LexPARIMISETTI SEETHARAMAMMA versus COMMISSIONER OF INCOME-TAX, HYDERABAD
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PARIMISETH SEETHARAMAMMA
v.
COMMISSIONER OF INCOME-TAX, H\'f)ERAllAI>
April 21, 1965
IK. SUBBA RAO. J. C. SHAH ANDS. M. SIKRI, JJ.]
lnco111e Tax Art. J 922, ss. 3 and 4-Gifts of jewellery nrrd n1one)' 111tult•
tn assesscc-Not in the nature af inconze-~Vhcther h11rde11 of prol·U1g
if .ruch receipts ta.tablr is upon tlu• drparflnent.
The appellant submitted a return of her income from property and
business for .the assessment year 1947-48 and disclosed in a statement that
the
Maharani of Baroda bad, beJween Nov_ember 1945 and February
l 948, "out of natural love. and affection", given her some jewellery and
money amounting to Rs. 5,20,000. The income-Tax Officer accepted this
sra1ement and di<l not treat the jewellery and money as taxable income.
But while considering the payment of funher similar amounts in the
course assessment proceedings for a subsequent year,
the
Incomc-Ta.l
()fficcr <lcciderl to issue the appellant a notice under s. 34; he ev~ntually
held the gifts n1:1de by the Maharani during the years in question to be
rcnnu1cralion for services rendered by lhe appell:1nt a.;; a n1Jid-servanl or
Secretary. and therefore to he taxable income.
In appeal, the Appellate Assistant Commissioner and the
Tribunal
substantially agreed with the view taken by the
Income-Tax
Officer.
Upon a reference, the High Court al'o decided in favour of the respon-
dent, mainly on the ground that as the asscssec was admiJJedly in receipt
of Jargc sums of money, in order to claim ex.cn1ption
from tax, the
hurdcn \\'3S upon her to establish that these amounts u-·erc voluntary pay-
n1cnts by the 1\1aharani out of natural love and affccrinn: anJ that this
burden had not been disch:1rgcJ.
On appeal to this ('oun.
HELD : The burden of proof was wrongly placed on the appelbnl.
In all ca~es in \\·hich a receipt is sought to be taxed a5 incon1e, the burden
lies upon the Department to prove that it is \Vithin the taxing provision.
Where, ho\vevcr, a receipt is o[ the nature of income, the burden of
proving that it is not tax:ahle because it falls
,~·ithin an exemption pro-
vided by the Act, lies upon the asscssee.
The appellant admitted that
~he had received jewellery and diYersc ~un1s of nloney froni the Mah.irani
and claimed that as these v.-crc girts made out of love :ind affection. they
<lid not fall within the taxing provisions.
It \Va~ not her c.ise that being
income, the receipts were exempt from ta:-::ation because of a statutory
provic;ion.
Consequently, it was for the Department to c;:;tahllsh that
t.hcse receipts \\'ere chargeahlc 10 tax. 112 E-·-13 A]
\Vhcther a receipt is liable to be treated ;1'i i~come depend-> very
largely upon the facts and circumstances of each case; it is open to the
Income-tax authorities to raise an inference that :i receipt by an ~cssce.
is assessable income where he fails to disclose satisfactorily the source
and the nature of the rcceipl.
But here the M'urcc of income \\'a'i Jis-
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SEETHARAMAMMA V. C.l.T. (Shah, J.)
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closed by the appellant and there was no dispute about the truth of the
disclosure. [14 C-D]
Comniissioner of Income Tax, West Bengal
v.
Calcutta
Agency
Ltd., 19 I.T.R. 191 and A .. Govindaraiulu Muda/klr v. Commissioner of
Income Tax, Hyderabad, 34 I.T.R. 807, explained and distinguished.
Crvn, APPELLATE JURISDICTION : Civil Appeals Nos, 199,
B
200 of 1964.
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Appeals by special leave from the judgment and order dated
April 13, 1960 of the Andhra Pradesh High Court in Case Refer-
red No. 11 of 1960.
AND
Civil Appeals Nos. 201 and 202 of 1964.
Appeals from the judgment and order dated April 13, 1960 of
the Andhra Pradesh High Court in Case Referred No. 12 of 1960.
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N. A. Palkhiwala and R. Ganapathy Iyer, for the appellant (in
all the appeals).
N. D. Karkhanis and R. N. Sachthey, for the respondent (in
all the appeals).
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The Judgment of the Court was delivered by :
Shah, J.
The appellant carried on business at Nuzvid as a
money-lender and conducted a cinematograph theatre. In respect
of income from property and business she submitted a return of
her income for the assessment year 194 7-48 and disclosed in a
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statement, dated August 26, 1949, that Sita Devi-Maharani of
Baroda-had between November 10, 1945 and February 11, 1948
"out of natural love and affection" given to her some jewellery and
four amounts of money which aggregated toExcerpt shown. Read the full judgment & AI analysis in Lexace.