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In our opinion the contention of Mr. Dutt must be accepted as correct. It should be pointed out that the Income-tax Officer gave two main reasons in support of his order that the whole amount of Rs. 68,000 should be taxed in the hands of the assessee as secreted profit. The Income-tax Officer stated in the first place that the account books as such did not contain any express, reference to the high denomination notes, and secondly that the petitioner did not require high denomination notes for carrying on daily transactions in the coal business. The Income-tax Officer observed that payment of the petitioner hardly exceeded Rs. 100 to each labourer per day and it was not necessary for the petitioner to keep the cash balance in high denomination notes.

The Appellate Assistant Commissioner affirmed the order of the Income-tax Officer mainly upon the ground that the petitioner did not require to keep high denomination notes for the purpose of meeting daily expenditure of the coal business. The Appellate Assistant Commissioner also referred to the circumstance that there is no intrinsic evidence in the cash book to show that these high denomination notes were obtaired by the peti-' tioner in the course of his business. Upon these reasons the Appellate Assistant Commissioner dismissed the appeal holding that the amount of Rs. 68,000 was properly added to the return of the assessee.

4. But that does not dispose of the question which has been referred to (sic) in this case. It was pointed out by Mr. Bahadur who argued on behalf of the Department that there was material on the record of the case to support the finding that the whole sum of Rs. 68,000/- which was the value of the high denomination notes should be treated as secreted profit of the assessee.

Counsel referred in this connection to the order of the Appellate Assistant Commissioner. Two reasons have been given by the Appellate Assistant Commissioner for the finding that the amount of Rs. 68,000 did not form a portion of the cash balance on 12-1-1946 on which date the Demonetization Ordinance was promulgated. It was stated by the Appellate Assistant Commissioner in the first place that the books of account did not expressly mention that the high denomination notes were received by the assessee in the course of business dealings. But this is hardly a circumstance which can reasonably be taken into account in deciding whether the cash balance consisted in part of high denomination notes. The possession of high denomination notes did not attract suspicion before the authorities promulgated the Demonetization Ordinance. The mere fact that before the date of the Ordinance the assessee did not choose to mention in the account books the receipt of high denomination notes would not suggest that the cash balance was not constituted of the high denomination notes as alleged by the assessee.

In these circumstances the contention put forward on behalf of the assessee is that the assumption made by the Appellate Assistant Commissioner is incorrect. In our opinion the argument of Mr. Dutt is well founded and the assessee has furnished a reasonable explanation for his possession of the high denomination notes to the extent of Rs. 68,000.

5. For the reasons we have expressed we hold that there is no material to justify the conclu sion of the Appellate Tribunal that Rs. 33,000 was secreted profit of the assessee and is liable to be taxed. We hold that the question referred to the High Court must be answered in favour of the assessee. The Income-tax Department must pay the cost of this reference. We assess the hearing fee at Rs. 250/-.