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TMI Blog1960 (4) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... wellery also, viz., ₹ 4 lakhs, in computing the taxable income. The total taxable income according to him was ₹ 4,70,000 (Rs. 4 lakhs representing the value of the jewellery and ₹ 70,000 cash received from Sita Devi). The assessee went in appeal before the Appellate Assistant Commissioner and contended that the amounts were not salaries paid, and submitted that the various amounts received by her could be regarded only as windfall . The Appellate Assistant Commissioner not being satisfied with the version put forward by the assessee and because the record before him showed that she had acted as the local agent of the said Sita Devi and it had also appeared that she was styled the private secretary of the said Sita Devi, he came to the conclusion that the amounts received by her were in lieu of services rendered to the said Sita Devi. In the result he affirmed the order of the Income-tax Officer with regard to the sum of ₹ 70,000 treating it as amount received by the assessee for services rendered. With regard to the value of the jewellery the jewels were got valued by a local firm of jewellers, Ummidi Ramiah Setti, and taking the valuation of the said firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s filed on September 9, 1953. After the statement was filed the Income-tax Officer called upon the assessee to furnish information on various matters relating to the gifts said to have been received from Princess Sita Devi. It is a detailed letter calling upon the assessee to give particulars about various matters contained therein. This letter of the Income-tax Officer is of October 31, 1953. The assessee sent her reply on November 27, 1953, explaining in detail the circumstances under which these payments were made to her and tracing the relationship of Sita Devi from the time that she was in Pithapuram and later in Vuyyur after her marriage with the Kumar Raja of Vuyyur. The next event worth mentioning is that Sitaramamma was examined on December 26, 1954, in support of the explanation given by her. After this sworn statement and after further enquiries, notice was issued to the assessee on March 15, 1955, under section 34 of the Income-tax Act. In the meantime the Income-tax Officer appears to have made independent enquiries and on the basis of the information received, proceedings under section 34 were started on August 8, 1955. The Income-tax Officer wrote a letter to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for services rendered, within the meaning of section 7 of the Income-tax Act. The material on record on which this conclusion was arrived at by the Income-tax Officer consists of a bill from the Bombay Garage Limited, dated 31st December, 1948, for a sum of ₹ 47-8-0 in regard to the registration fee paid on Chevrolet Car No. BMY 4931 for Baroda State. The bill is addressed to The Private Secretary to H.H. The Maharani of Baroda, P. Manavathi Bai, Jayamahal Palace, Nepeansea Road, Bombay. The Income-tax Officer seeks to rely upon this document as lending support to the case that the assessee was an employee of Sita Devi. The other document on which reliance is placed is a letter from the Income-tax Officer, II Ward, Bombay, to the Additional Income-tax Officer Vijayawada, wherein the Income-tax Officer says that he called for the books of a firm called Chamanlal Manchand and Co., Jewellers, for Samvats 2003 to 2008 and that there was no account in the account books of the said firm in the name of either K.V. Narasinga Rao or Sitaramamma (the assessee). The Income-tax Officer, Bombay, enclosed with this letter a statement in original recorded by him of Chamanlal Manchand, one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imply contended herself by making bland statements like Her Highness Sita Devi, Gaekwad of Baroda, used to give me these gifts according to the will and pleasure of Her Highness. With regard to the jewellery that she received from Princess Sita Devi, she makes the same statement to say that these were received as gifts on various occasions in India and she says I do not have any correspondence regarding these gifts. The position was that she did not make any attempt to prove that the receipt of sums of money from the Princess, and the jewellery received from her, were gifts and as such exempt from tax falling under section 4(3)(vii) of the Act. The bare allegation unsupported by any evidence, in our opinion, was not sufficient to discharge the burden which lay upon the assessee. When certain amounts appear in the account books of an assessee as receipts, the taxing authorities ask for an explanation; if the explanation is satisfactory there is an end of the matter and no other question arises but if the explanation be not found to be satisfactory, the taxing authorities are entitled to bring such sums under assessment. This would make it abundantly clear that the burden lay upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorities proper materials to enable them to come to the conclusion that the income sought to be assessed was agricultural income and that it was not for the income-tax authorities to prove that it was not agricultural income. In this view they set aside the judgment of the High Court of Madras, holding that the High Court had erroneously placed the burden of proof on the Department. This case is authority for the proposition that the bare allegation of the assessee unsupported by evidence is insufficient to discharge the burden which lay upon the assessee to prove that the income was not taxable. For these reasons, we hold that the assessee failed to discharge the burden that lay upon her. With regard to R.C. No. 12 of 1960 it would appear that the Income-tax Officer started taking proceedings under section 34 of the Act with regard to the assessments for the years 1947-48, 1948-49, and 1950-51. The Income-tax Officer initiated proceedings under section 34 stating that he had come to know that the assessee was in the employ of Sita Devi as a result of which she had received large amounts in question and as he was of the opinion that the assessee did not disclose fully and truly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Income-tax v. Mahaliram Ramjidas [1940] 8 ITR 442 . The law as it stood prior to the amendment of the section in 1948 gave the power to the Income-tax Officer to initiate proceedings under section 34 where on the information before him he considered in good faith and he had good reason to believe that the assessee's profits have for some reason escaped assessment. Their Lordships were of the opinion that the Income-tax Officer was not required by the section to convince the assessee or to intimate to him the nature of the alleged escapement or to give him an opportunity of being heard before he decides to exercise the powers conferred by the section. By an amendment brought in 1939 the powers of the Income-tax Officer in this regard were curtailed and after the amendment in 1948 the position came to be this. By this amendment the words definite information and discovers were deleted and the words has reason to believe substituted. There can be no doubt that the belief that is contemplated in this section must be that of an honest and reasonable person, based upon reasonable grounds. The Officer must act on direct evidence or, if direct evidence was not available, on ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . No documentary or oral evidence was adduced in support of this allegation by the assessee. He also expressed his inability to lead any evidence and denied his being in a position to produce any correspondence with regard to the alleged gift by Princess Sita Devi. He merely contended himself by saying that these amounts were given to him for his faithfulness to the said Sita Devi for having given up his railway job and attaching himself to the Princess for rendering services to her. The Income-tax Officer, on the sworn statement of the assessee, assessed him to an income of ₹ 58,000 consisting of ₹ 30,000 being the amount received in cash and ₹ 32,000 being the value of the jewellery, after giving credit for the earned income relief. The assessee appealed to the Appellate Assistant Commissioner, who, while confirming the assessment order of the Income-tax Officer in regard to the cash income of ₹ 30,000, taxed the assessee on the actual value of the jewellery, viz., ₹ 6,350, and reduced the taxable assessment to ₹ 25,650. The matter was taken up in appeal before the Appellate Tribunal and the Tribunal concurred with the Income-tax Officer and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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