Law:

Section:

Section 69, read with section 256, of the Income-tax Act, 1961 - Unexplained investments - Tribunal accepting explanation offered by assessee in relation to source of income deleted additions made under section 69 - Whether once explanation offered by assessee was accepted by taxing authorities and same having been upheld up to Tribunal in second appeal, no question of law arose which could be said to be referable question for answer under section 256(1) - Held, yes FACTS The Tribunal accepting the explanation offered by the assessee deleted certain additions made under section 69. On a reference application under section 256(1), the Tribunal held that no referable question of law arose out of the order passed by the Tribunal, it being pure finding of fact and was covered by the decision of the Supreme Court. On application under section 256(2): HELD The Tribunal was right in rejecting the application made by the revenue under section 256(1). The authorities while accepting the explanation offered by the assessee deleted the addition. In other words, the impugned addition was not sustained in view of the satisfactory explanation offered by the assessee in relation to the source of income. Once the explanation offered by the assessee was accepted by the taxing authorities and the same having been upheld up to the Tribunal in second appeal, then, no question of law as such arose which could be said to be a referable question for answer under section 256(1). Since, the issue being mostly of facts and no issue of law was involved, there was no case made out for allowing this application under section 256(2) and calling for any reference. The application was, accordingly, dismissed. Note : The case was decided in favour of the assessee. R.L. Jain for the Applicant. B.K. Joshi for the Respondent. JUDGMENT A. M. Sapre, J.-This is an application made by the Revenue (Income-tax Department) under section 256(2) of the Income-tax Act, 1961, seeking a reference to be made to this court on certain questions of law which according to the Revenue arise out of the order passed by the Tribunal for being answered by this court under section 256(1) of the Act. This application…

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