Law:

Section:

Section 2(6)(c ) of the Finance Act, 1968 – Income - Earned or unearned - Assessment year 1968-69 - Whether burden is on department to prove whether particular income is earned income or unearned income for purpose of applying relevant rate of surcharge - Held, yes - ITO rejected assessee's explanation that money seized in search represented accumulations of agricultural income and income from business activity and treated amount as unearned income of assessee for purpose of levying surcharge – There was no material to show that amount in question constituted income received by assessee from any investments made by him or from property owned by him – Whether, in such circumstances, Tribunal was justified in holding that amount would constitute in income earned by assessee by personal exertion – Held, yes FACTS On a search of the premises of the assessee certain amount was seized by the Income-tax authorities. Since the assessee was not able to offer any satisfactory explanation regarding this cash, the ITO assessed the said amount as the income of the assessee from "other sources". He also levied a surcharge treating the entirety of the said amount as unearned income. Since the AAC confirmed the conclusion of the ITO, the assessee contended before the Tribunal that the surcharge being an additional levy, the burden was on the department to prove that the income in question was unearned income attracting the rate referable thereto. The assessee also contended that the amount in question represented the accumulations of agricultural income and the income which the assessee obtained from his business activity in Ceylon and this contention having been rejected and there being no evidence to show that the amount in question was the income of any investment made by the assessee, the amount in question could only be earned income and could not have been treated as unearned income. The Tribunal allowed the assessee's appeal. On reference: HELD The income in the instant case not having been assessed as salaries and not having been assessed as profits and gains of business or profession, but having been assessed only as income from other sources, it would be "earned…

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