JUDGMENT

V.K. Oak, C.J. - This is a reference u/s 66 of the Indian Income Tax Act, 1922. Kashi Ram has been assessed as an individual. The assessment year is 1960-61. The assessee is a partner in registered firm, Messrs. Jamuna Das Kashi Ram. His share in the firm is 8 annas. At the time of assessment of Kashi Ram the Income Tax Officer noticed deposits amounting to Rs. 8,500. It was further noticed that the assessee had withdrawn from the accounts of the firm a small sum of Rs. 500. The assessee was invited to explain the source of deposit of Rs. 8,500. The assessee state d that that money came from dowry and sale of ornaments. The Income Tax Officer concluded that the explanation given by the assessee was not correct. Adding a sum of Rs. 2,000 to the deposit of Rs. 8,500 the Income Tax Officer inferred that a total sum of Rs. 10,500 represented the assessee's income from undisclosed sources. The same officer assessed the firm also. The firm declared a loss during the accounting period. That position was not accepted by the Income Tax Officer. He estimated the profit of the firm as Rs. 44,000. The assessee's share in the profit of the firm was fixed at Rs. 21,975. To that sum, a further sum of Rs. 10,500 was added as income of the assessee from undisclosed sources. In the result the individual was assessed on a total sum of Rs. 32,475.

2. In appeal the assessee urged that it was unfair to assess on the sum of Rs. 10,500 as income from undisclosed sources in addition to the assumed share in the profit of the firm amounting to Rs. 21,975. This contention was accepted by the Appellate Assistant Commissioner. The sum of Rs. Rs. 10,500 was, therefore, deleted from the assessment.

3. The department appealed. The Tribunal allowed the appeal by the department, reversed the decision of the Appellate Assistant Commissioner, and restored the decision of the Income Tax Officer, Kanpur, In arriving at its conclusion the Appellate Tribunal relied upon a decision of the Supreme Court in Kate Khan Mohammad Hanif v. Commissioner of Income Tax.

4. At the instance of the assessee, the Appellate Tribunal has referred the following question of law to this court:

"Whether the ratio laid down by the Supreme Court in KALE KHAN MOHAMMAD HANIF Vs. COMMISSIONER OF Income Tax, MADHYA PRADESH AND BHOPAL., (1963) 50 ITR 1 , applied to the case of the assessee and whether under the circumstances of the case the sum of Rs. 10,500 was rightly assessed in the hands of the assessee as income from undisclosed sources in addition to the addition made to the share income of the assessee from the firm, M/s. Jamuna Das Kashi Ram ?"

5. In Sreelekha Banerjee v. Commissioner of Income Tax [1963] 49 ITR (S.C.). 112 : [1964] 2 S.C.R. 552 (S.C.), it was held by the Supreme Court that if the explanation offered by an assessee is unconvincing, the department can reject it and draw the inference that the amount represents income either from the sources already disclosed by the assessee or from some undisclosed source. The department does not proceed on no evidence, because the fact that there was receipt of money is itself evidence against the assessee.

6. In Kale Khan Mohammad Hanif v. Commissioner of Income Tax, it was held by the Supreme Court that the burden of proving the source of cash credits is on the assessee.

7. In the assessee's books there was a credit entry for a sum of Rs. 8,500. It was for the assessee to explain the source of this sum of Rs. 8,500. The explanation offered by the assessee was rejected by the Income Tax Officer and by the Tribunal. It was, therefore, open to these authorities to infer that the sum of Rs. 8,500 represents the assessee's income from some undisclosed source.

8. The next question for consideration is whether the undisclosed source is the business of the firm of which the assessee was a partner, or some other source. According to the department, the source in question was outside the business of the firm. On the other hand, the assessee sug