The assessee has the burden of proving the source and nature of the amount of the receipt, and if the assessee fails to do so, the revenue authorities are entitled to draw an inference that the receipt is of an income nature.

, J.

1. For the assessment year 1946-47 the petitioner was assessed under Section 23(3), Income-tax Act, upon the total income of Rs. 32,689/-. After the assessment was completed the Income-tax Officer received information that on 19-1-1946, the petitioner had encashed high denomination notes to the extent of Rs. 28,000/-. Proceedings were thereupon initiated under Sec.34, Income-tax. Act. The assessee filed a fresh return and gave explanation that the amount of Rs. 28,000.00 represented the amount of savings accumulated from his personal income upon which income-tax had already been paid. In his letter dated 16-6-1947 the assessee states:

"The funds of the high denomination notes accumulated from savings of my personal income since the date of our disruption of joint Hindu family. There was a run in the bank when England was off gold standard; since then we were in the habit of keeping some reserve cash at home in order to meet the personal and business needs. The high denomination notes in question form part of this reserve cash."

The Income-tax Officer did not accept the explanation and included the entire amount of Rs. 28,000.00 as secreted profits of the assessee during the accounting year. An appeal was taken by the assessee to the Appellate Assistant Commissioner but the appeal was rejected. The matter then came up before the Appellate Tribunal. It was contended on behalf of the assessee that out of 28 notes 15 notes were received from the Hongkong and Shanghai Banking Corporation.

The Appellate Tribunal did not accept this explanation but held that the case should be remanded back to the Income-tax Officer with a direction that the claim should be investigated after examination of the books of the Busserya Coal Company to whom Rs. 1000.00 notes were actually paid by the Hongkong and Shanghai Banking Corporation.

An enquiry was held by the Income-tax Officer and the matter again came up before the Income-tax Appellate Tribunal for the determination of the question whether the assessee had given sufficient explanation of the source of the entire amount represented by high denomination notes or portion thereof. After a comparison of the numbers of notes given by the Hongkong and Shanghai Banking Corporation with the numbers in the declaration made under the Denomination Ordinance the Income-tax Appellate Tribunal took the view that there was an agreement with respect to 15 notes. The Appellate Tribunal, therefore, accepted the explanation of the assessee with regard to Rs. 15,000.00 out of the total amount of Rs. 28,000/-, which represented the value of the high denomination notes. As regards the balance of Rs. 13,000/-, the Appellate Tribunal held that the explanation furnished by the assessee was insufficient and Rs. 13,000.00 should be held as secreted profits of the assessee for the accounting year and liable to be taxed.

2. In this state of facts the Income-tax Appellate Tribunal has referred the following question of law for the opinion of the High Court:

"Whether on the facts and the circumstances of the case there is material for holding that the sum of Rs. 13,0007- representing high denomination notes encashed on 19-1-1946 is income assessable to income-tax?"

On behalf of the assessee Mr. Gupta put forward the argument that the assessee was the owner of several collieries, that he had fixed deposits in banks and that he also obtained dividends from companies shares. It was contended that the assessee was in the habit of keeping large amounts of cash in the high denomination notes though the assessee also had opened several bank accounts. In support of his argument Mr. Gupta pointed out that for the period front December 1943 to January 1945 the assessee had withdrawn a sum of Rs. 28,000.00 from the Lloyds Bank. In order to substantiate the point Mr. Gupta produced the pass book of the assessee maintained by the Lloyds Bank and showed to us that from 1937 to 1945 the assessee had withdrawn large amounts to