1960 (9) TMI 99 - HC - Income Tax

Court rules deposits not revenue receipts, burden of proof on Department, costs awarded to assessee.

RAM KISHAN DAS MUNNU LAL Versus COMMISSIONER OF INCOME-TAX, U.P. & V.P.

The court found that there was no evidence to prove that the cash deposits in question were revenue receipts of the assessee family. As a result, the ... - Issues Involved:1. Whether there was any evidence to prove that the cash deposits of Rs. 3,200, Rs. 3,500, and Rs. 1,000 totaling Rs. 7,700 entered in the account books of the firm Bachhoolal Chotey Lal in the name of Kailash Chand, Mst. Ram Piari, and Bachhoolal's mother respectively were the revenue receipts of the assessee.2. Whether there was any evidence to prove that this amount could be treated as revenue receipts for the relevant accounting year.Issue 1: Evidence of Cash Deposits as Revenue Receipts of the AssesseeThe assessee, a Hindu undivided family carrying on a business in gold and silver, was called upon by the Income-tax Officer to explain certain cash deposits appearing in the account books of the firm Bachhoolal Chotey Lal. The deposits in question were Rs. 3,200 in the name of Kailash Chand, Rs. 3,500 in the name of Mst. Ram Piari, and Rs. 1,000 in the name of Bachhoolal's mother. Radhey Shiam, a family member, provided an explanation on oath regarding the origins of these deposits, attributing them to personal savings and gifts. However, the Income-tax Officer, Appellate Assistant Commissioner, and the Tribunal did not accept this explanation and treated the amounts as revenue receipts of the assessee family.The court noted that the deposits appeared in the account books of the firm, not in the books of the assessee family. The firm, Bachhoolal Chotey Lal, was in a position to know the source of these deposits. The Income-tax authorities did not treat these amounts as the income of the firm. Thus, there was no direct evidence to show that the deposits belonged to the assessee family. The court emphasized that the mere rejection of the assessee's explanation does not automatically lead to the conclusion that the deposits were revenue receipts of the family. The court referred to various precedents, including Mithoo Lal Tek Chand v. Commissioner of Income-tax, which established that the burden of proof lies initially on the assessee to explain the nature of the receipt. If the explanation is unsatisfactory, the Income-tax Officer can consider it a circumstance but must base any conclusion on available materials.Issue 2: Evidence to Treat the Amount as Revenue Receipts for the Relevant Accounting YearThe court examined whether the amounts could be treated as revenue receipts for the relevant accounting year. The court reiterated that the deposits were in the firm's account books, not the assessee family's. The court also noted that the assessee family did not receive these amounts directly. The court highlighted that the burden of proof was on the Department to establish that the deposits did not belong to the individuals in whose names they appeared but to the assessee family. The court found no material evidence to support such a finding.The court referred to the principle that unless the contrary is proved, the apparent state of affairs is presumed to be real. The court concluded that mere relationship to the assessee family does not justify the assumption that the deposits belonged to the family. The Department failed to provide any material evidence to support the claim that the deposits were the family's income.Conclusion:The court answered the first question in the negative, stating there was no evidence to prove that the cash deposits were the revenue receipts of the assessee. Consequently, the second question did not arise, and it was not necessary to answer it. The assessee was awarded costs of Rs. 200, and the fee of learned counsel for the Department was fixed at the same amount. The reference was answered in the negative.