Section 66 of the Indian Income-tax Act, 1922

Section 66 of the Indian Income-tax Act, 1922 — the law in short

What the courts have decided on section 66 of the Indian Income-tax Act, 1922, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• CIT v Daulat Ram Rawatmull Supreme CourtHelps taxpayer
  A fixed deposit stands in the name of a partner's son and my firm used it as security for its overdraft. The Assessing Officer says the money is really the firm's concealed income. Who has to prove what?
  The Department. The Supreme Court dismissed the Revenue's appeals and upheld the Calcutta High Court. The onus to prove that the apparent is not the real lies on the party who says so, and it was the Department that claimed the deposit standing in Biswanath's name belonged to the firm. Nothing showed the money came from the firm's coffers or went back into them; Biswanath himself drew the deposit. That his own explanation of where the money came from was false did not make it the firm's, and offering the receipt as security for the firm's overdraft did not make him anything but a surety.
• CIT v Mugneeram Bangur & Co Supreme CourtHelps taxpayer
  We sold our land development business as a going concern for a lump sum, and the schedule to the agreement showed a figure for land. Can the officer tax a profit on the land as stock-in-trade?
  No. The Supreme Court held that the sale was of the whole concern and that no part of the slump price was attributable to the cost of the land, so no part of it was taxable. The firm was not carrying on a business of purely buying and selling land; it bought land, developed it and sold it, and the agreement itself recorded liabilities for roads, drains, sanitation, electricity and a school. The figure for land in the schedule was the cost price as it stood in the books, and there was no evidence of any attempt to value the land at the date of sale.
• Kale Khan Mohammad Hanif v CIT Supreme CourtHelps department
  My business income was estimated on a percentage of turnover because my books were rejected. Can unexplained credits in those same books still be added separately as income from undisclosed sources?
  Yes, on the way the question was framed. The Supreme Court held that the onus of proving the source of a sum received is on the assessee: if he disputes liability he must show either that the receipt was not income or that it was exempt, and failing that the officer may treat it as taxable income. And the fact that the income of a disclosed business was computed on an estimate does not preclude treating a credit entry in that business's books as income from another, undisclosed source. If it is income of an undisclosed source, it is not income of the disclosed source already taxed, so there is no double taxation.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.