LexSMT. SRILEKHA BANERJEE AND OTHERS versus COMMISSIONER OF INCOME-TAX, BIHAR AND ORISSA
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1963 8ijayt111011da Pot11ait v. Ga1,.,glina Sa/w w ...... J. 19/JJ M.,<11 11 552 SUPREME COURT REPORTS [1!164] VOL. for withdrawal of an appeal, the proper course for the High Court would be to consider all that is required bys. 110 itself. However in view of our decision on the first question we need not pursue the point further. We, therefore, allow the appeal, set side the order of the High Court and in view of the unconditional application for withdrawal made by Satrughna Sahu, the appellant before the High Court, order that the appeal before the High Court should stand with- drawn. In the circumstances we pass no order as to costs. Appeal allowed. SMT. SRILEKHA BANERJEE AND OTHERS v. COMMISSIONER OF INCOME-TAX, BIHAR AND ORISSA (S.K. DAS, A.K. SARKAR and M. HIDAYATUJ,LA.H JJ.) [1\COl1\t Tax-Sale of high denominalio1' notts-Sale procud•, if liable to tax-Indian Incomeo-ta~ Act, 1922 (11 of 1922). The asscssee had encashed 51 high denomination note• of R1. 1,000/- each injanuary, 1946. The assessee'• explanation in his application for encashment of the notes was that he '"1.'.U a colliery proprietor and contractor, that for conducting the buainess and for payment to labour which came tc a!,out Rs.30,000/-to 4-0,000/- every week he had to keep large sums of money to meet emergency and that the sum of R.. 5r ,000/ - realised by cncashment of the notes wa• neither profit nor part of profit but was floating capit~l for.the purpose of.condu.liaJ business. The Income-tax Officer did not accept thu explana- tion and treated this amount •• profit from 10me undisclosed 2 S.C.R. SUPREME COURT REPORTS 553 source and assessed it as assessable income. The assessec conten- ded that the burden lay on the department to establish that the amount in question was income liable to tax and that the department had failed to establish this. Held that the department was justified in holding that Rs. 51,000/- was assessable income of the assessee from some undisclosed source. It was not correct that the assessce was not required to prove anything and that the burden was entirely upon the department to prove that the amount received from the encashment of high denomination notes was income. The correct position is as follows. If there is an entry in the account books of the assessee which shows the receipt of a sum or conversion of the notes by the assessee himself, it is necessary for the assessee to establish, if asked, what the source of that money was and to prove that it did not bear the nature of income. The depanment is not at this stage required to prove anything. If the business, the state of accounts and dealing of the a1Scssee show that he might have, for convenience, kept the whole or part of a particular sum in high denomination notes, the assessee prima facie discharges his initial burden. If the assessee does this the department cannot act unreasonably and reject that explanation to hold that it was income. If the explanation is unconvincing, the department can reject it and draw the inference that the amount represents income either from the source already disclosed by the asscssee or from some undisclosed source. Before the department rejects such evi- dence it must either show an inherent weakness in the explana- tion or rebut it by putting to the asscssce son1e infortnation or evidence which it has in its possession. The fact that there was rec!eipt of money or conversion of notes is itself prima Jacia evidence against the assessee on which the department can proceed in absence of good explanation. In the present case though cash used to be received from Banks and sent to the various places where works were carried on by the asscssee and vice versa, no central account of such transf~rs was disclosed. There was also no account of personal expenses of the assessee and he failed to prove why such large sums were kept at hand in one place when at each of the places where work wa1 carried on, there were Banks with which he had accounts. Further though this large sum was kept on hand, further cheques were drawn to meet current needs and this amount remained untouched. Kanpur Steel Co. Ltd. v. C. I. T. [1957] 32 I. T. R. 56, Lalchand Bhagat Ambica Ram v. CommisBioner of Inc"'1!e-tax, Bihar and Oriesa, [1959] 37 I. T. R. 288; Manindranath DaB1' v, OommisBioner of Income-tax, Bihar and Orissa, [1955] 196J Sriltk ho B11t11rj11 •• C.mmisrie
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