Unexplained deposit and inferred source: Tribunal may treat it as taxable business income without proof of a specific source.

Where an assessee's explanation for an unexplained deposit is rejected and no source outside the taxable territory is shown, the Tribunal may draw a reasonable inference from surrounding circumstances that the amount represents concealed business income arising within the taxable territory. Positive proof of a specific source by the department is not required on those facts. Applying that approach, the Tribunal treated Rs. 50,000 as assessable income for the relevant assessment year, and that finding was upheld.

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Issues: Whether the Tribunal had material to hold that Rs. 50,000 represented assessable income of the assessee in the assessment year 1947-48 and that, in the absence of any proved source outside the taxable territory, the amount could be inferred to have arisen from business in the taxable territory.

Analysis: The assessee's explanation for the deposit was rejected on facts, and that finding was final. The remaining question was whether the department had to prove positively a particular source in the taxable territory. The Tribunal's inference was based on the admitted absence of any business or source outside the taxable territory and on the surrounding circumstances of the deposit. On those facts, the conclusion was not conjectural but a reasonable inference that the amount represented concealed income arising in the taxable territory.

Conclusion: The issue was answered against the assessee. The Tribunal's finding that Rs. 50,000 was assessable income was upheld.

Ratio Decidendi: Where an assessee admits no source outside the taxable territory and the explanation for an unexplained deposit is rejected, the Tribunal may infer from surrounding circumstances that the income arose from the assessee's business in the taxable territory without positive proof of a specific source by the department.

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