G M MADAPPA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference made by the Income-tax Appellate Tribunal in pursuance of the order of this Court in C. M. P. No. 4484 of 1946. We shall set out the questions at a larger stage. The reference arises out of the assessment for 1942-43 relating to the accounting period commencing from 10th October, 1940, and ending on 29th September, 1941. During that period, two items of cash receipts were brought into the account, namely, a sum of Rs. 10,000 on 26th March, 1941, and a sum of Rs. 5,000 on 2nd April, 1941. The two cash credits were discovered in the personal account designated as the cash chest account. The Income-tax Officer assessed the aggregate sum of Rs. 15,000 as part of the total income of the assessee earned during the accounting year. On appeal before the Appellate Assistant Commissioner, it was argued on behalf of the assessee that the cash chest account had been in existence since 1931, the previous credits had gone to make up the opening balance of Rs. 35,000 disclosed in the account, and that this account and the respective entries therein were noticed by the Income-tax Officer on previous occasions, when they were not questioned. The Appellate Assistant Commissioner called upon the assessees Advocate to furnish particulars as to the name of the ancestor, the date of bequest, the nature of the trust whose income was supposed to have been brought into the cash chest account, the amount left originally, and the amount then in hand. The Advocate expressed his inability to furnish those details, virtually refusing to supply any information regarding the source and nature of the two amounts in question. The Appellate Assistant Commissioner thereupon dismissed the appeal. An appeal was brought before the Tribunal, and there also the assessee was questioned about certain entries appearing in the cash chest account statement from 1933 onwards. But he was unable to show how such a large sum of cash happened to be in the cash chest in charge of the assessee. The appeal before the Tribunal was also dismissed. An application was made under Section 66 (1) by the assessee formulative for reference to this Court as many as seven questions. The application was resisted by the Commissioner, who, however, suggested in his reply that if at all any questions were to be referred relating to the unexplained cash credits, they were the two following question :-

(2.) WHETHER the burden of proving that such receipts are of an income nature would be on the Income-tax Officer if the Income-tax Officer failed to notice similar unexplained cash receipts in the accounts of earlier years in the course of the assessment proceedings of those years.