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Issues: (i) Whether, in an appeal against an order of remand, the Appellate Tribunal could take fresh evidence and examine the assessment on merits. (ii) Whether there was material to hold that the sum of Rs. 73,000 represented concealed income of the assessee.
Issue (i): The Tribunal's appellate power under section 33(4) was wide enough to enable it to pass such orders as it thought fit, provided both parties had an opportunity of being heard. The subject-matter of the Department's appeal remained the correctness of the assessment, and the Tribunal was not confined to the two grounds stated in the memorandum of appeal.
Conclusion: The Tribunal was competent to take fresh evidence and decide the assessment on merits, and the finding was against the assessee.
Issue (ii): In cases of cash receipts, the burden lies on the assessee to prove the source and nature of the money. The Tribunal rejected the explanation offered for the high denomination notes, found the Ruler's evidence unreliable, and relied on surrounding circumstances which supported the inference that the story of deposit and return was untrue. The High Court held that the finding rested on material and involved a question of fact, not a question of law.
Conclusion: There was material to sustain the finding that Rs. 73,000 was concealed income, and the conclusion was against the assessee.
Final Conclusion: The reference was answered against the assessee on both questions, and the addition of Rs. 73,000 as taxable income was upheld.
Ratio Decidendi: In an income-tax reference, the Tribunal may exercise the full appellate power conferred by section 33(4), and a finding that a receipt is concealed income will not be disturbed if it is supported by material and the assessee has failed to discharge the burden of proving its source.
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