1. As directed by this court in M.C.C. No. 305 of 1970, the Income-tax Appellate Tribunal, Indore Bench, has referred the following question of law to this court for its opinion:
' Whether, on the facts and in the circumstances of the case, the Tribunal was justified in giving a finding that the amount of Rs. 15,300 which was added as income from undisclosed sources, was covered by the intangible additions made to the income of the assessee '
2. The material facts giving rise to this reference briefly are as follows : The assessee is an individual and carries on business in kirana and sugar under the name and style of M/s. Daluram Pannalal. The assessment year in question is 1958-59 for which the accounting year ended on 23rd October, 1957, During the assessment proceedings, the ITO came to know that the assessee imported sugar in the name of M/s. Gajanand Satyanarayan and the same was sold without being recorded in the account books maintained by the assessee. As the assessee had not furnished any details of those transactions, the ITO estimated the assessee's suppressed transaction at Rs. 8,20,000 and the income therefrom was assessed at Rs. 82,000. The ITO also held that the assessee had failed to satisfactorily explain the cash credits amounting to Rs. 15,300 appearing in the books of account of M/s. Daluram Pannalal. The ITO, therefore, held that the sum of Rs. 15,300 was the assessee's income from undisclosed sources and theassesses was assessed accordingly. The assessee preferred an appeal before the AAC, who reduced the turnover of the business carried on in the name of Gajanand Satyanarayan, to Rs. 5,00,000 and the profits therefrom to Rs. 50,000, but so far as the addition of Rs. 15,300 made by the ITO as income from undisclosed sources was concerned, the AAC maintained, the same. The assessee preferred second appeal before the Tribunal. The Tribunal estimated the profit from the business carried on by the assessee in the name and style of M/s. Gajanand Satyanarayan at Rs. 40,000. Dealing with the question of addition of Rs. 15,300 in respect of the cash credits, it was urged before the Tribunal that the cash credits were covered by intangible additions made to the income of the assessee. The Tribunal upheld this contention and directed the deletion of the addition of Rs. 15,300 as income from undisclosed sources. The Commissioner made an application for making a reference, but that application was rejected. The Commissioner then preferred an application under Section 256(2) of the I.T. Act, 1961, to this court. That application was allowed and, as directed by this court, the Tribunal has stated the case and referred the aforesaid question of law to this court for its opinion.
3. Having heard learned counsel for the parties, we have come to the conclusion that this reference should be answered in the negative and against the assessee. As held by the Supreme Court in CIT v. Devi Prasad Vishwanath Prasad : 72ITR194(SC) , where there is an unexplained cash credit, it is open to the ITO to hold that it is income of the assessee and no further burden lies on the ITO to show that that income is from any particular source. It is for the assessee to prove that even if the cash credit represents income, it is income from a source which has already been taxed. In the instant case, therefore, the assessee had to show, by adducing satisfactory evidence, that the cash credits were referable to the undisclosed income of the very known or disclosed source, namely, the business, whose income had already been estimated. The ITO held that the cash credits represented income from undisclosed sources. This finding was not set aside either by the AAC or by the Tribunal. The Tribunal seems to assume that once the business income is estimated, the unexplained cash credits would be covered by the income so estimated. This assumption is not warranted by law. Without setting aside the finding of the ITO that the cash credits represented income from undisclosed sources, the Tribunal was not justified in holding that the amount of Rs. 15,300, which was added as income from undisclosed sources, was covered by the intangible additions made to the income of the assessee.
4. For all these reasons, our answer to the question referred to us is in the negative and against the assessee. In the circumstances of the case, the parties shall bear their own costs of this reference.