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Explanation of the source of deposits in the business for the assessment year 1967-68. Analysis: The case involved a reference made by the assessee regarding the explanation of deposits totaling Rs. 15,000 introduced in the business during the accounting year 1967-68. The deposits were found credited in the accounts of two ladies who were wives of the partners in the firm. The assessee claimed that the money belonged to the ladies, supported by affidavits and evidence showing disclosure under the voluntary disclosure scheme of the Finance (No. 2) Act of 1965. The Income-tax Officer found the explanation unsatisfactory under section 68 of the Income-tax Act, 1961. The Appellate Assistant Commissioner, however, accepted the explanation based on the acceptance of disclosure petitions by the Commissioner, indicating that the amounts belonged to the ladies. Consequently, the assessment was reduced by Rs. 15,000. The department appealed to the Tribunal, which overturned the decision, stating that the assessee failed to explain the source of the deposits adequately. The Tribunal disregarded the disclosures made under the voluntary disclosure scheme and found the affidavits vague and unconvincing in proving ownership of the money. The High Court analyzed the Finance (No. 2) Act of 1965, emphasizing that the voluntary disclosure scheme did not require investigation into the claims of the declarant but only aimed at taxing the disclosed income. The Court agreed with the Tribunal that the tax charged on the disclosed amount did not establish ownership if the money did not belong to the declarant. The Court concluded that the disclosures and tax payments by the ladies were irrelevant in proving ownership, and since the affidavits were rejected, the assessee failed to explain the source of the deposits as required by section 68 of the Income-tax Act, 1961. Ultimately, the High Court answered the question negatively, ruling against the assessee and in favor of the Commissioner of Income-tax. The Court upheld the Tribunal's decision that the assessee had not discharged the onus of explaining the source of the deposits, considering the inadmissibility of the affidavits and the irrelevance of the voluntary disclosure scheme in proving ownership of the deposited amounts. The Commissioner was awarded costs amounting to Rs. 200.
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