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TMI Blog1957 (9) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... r. It was in answer to the notice that the assessment case was reopened and some further items said to be income from an undisclosed source in the hands of the assessee were assessed. The question which mainly arises in these assessment cases is whether the Income-tax Officer had sufficient material on which to hold that the cash credits represented income from an undisclosed source. The matter, however, has been split into many questions, which we shall give after we have narrated the facts of the two cases separately. M.C.C. No. 42 of 1955: In that assessment year the Income-tax Officer found the following cash credits in the account books of the assessee, who carries on the business of bidi making and manihari: ₹ 33,000 Ghar account ₹ 10,000 Deposit in the name of Mohammad Islam ₹ 11,000 Deposit in the name of Muslimbi ₹ 41,300 From sale of gold The Income-tax Officer held that all these represented income from an undisclosed source, and he therefore added these sums to the income alr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessed the income on a percentage basis, he was justified in treating the said sums of ₹ 41,300 and ₹ 11,000 as profits from an undisclosed source? M.C.C. No. 43 of 1955. The questions are the same as in M.C.C. No. 42 of 1955 except that in question No. 6 ₹ 41,300 and ₹ 11,000 are replaced by ₹ 19,576 and ₹ 20,000. As regards questions Nos. (1) and (2) we may say that these questions were not debated before us, because the assessee admitted that the action taken cannot now be questioned. We, therefore, do not consider it necessary to give any answers to those questions. Thus, there are only four questions which need to be answered. These questions readily divide themselves into two categories. In category one is the sale of gold worth ₹ 41,300 in the assessment year 1945-46 and sale of gold worth ₹ 19,576-2-0 in the assessment year 1947-48. In the second category are two deposits made by Muslimbi amounting to ₹ 11,000 in the assessment year 1945-46 and ₹ 20,000 by Yaqub Manihar in the assessment year 1947-48. The case of the assessee is that the power to tax by virtue of section 34 belongs to the Depart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Those were cases on their own facts and cannot therefore be made applicable in the present context of facts. The next argument of the assessee is that he had given a reasonable explanation about the sale of gold and that in the absence of any proof by the Department that that explanation was untrue the case of the assessee ought to have been accepted by the Department. This leads us to the consideration of the burden of proof in these cases. The learned counsel for the assessee contends that in an original assessment case the burden of proving every item of cash credit as not being income is upon the assessee, but that in a case arising under section 34 the Department must show by some evidence that the cash credits represented income from an undisclosed source contrary to what the assessee alleges it to be. In our opinion, the question of burden has not been properly understood by the assessee. The assessee is always in a better position to know whence the income or the cash deposits came. Of course, the assessee always gives an explanation, and that explanation may be true or it may be false. The Department is under no bounden duty to accept the explanation of the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosed source on the ground that the sale had taken place in far off places like Delhi and Bombay through the agency of third parties and no vouchers of the acquisition or of the sale of gold had been produced before the Department. Indeed, the very conduct of the assessee in selling gold at Delhi and Bombay through third parties would put any person on enquiry as to how this gold came to be acquired. No explanation beyond this that the acquisition was made by the family in the past was given. No vouchers were produced either of the purchase or of the sale of gold, and in view of this the explanation of the assessee was rejected and reliance was placed on his own account books to show that there was a cash entry of the receipt of this sum, which was said to be from an undisclosed source. We have already said that the Department was not bound to show categorically what that source was. Indeed, from the nature of things it would be impossible for the Department to find out how much of the income had been obtained from the disclosed business of the assessee and how much of the income from undisclosed sources had gone to build up this nucleus. In our opinion, there was thus mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in treating the amount as the assessee's income over and above the income which they had assessed at an enhanced flat rate on the normal working of the disclosed business of the assessee. We are, therefore, of opinion that the income which has been added under the head gold in the two assessment years above mentioned was properly so included. This brings us to the cash deposits in the name of Muslimbi and Yaqub Manihar. In relation to the deposit of Muslimbi nobody was examined. It was said that Muslimbi and her husband were dead and, therefore, could not be examined. The very existence of these persons is a matter of some doubt and conjecture. The Income-tax authorities took into account the explanation together with the evidence such as it was and found it most unsatisfactory. It was contended on the authority of R.B.N.J. Naidu s case (supra), that the explanation given by the assessee should be accepted when the Department had no other evidence of its own. In that case the assessee had stated that the deposit in the name of his wife arose from moneys which the wife had managed to save from her monthly allowances. The amount there was small, and the pass-book of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to see is not what the Tribunal decided subsequently but what was the material on which the Department had to reach its conclusions in the assessment year. It may be that by the time the other case came before the Tribunal some other material which might have been brought in this case was brought before them. The Department has to decide cases from year to year, and it can only do so on the material placed before it and is not expected to anticipate material that will be brought before it in future. For these reasons we think that the orders passed were, therefore, correct and the questions naturally get answered. It was contended that the report of the Income-tax Officer for obtaining the sanction of the Commissioner related only to gold and not to the cash deposits which were subsequently found in the name of third persons. We think that once the case is reopened under section 34 of the Income-tax Act the Income-tax Officer is not limited to the information which he had received and on the strength of which he had asked for a reopening and reassessment of the assessee. If he were to discover other cash credits, he is entitled to take them into account in the income of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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