Income assessment requires proof of accrual or receipt in the relevant year before an addition can stand.

An amount cannot be assessed as income for a particular accounting year unless the record contains a reasoned finding, supported by evidence, that it was income and that it accrued or was received in that year. Here, the addition under section 34 failed because there was no specific finding that the sum was income of the assessee or joint family, and no material showing receipt or accrual during the relevant year. The Tribunal's further observation did not supply the missing factual basis. The tax addition was therefore unsustainable and the reference was answered against the Revenue.

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Issues: Whether the sum of Rs. 7,750 could be assessed as income of the assessee for the relevant accounting year in the absence of findings that it was income and that it accrued or was received during that year.

Analysis: The reference arose from an addition made under section 34, and the question referred concerned whether there was material to assess the sum in the hands of the assessee. The record disclosed no specific finding that the amount was income or that it accrued to the joint family during the accounting year 1944-45. Without such findings, and without evidence showing that the amount was received as income within the relevant period, the addition could not be sustained. The Tribunal's further statement did not cure the defect, because no basis was shown for an implied finding on the essential questions.

Conclusion: The question was answered in the negative, and the addition was not sustainable; the decision was in favour of the assessee.

Final Conclusion: A tax addition cannot stand unless the authority records and supports findings that the amount was income and that it accrued or was received in the relevant accounting year.

Ratio Decidendi: An amount cannot be assessed as income for a particular year unless there is a reasoned finding, supported by evidence, that it was income and that it accrued or was received during that year.

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