KASHI RAM Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under Section 66 of the Indian Income-tax Act, 1922. Kashi Ram has been assessed as an individual. The assessment year is 1960-61. The assessee is a partner in registered firm, Messrs. Jamuna Das Kashi Ram. His share in the firm is 8 annas. At the time of assessment of Kashi Ram the Income-tax Officer noticed deposits amounting to Rs. 8,500. It was further noticed that the assessee had withdrawn from the accounts of the firm a small sum of Rs. 500. The assessee was invited to explain the source of deposit of Rs. 8,500. The assessee state d that that money came from dowry and sale of ornaments. The Income-tax Officer concluded that the explanation given by the assessee was not correct. Adding a sum of Rs. 2,000 to the deposit of Rs. 8,500 the Income-tax Officer inferred that a total sum of Rs. 10,500 represented the assessee's income from undisclosed sources. The same officer assessed the firm also. The firm declared a loss during the accounting period. That position was not accepted by the Income-tax Officer. He estimated the profit of the firm as Rs. 44,000. The assessee's share in the profit of the firm was fixed at Rs. 21,975. To that sum, a further sum of Rs. 10,500 was added as income of the assessee from undisclosed sources. In the result the individual was assessed on a total sum of Rs. 32,475.

(2.) IN appeal the assessee urged that it was unfair to assess on the sum of Rs. 10,500 as income from undisclosed sources in addition to the assumed share in the profit of the firm amounting to Rs. 21,975. This contention was accepted by the Appellate Assistant Commissioner. The sum of Rs. Rs. 10,500 was, therefore, deleted from the assessment.

(3.) IN Sreelekha Banerjee v. Commissioner of INcome-tax, [1963] 49 I.T.R. (S.C.). 112 ; [1964] 2 S.C.R. 552 (S.C.), it was held by the Supreme Court that if the explanation offered by an assessee is unconvincing, the department can reject it and draw the inference that the amount represents income either from the sources already disclosed by the assessee or from some undisclosed source. The department does not proceed on no evidence, because the fact that there was receipt of money is itself evidence against the assessee.