1966 (9) TMI 16 - HC - Income Tax

Tribunal Decision: Cash credit deemed income, subject to taxation

Ganesh Prasad Versus Commissioner of Income-Tax, UP

The court upheld the Tribunal's decision, ruling that the cash credit of Rs. 18,005 should be treated as income from an undisclosed source and subject to ... Cash credits - income from undisclosed source - taxability Issues:1. Treatment of a cash credit as income of the assessee for taxation in the year 1947-48.Analysis:The judgment pertains to a case under section 66(2) of the Income-tax Act, 1922, where the main issue was whether the sum of Rs. 18,005 credited to the assessee's account should be treated as income liable for taxation in the assessment year 1947-48. The assessee, a partner in a firm, explained that the cash credit was from the sale of gold ornaments brought from Rangoon due to enemy action. However, the Income-tax Officer, Appellate Assistant Commissioner, and Tribunal rejected the explanation, deeming the amount as income from an undisclosed source. The Tribunal found that the source and nature of the cash credit were not satisfactorily proven by the assessee, leading to the question of whether the authorities were justified in inferring it as assessable income.The judgment discusses precedents such as Mithoo Lal Tek Chand v. Commissioner of Income-tax, emphasizing that the period between the credit entry and the commencement of the accounting year is not determinative of whether the sum is income. It cites Govindarajulu Mudaliar v. Commissioner of Income-tax, highlighting that if the source and nature of a cash credit are not satisfactorily proved, the Income-tax Officer can infer it as assessable income. The judgment also refers to Devi Prasad Vishwanath Prasad v. Commissioner of Income-tax, where the inclusion of unexplained cash credit in total income was discussed. The Supreme Court's stance in A. Govindarajulu Mudaliar's case established that the burden of proving the source of a cash credit lies with the assessee, and in the absence of such proof, it can be treated as taxable income.Further, the judgment addresses the contention that the burden of proof may shift if the source of the receipt is disclosed by the assessee, as seen in Parimisetti Seetharamamma v. Commissioner of Income-tax. However, it clarifies that the onus remains on the assessee to satisfactorily prove the source and nature of the receipt. Ultimately, the court upholds the Tribunal's decision, stating that the inference drawn regarding the cash credit being income from an undisclosed source was legally sound. The judgment concludes by answering the question in the affirmative, holding the assessee liable for costs and counsel's fee.In conclusion, the judgment delves into the burden of proof regarding cash credits, the authority of income-tax officers to draw inferences, and the significance of disclosing the source of receipts in determining assessable income. The decision underscores the principles established in previous cases and affirms the Tribunal's finding that the cash credit in question constituted income from an undisclosed source, justifying its inclusion in the assessment for the relevant year.