Presumption of ownership of cash found in possession sustained where no reliable evidence rebutted the assessee's explanation.

Cash found in an assessee's residential premises gave rise to a strong presumption of ownership, and the assessee had to rebut that presumption with cogent, reliable evidence. The explanation that the cash belonged to a third party was rejected because the third party's books did not show any corresponding cash balance and the affidavit relied on was treated as unsupported and self-serving. On those facts, the cash was assessed as the assessee's income from undisclosed sources and the addition was sustained.

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Issues: Whether the amount of Rs. 84,233 recovered from the assessee's premises was taxable as income of the assessee on the basis of possession and whether the assessee's explanation that it belonged to Anand Marg Pracharak Sangh could be accepted.

Analysis: The cash was found in the residential premises occupied by the assessee, while the books of the said society did not record any corresponding cash balance. The explanation that the money belonged to the society was not supported by its accounts or by reliable contemporaneous evidence. The assessee's reliance on an affidavit asserting ownership of the cash by the society was rejected as a self-serving statement unsupported by corroboration. The majority held that in the case of cash, possession gives rise to a strong presumption of ownership and the assessee had not discharged the burden of proving that the cash belonged to someone else. The contrary view in dissent treated the surrounding circumstances as insufficient to attribute exclusive possession to the assessee and would have remanded the matter for fresh appraisal.

Conclusion: The amount of Rs. 84,233 was rightly assessed as the assessee's income from undisclosed sources, and the addition was sustained.

Ratio Decidendi: Where cash is found in the possession of an assessee, possession raises a strong presumption of ownership, and unless the assessee adduces cogent and reliable evidence to rebut that presumption, the cash may be assessed as the assessee's income from undisclosed sources.

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