Burden of proof on assessee: unexplained cash held taxable where source is not proved and factual inferences uphold assessment.

The central issue concerns the assessee's burden to prove the source and nature of cash receipts; applying that principle, the factfinder rejected inconsistent explanations and lack of corroboration for an asserted third party origin, drew adverse factual inferences and estimated a portion as held by the assessee. On that factual and legal basis the tribunal treated the unexplained balance as income assessable to tax and its finding was upheld, so the assessment of the contested cash as unexplained taxable income stands against the assessee.

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Issues: Whether there was material for holding that Rs. 53,000 representing high denomination notes encashed by the assessee during the accounting period was income assessable to income-tax.

Analysis: The applicable legal principle places on the assessee the burden to prove positively the source and nature of receipts received in the accounting year; failing such proof, revenue authorities may infer that unexplained receipts are of an income nature. The tribunal examined the assessee's inconsistent explanations, the evidence on record (including statements disproving the asserted gift) and the absence of corroboration for the later claim that the notes belonged to a third party. The tribunal also considered the assessee's social and financial status and, on that factual basis, estimated an amount (Rs. 20,000) as a plausible holding of high denomination notes by the assessee and treated the balance as unexplained and taxable. The referral raised a question of law as to whether material existed to sustain the assessment; the tribunal's conclusion rested on application of the burden principle and on factual inferences drawn from the evidence and the assessee's failure to discharge the onus.

Conclusion: The question is answered against the assessee and in favour of the Income-tax department; the tribunal's finding that Rs. 53,000 was assessable as unexplained income is upheld.

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