Law:

Section:

Section 143 of the Income-tax Act, 1961 [Corresponding to section 23 of Indian Income-tax Act, 1922] - Assessment - Additions to income - Assessment year 1947-48 - Whether receipts or cash credits in books of account of assessee are prima facie evidence in favour of holding them as assessee's income and initial onus cannot be said to be discharged by mere production of a letter from a third party admitting such money as their money - Held, yes - Whether when reliance is not placed by department on such third party letter and opportunities are given to assessee and third party for giving satisfactory explanation as to source of cash credits, assessee's onus to prove source remained undischarged - Held, yes - Whether, therefore, on failure to discharge such onus, additions of said amount is to be upheld - Held, yes FACTS In the books of accounts of the assessee-company, there were several cash credits. The assessee's explanation before the Income-tax Officer was that the amount in question was received from a firm to which the assessee was an associate company. The assessee produced from the said firm a statement to the effect that the loans in question were advanced by the firm in the names of the above persons. The Income-tax Officer rejected the explanation of the assessee and the sum of cash credit was added as the income of the assessee-company from undisclosed sources. An appeal was filed by the assessee before the Appellate Assistant Commissioner without any success. The Appellate Tribunal also, on second appeal, rejected the said explanation put forward on behalf of the assessee-company. On reference : HELD When cash credit entry appeared in the assessee's books of account in an accounting year, the assessee had the legal obligation to explain the sources of such receipt. The initial onus was entirely on the assessee, but the question whether such onus had been duly discharged by the assessee or had been shifted to the revenue could only be determined after the evaluation of all the surrounding circumstances. The surrounding circumstances to be considered must however be objective facts, evidence adduced before the taxing authorities, presumption of facts…

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