Unexplained cash receipt treated as income when the assessee failed to prove the source of encashed high denomination notes.

An unexplained cash receipt obtained by encashing high denomination notes was held assessable as income because the assessee failed to prove, with reliable evidence, that the amount came from earlier savings. The explanation was unsupported by material showing the source of the cash, the relevant disbursements, or that the claimed cash balance remained available on the material date. The court applied the principle that the burden lies on the assessee to rebut an inference of income where the source and nature of a receipt are not satisfactorily explained, and upheld treatment of the amount as taxable income.

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Issues: Whether the sum of Rs. 13,000 represented by encashed high denomination notes was income assessable to income-tax.

Analysis: The assessee had encashed high denomination notes during the relevant previous year and claimed that they represented earlier savings. The explanation was not supported by complete material showing the source, disbursements over the relevant years, or that the cash balance on the material date remained available in the amount claimed. The burden was on the assessee to prove that the receipt was not of an income nature. In the absence of sufficient evidence, the revenue authorities were entitled to treat the unexplained amount as income.

Conclusion: The sum of Rs. 13,000 was correctly treated as income assessable to income-tax, and the answer was against the assessee and in favour of the Revenue.

Ratio Decidendi: Where an assessee fails to satisfactorily explain the source and nature of an unexplained receipt, the taxing authority may infer that the amount is income and the burden lies on the assessee to rebut that inference by reliable evidence.

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