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TMI Blog1979 (11) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... ade in the past two years? " At the outset we may point out, as we did during the course of argument by the learned counsel, Mr. Monga, for the respondent, that the question needs to be reframed. The words in the appellate order of the Income-tax Appellate Tribunal, dated 20th August, 1966, as also in the referring order, dated 21st November, 1969, are " should be treated to have come out ". These words will be substituted in place of the words " came out " in the question. In the assessment year 1961-62, income shown by the assessee in his return was not accepted but was estimated at Rs.13,000 for 1960-61 and at Rs. 11,000 for 1961-62. In the assessment year 1962-63, with which we are concerned, the cash credit of Rs. 11,724 had to be e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether the assessee has offered no explanation about the nature and source of the cash credit or whether the explanation offered by him is not in the opinion of the ITO within the meaning of s. 68. The first thing that strikes us regarding s. 68 is that it is necessary that an explanation has to be given by the assessee regarding the nature and source of the cash credit. That is to say, the assessee must state what the cash credit represents and from where this loan has been obtained by the assessee. This, to us, appears to be entirely a statement of fact to be made by the assessee. The explanation cannot be a mere legal argument. We find that in the present case the factual explanation given by the assessee was that this cash credit repres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 18,500 made to his income in the previous year. In our view, s. 68 requires only a factual explanation and not such a purely legal argument. In so far as the decision in CIT v. Ram Sanehi Gian Chand [1972] 86 ITR 724 (Punj) suggests that benefit of the additions to the disclosed income of the assessee in the previous years can be given to the assessee in the subsequent years to explain the source of the cash credit is a pure question of law, we are respectfully unable to understand how the explanation required by s. 68 can be given by way of a purely legal argument without any statement of fact. Mr. Monga also relied upon two previous decisions of this court, namely, (1) CIT v. Bawa Jagjit Singh, (ITR No. 30 of 1969, decided on 18-7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1963] 50 ITR 1 did not hold that the loan given in one account can, in no case, be linked with or explained by reference to the earlier withdrawals, in other accounts. In that case the Tribunal had reached the conclusion that these loans were sufficiently explained as having been covered by the withdrawals of Rs. 50,000 in the three accounts barely two months earlier. In this decision also, therefore, there is a clear link between the loans and the withdrawals and the explanation of facts, therefore, was according to s. 68 of the Act. In the present case, the question whether the explanation of fact as to the source of the cash credit was given by the assessee can be decided only on the strength of the order passed by the Tribunal in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the mere fact that no explanation is to be given at all. The explanation then will be only a, presumption of law that the cash credit which was unexplained income must in law be deemed to have come out of the previous years' income. Mr. Monga earnestly argued that we should construe the words in the orders of the Tribunal to mean that the assessee had actually given an explanation of fact that the amount of the cash credit had in fact come from the previous years' income. The line of demarcation between an allegation of fact and an argument based on law may be fine, but it is nevertheless real. In this cam, howsoever sympathetically the orders of the Tribunal are read, we cannot draw from them the conclusion that the assessee had given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was said that there would be double taxation because it was assumed that the same income had once been earlier taxed on the basis of an estimate. This reason is obviously fallacious, for, if the income is treated as one from an undisclosed source which the question postulates, it is not treated as income of the disclosed source which had previously been assessed to tax and, therefore, there is in such a case no double taxation. It is not a case where the Income sought to be taxed was held to be undisclosed income of a disclosed source the income of which source had previously been taxed on the basis of an estimate. If it were so, the question of double taxation might have been legitimately raised. That, however, is clearly not the case here ..... X X X X Extracts X X X X X X X X Extracts X X X X
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