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Issues Involved:
1. Whether there was any material to hold that the sum of Rs. 20,000 was income of the assessee from some other source and not included in the assessed income after the rejection of the books of account. Issue-wise Detailed Analysis: 1. Material to Hold Rs. 20,000 as Income from Another Source: The assessee, a registered firm dealing in handloom cloth and Kashi silk, had its accounts rejected by the income-tax authorities for the assessment year 1946-47. The authorities estimated the income at a 10% profit rate and added a cash deposit of Rs. 20,000, recorded in the name of Banshidhar Rawatmal, to the estimated income, treating it as income from an undisclosed source. The Tribunal upheld the assessment, rejecting the assessee's contentions that the Rs. 20,000 should not be treated as income from an undisclosed source and that the books of account should not have been rejected. The court noted that the assessee was known to carry on only one business and there was no material to suggest any other business. The income-tax authorities treated the Rs. 20,000 as income from an undisclosed source without expressly stating or discussing whether it was from a source other than the business. The authorities' ignorance of the source did not justify treating it as income from another source. The court emphasized that income from the six sources enumerated in section 6 is taxable, including "profits and gains of business" and "income from other sources." Without material evidence, income from business cannot be treated as income from other sources. The Tribunal's justification was based on the mere fact that the assessee's explanation for the entry was found unacceptable. The court acknowledged that false explanations could lead to the presumption that the receipt was assessable income, but not necessarily from a particular source. The court referenced several case laws, including Srinivas Ramkumar v. Commissioner of Income-tax, Ramcharitar Ram Harihar Prasad v. Commissioner of Income-tax, and D.C. Auddy and Bros. v. Commissioner of Income-tax, to support its view that without material evidence, the income could not be presumed to be from another source. The court concluded that the income-tax authorities' assumption that the Rs. 20,000 was from a source other than the business was unjustified. The authorities could not add the Rs. 20,000 to the estimated income from the business without material evidence to support the finding that it was from another source. The absence of knowledge about the source did not mean it was necessarily from another source. The court highlighted that when the source is unknown, the authorities should resolve the doubt in favor of the assessee. The court referred to various cases, including L.R. Brothers v. Commissioner of Income-tax and Maddi Sudarsanam Oil Mills Co. v. Commissioner of Income-tax, which supported the view that unexplained cash credits should be treated as part of the estimated income if there was no material evidence suggesting another source. The court also discussed the case of Homi Jehangir Gheesta v. Commissioner of Income-tax, emphasizing that the rejection of an explanation does not automatically establish the character of the receipt as income from another source. The circumstances must lead to the inference that it is income from another source, which was not the case here. The court concluded that there was no material to hold that the Rs. 20,000 was income from a source other than the business. The question was answered in the negative and against the Commissioner of Income-tax. The assessee was awarded costs assessed at Rs. 200. Separate Judgment by Brij Lal Gupta J.: Brij Lal Gupta J. agreed with the answer proposed by the Chief Justice. He noted that there was no material to hold that the Rs. 20,000 was income from a source other than the business. He also agreed with the order about costs. He mentioned that he initially thought the question did not arise out of the appellate order of the Tribunal and should not be answered, but since the matter was argued on merits, he did not pursue this point further.
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