed by her in her wealth stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remuneration for services rendered, were taxable. The Tribunal submitted two consolidated statements of case---one in respect of the assessment years 1946-47 and 1951-52 and the other in respect of the years 1947-48 and 1950-51 and submitted in each of the statements the following question: Whether on the facts and in the circumstances of the case what the assessee received in the relevant years is assessable to tax and whether section 34 of the Income-tax Act could be invoked in regard to the years 1947-48, 1948-49 and 1950-51 ? (Reference to the year 1948-49 in the question is due to oversight as no reference was asked for and none was made in respect of that year). The High Court held that there was evidence before the Tribunal to support the finding that the appellant was an employee of Sita Devi and that the cash, cheques and jewellery admitted as received by the appellant were not given to her as gifts made out of love and affection, but as remuneration for services rendered. In the reference relating to the years 1947-48 and 1950-51 the High Court called for a supplementary statement, for determination of the question whether action under section 34 was justifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and affection. In so observing, the High Court, in our judgment, has committed an error of law. By sections 3 and 4 the Act imposes a general liability to tax upon all income. But the Act does not provide that whatever is received by a person must be regarded as income liable to tax. In all cases in which a receipt is sought to be taxed as income, the burden lies upon the department to prove that it is within the taxing provision. Where however a receipt is of the nature of income, the burden of proving that it is not taxable because it falls within an exemption provided by the Act lies upon the assessee. The appellant admitted that she had received jewellery and diverse sums of money from Sita Devi and she claimed that these were gifts made out of love and affection. The case of the appellant was that the receipts did not fall within the taxing provision : it was not her case that being income the receipts were exempt from taxation because of a statutory provision. It was therefore for the department to establish that these receipts were chargeable to tax. The decision of this court in Commissioner of Income-tax v. Calcutta Agency Ltd. lends no support to the proposition whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urce and nature of the receipt, to treat that as concealed income of the previous year in which the assessee was being taxed. The observation relied upon does not lay down a proposition that it may be inferred that a receipt is taxable as income because the assessee fails to lead all evidence in support of the case pleaded by him that the receipt is not within the taxing provision. Whether a receipt is liable to be treated as income depends very largely upon the facts and circumstances of each case : it is open to the income-tax authorities to raise an inference that a receipt by an assessee is assessable income where he fails to disclose satisfactorily the source and the nature of the receipt. But in this case the source of the income was disclosed by the appellant, and there was no dispute about the truth of that disclosure. The High Court disposed of the reference holding that the onus of proving that the receipts were not taxable lay upon the appellant, and that he did not discharge that burden. On the view expressed by us the answer recorded by the High Court on the taxability of the receipts must be discharged. Since the High Court has not considered the evidence, we would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The appellant's case primarily was that the receipts were not taxable because they were not income chargeable to tax. The Tribunal rightly observed that the information collected by the department from different sources which consisted of record of ex parte statements of certain persons about the relation between Sita Devi and the appellant, which they even declined to give in writing, could have no value in establishing the case of the department. There remained two pieces of evidence on which the Tribunal relied---(i) admission made by the appellant that she acted as the local agent in Nuzvid for disbursing salary to servants of Sita Devi and (ii) in a bill issued by the Bombay Garage Ltd. the appellant was described as private secretary to Princess Sita Devi . But these circumstances could not establish that what was given to her by Sita Devi was remuneration for services rendered or to be rendered. Realizing this infirmity, the Tribunal observed that the burden of proving that the receipts were not income lay upon the appellant. The Tribunal did not infer that as remuneration for disbursing salary to Sita Devi's servants she was given large amounts of money and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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