HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Smt. Srilekha Banerjee and others v. Commissioner of Income-tax, Bihar and Orissa
Civil Appeal No. 486 of 1962
[1964] 2 SCR 552 ·
Indian Income-tax Act, 1922: section 34
Holding and result. Receipt or conversion was prima facie evidence requiring the assessee to explain the source. Because the explanation was unsupported and internally weak, the Department could treat Rs.51,000 as undisclosed income; the appeal was dismissed.
Sources & disclosures includedDownload original judgment / order
Three-judge bench; judgment delivered by M. Hidayatullah, J. · S. K. Das, J. · A. K. Sarkar, J. · M. Hidayatullah, J.
Assessment years: 1946-47
01 · Facts of the case
A colliery proprietor and contractor encashed 51 notes of Rs.1,000 during demonetisation, saying the cash was floating business capital for weekly labour payments. The books lacked a central transfer account, personal-expense record and a convincing explanation for retaining this cash while making further bank withdrawals.
02 · Discussion by the Hon’ble Court
An assessee shown to have received money or converted notes bears an initial source explanation burden. A credible business and cash-position explanation may discharge it, after which rejection cannot be unreasonable; but inherent weakness or contrary evidence permits the inference of income. A valid section 34 reassessment uses the same evidentiary rule as an ordinary assessment.
Source: Primary judgment: reasoning
03 · Judicial decision
The factual gaps and conduct supported rejection of the explanation and assessment of Rs.51,000 as income from an undisclosed source.
Source: Primary judgment: holdings
04 · Outcome / in whose favour
Assessee appeal dismissed with costs.
05 · AKHB REVIEW POINT
AKHB analysis: reconcile cash books, bank withdrawals, transfers and actual cash needs before offering a source explanation. The ruling does not make every unexplained receipt taxable without examining the explanation and record.
Source & verification
Download original judgment / order · Open cited source rendition
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Statutory scope
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Later treatment
Source checked 2026-10-12. No comprehensive later-treatment or present-law clearance is represented. The note reports the historical statutory text and result in this primary report only.
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This AKHB research note was prepared with AI assistance from the identified primary report and has not been represented as independently human-reviewed.
General legal and tax research only; not legal or tax advice. Verify the complete judgment, governing statutory version and subsequent judicial treatment before reliance. The AKHB REVIEW POINT is editorial analysis, not the Court's holding, and no current-law clearance is claimed.