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Issues: Whether there was material to support the finding that the assessee was carrying on a business for its own benefit and that the sum of Rs. 28,200 was not merely an advance to Panna Lal.
Analysis: The relevant year was 1945-46. The assessee's books showed a squared-up account in the name of Panna Lal with debits and credits totalling Rs. 28,200. The Income-tax Officer treated the amount as artificial receipts from undisclosed sources and taxed it as business income. The appellate authority rejected that approach, but still inferred that the assessee must have had a share in Panna Lal's business because no interest was charged on the temporary use of the money. The Tribunal proceeded on the same assumption, although there was no evidence linking the assessee with Panna Lal's business. Mere suspicion, however strong, could not substitute for proof.
Conclusion: The question was answered in the negative and in favour of the assessee.
Final Conclusion: The reference was answered by holding that the addition could not be sustained on the record and the Revenue was directed to bear the assessee's costs.
Ratio Decidendi: An addition to income cannot be sustained on conjecture or suspicion alone; there must be material evidence connecting the assessee with the alleged business or income source.
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