Unexplained cash receipts treated as assessable income when taxpayer fails to satisfactorily explain, leading to taxability of those sums.

Where amounts recorded as credits in a firm's books were not satisfactorily explained by the taxpayer, the legal principle applied permits the tax authority to draw an adverse inference and treat such unexplained receipts as assessable income. The Court accepted factual findings that the proffered explanations (a gift and profits credited through a benamidar partner) were not established, and so upheld the treatment of the specified sums as concealed income, resulting in dismissal of the taxpayer's appeals and taxability of those receipts.

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Issues: Whether the amounts of Rs. 80,000 and Rs. 42,000 shown in the firm's accounts but not satisfactorily explained by the assessee are to be treated as income assessable to tax (concealed income).

Analysis: The Court examined the factual findings of the Income-tax Officer and the Appellate Tribunal that the two explanations offered by the assessee (a gift from his aunt and profits credited through a benamidar partner) were not established. On the facts, the receipts appeared in the firm's books as credits from the assessee, and the assessee failed to prove the source or nature of these receipts. The Court applied the established legal principle that where an assessee fails to satisfactorily explain the source and nature of cash receipts during the accounting year, the tax authority may draw an adverse inference and treat such unexplained receipts as assessable income.

Conclusion: The Court upheld the Tribunal's conclusion that the amounts represented concealed income and dismissed the appeals; decision is against the assessee and in favour of the Revenue.

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