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Several cases were referred to us by the learned counsel for the assessee and the revenue and we may now discuss them. The first case relied on by Dr. Pal is Mehta Parikh & Co. v. Commissioner of Income-tax which happened to be a case on high denomination notes. The assessee encashed on 18th January, 1946, high denomination notes of Rs. 1,000 each, of the face value of Rs. 61,000. The Income-tax Officer rejected the assessees explanation and assessed the whole amount as undisclosed profit. Before the Appellate Assistant Commissioner, however, the assessee produced affidavit from some persons to the effect that Rs. 43,000 were paid in one thousand Rupees notes during the relevant period. The Appellate Assistant Commissioner did not accept the affidavit and confirmed the order of the Income-tax Officer. The Appellate Tribunal thereafter accepted the assessees explanation as to Rs. 31,000, but rejected as to Rs. 30,000. The Bombay High Court confirmed the Tribunals order. The Supreme Court, in allowing the appeal and reversing the High Courts order, made the following observations at page 189 :

Dr. Pal next cited Sreelekha Banerjee v. Commissioner of Income-tax and relied on the following observations of the Supreme Court at page 120.

"It seems to us that the correct approach to questions of this kind is this. If there is an entry in the account books of the assessee which shows the receipt of a sum on conversion of high denomination notes rendered for conversion by the assessee himself, it is necessary for the assessee to establish, if asked, what the source of that money is and to prove that it does not bear the nature of income. The department is not this stage required to prove anything. It can ask the assessee to bring any books of account or other documents or evidence pertinent to the explanation, if one is furnished, and examine the evidence and the explanation. If the explanation shows that the receipt was not of an income nature, the department cannot act unreasonably reject that explanation to hold that it was income. If, however, the explanation is unconvincing and one which deserves to be rejected, 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 then proceed on no evidence, because the fact that there was receipt of money is itself evidence against the assessee. There is thus, prima facie, evidence against the assessee which he fails to rebut and, being unrebutted, that evidence can be used against him by holding that it was a receipt of an income nature. The very words an undisclosed source show that the disclosure must come from the assessee and not from the department. In cases of high denomination notes, where the business and the state of accounts and dealings of the assessee justify a reasonable inference that he might have for convenience kept the whole or a part of a particular sum a high denomination notes, the assessee prima facie discharges his initial burden when he proves the balance and that it might reasonably have been kept in high denomination notes. Before the department rejects such evidence, it must either show an inherent weakness in the explanation or rebut it by putting to the assessee some information or evidence which it has in its possession. The department cannot by merely rejecting unreasonably a good explanation, convert good profit into no proof."

But it should be remembered that in this Supreme Court case the Tribunal came to the conclusion that the high denomination notes represented not the cash balance but some other money which remained unexplained and the Tribunal treated it as the assessees income from some undisclosed source. The High Court decided against against the assessee and the Supreme Court confirmed the High Courts order because there were materials to show that the disputed amount did not from part of the cash balance and, the source of money not having been satisfactorily proved, the department was justified in holding it to be assessable income of the assessee from some undisclosed source.