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1. Interpretation of unexplained cash receipts in income tax assessment. Analysis: The judgment pertains to a reference made by the Income Tax Appellate Tribunal regarding the assessment for the accounting period of 1942-43. The case involved two cash receipts totaling &8377; 15,000 brought into the account during the said period. The Income Tax Officer treated this sum as part of the assessee's total income. The assessee argued that the cash chest account, where the receipts were found, had a history dating back to 1931 and had not been questioned previously. However, the Appellate Assistant Commissioner and the Tribunal dismissed the appeal, leading to the reference to the High Court. The primary issue addressed in the judgment was whether the Income Tax Officer could infer that unexplained cash receipts were income in nature if the assessee failed to prove the source and nature of such receipts. The Court held that in the absence of proof regarding the source and nature of cash receipts, the Income Tax Officer was entitled to infer that they constituted income. This ruling aimed to prevent taxpayers from entering unexplained cash credits in their accounts and avoiding disclosure of pertinent details, thereby ensuring proper income assessment. The second issue revolved around the burden of proof regarding the nature of unexplained cash receipts. The question posed whether the burden shifts to the Income Tax Officer if similar unexplained cash receipts had not been noticed in previous years. The Court clarified that in such instances, the burden does not shift to the Income Tax Officer. The judgment emphasized that the failure to notice similar cash receipts in earlier assessments did not automatically impose the burden of proof on the tax authorities. The Court cited relevant case law to support its interpretation and concluded that the burden remained on the assessee to substantiate the nature of unexplained cash receipts. In conclusion, the High Court answered the first question affirmatively, stating that in the absence of proof, unexplained cash receipts are to be treated as income. The second question was answered in the negative, confirming that the burden of proof does not shift to the Income Tax Officer based solely on the failure to notice similar cash receipts in previous assessments. The Court directed the applicant to pay the cost of the reference to the respondent Commissioner.
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