Third-party cash deposits cannot be taxed as family income without affirmative proof of real ownership

Cash deposits recorded in a third party's books cannot be treated as an assessee family's revenue receipts unless the Revenue first establishes, with affirmative material, that the money in fact belonged to the family. Disbelieving the family's explanation does not by itself prove taxable ownership, and mere relationship between the deposit holders and family members is insufficient. As the receipt of the money by the family was not admitted or otherwise established, and the apparent ownership of the deposit holders was not shown to be unreal, the disputed deposits could not be assessed as the family's income on the material before the authorities.

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Issues: Whether the cash deposits standing in the names of third persons in the account books of a firm, and not in the assessee family's own books, could be treated as the revenue receipts of the assessee family merely because its explanation was disbelieved.

Analysis: The deposits were found in the books of a firm in which the assessee family was not a partner, so the receipt of the money by the assessee family was not admitted or otherwise established. The rejection of the family's explanation, standing alone, did not supply affirmative material to prove that the money belonged to the family. In such a situation, the Revenue had to prove by some material that the apparent ownership of the deposit holders was not real and that the amounts in fact belonged to the assessee family. Mere relationship of the deposit holders to members of the family was insufficient.

Conclusion: The question was answered in the negative, and the deposits could not be treated as the assessee family's revenue receipts on the material before the authorities.

Final Conclusion: The reference succeeded for the assessee because the Revenue failed to establish the necessary factual foundation for treating the disputed deposits as taxable income of the family.

Ratio Decidendi: Where money is credited in the books of a third party and receipt by the assessee is not established, disbelieving the assessee's explanation does not by itself justify an inference that the amount is the assessee's taxable income; affirmative material is required to prove real ownership.

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