1964 (12) TMI 56 - HC - Income Tax

High Court decision upholds inclusion of deposit in assessable income for 1947-48

Akberally Esufally (by his Legal Representatives) Versus Commissioner of Income-Tax

The High Court of Madras upheld the inclusion of a &8377; 50,000 deposit in the assessable income of the assessee for the assessment year 1947-48. The ... - Issues:1. Determination of assessable income under the Income-tax Act for the assessment year 1947-48 based on undisclosed deposits made by the assessee.Detailed Analysis:The judgment by the High Court of Madras involved a dispute regarding the assessable income of the assessee for the assessment year 1947-48. The assessee, a partner in a hardware merchant firm, did not disclose certain investments and income sources during the original assessment. Subsequently, it was discovered that the assessee had made fixed deposits of &8377; 50,000 each in a bank. The Tribunal excluded two deposits but upheld one &8377; 50,000 deposit in the name of the assessee and his son. The assessee explained the deposit as savings from partnership drawings and proceeds from jewelry sales. However, this explanation was rejected by the Income-tax Officer, leading to the inclusion of the &8377; 50,000 in the assessable income.The assessee appealed the decision, arguing that the Tribunal wrongly concluded that the amount must have originated from taxable territories. The counsel contended that the burden of proof lies with the department to establish the source of income, which was not done in this case. The court acknowledged that the assessee did not claim income from outside taxable territories and that the Tribunal's finding against the utilization of savings for the deposit was final. The court emphasized that when circumstances point to the only plausible source being the taxable territory, the burden of proof does not solely rest on the department to provide positive evidence. In this case, the Tribunal's conclusion was based on undeniable facts and circumstances, leading to the inference that the undisclosed income stemmed from the business in the taxable territory.The court dismissed the argument that the Tribunal's reasoning was speculative, highlighting that the evidence supported the conclusion drawn. Given that the assessee had no business or income source outside the taxable territory, the only logical inference was that the undisclosed income arose from the business within the taxable territory. Consequently, the court ruled against the assessee, upholding the inclusion of the &8377; 50,000 in the assessable income and ordering the assessee to bear the costs of the department along with counsel's fee.