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Money found unclaimed: is it income for the finder?

The law may not accept the assessee's version

Two years back, while dining in a restaurant I found a pouch which I carried home. It contained an amount of Rs. 3.25 lakh. No one claimed the amount though I advertised it in the "Lost and Found" columns of newspapers. I have retained the amount without depositing it in my bank account. I have also not disclosed it in my returns of income. If I disclose it now, can it be treated as my income and charged to tax?

I presume that in law, the finder is the keeper so that the amount found, where the owner cannot be identified, will belong to the finder. This being a windfall in the nature of capital receipt should not be assessable. Even such a casual receipt should have the character of income to be taxed. Unless specifically deemed as income as in the case of lottery winnings, such receipts are not taxable. It is also possible to argue that the amount may be ultimately returnable to the owner, if he turns up at a later date and establishes his ownership. Hence it may not be assessable.

In such cases where a taxpayer claims that he had such a windfall, the assessing officer is bound to insist on clear proof to show that it was so found and that it is not his undisclosed income. The story of such a finding may not be convincing. Sec. 68 would place the burden of proof on the assessee in respect of any cash brought to the accounts.

The fact that it was not brought into account does not spare the taxpayer the responsibility of proving the nature of the receipt, where such a receipt is admitted. In such cases, the finder cannot prove the identity of the loser or his source of income. Since it will be an impossible task, the law may not accept if the assessee's version is credible.

It has been stated by the reader that he has kept the amount in cash and has not deposited it in his bank account. If he does so now, the presumption is that it is the income of the year in which the amount is deposited. But then, it is stated by the reader that he had advertised what he found in newspapers. If he had also declared the amount in the pouch or he had given such information to the police or to any third party or given such other credible information as to the truth of his claim, the argument that it is not taxable should be acceptable.

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