Law:

Section:

Section 68, read with section 256 of the Income-tax Act, 1961 - Cash credits - Assessment years 1963-64 and 1964-65 - In course of assessment proceedings, ITO found certain cash credits - Having come to hold that assessee had failed to establish cash credits, ITO made certain addition to assessee's income as income from undisclosed sources - AAC upheld additions so made - Tribunal, however, found that assessee by making a request to ITO to cause summons issued on creditors got reply as to existence of creditors - Even ITO did not dispute existence of creditors but what he disputed was genuineness of loans - In such circumstances, Tribunal recorded finding that initial burden cast on assessee had been discharged - Accordingly, Tribunal deleted addition - Whether, finding recorded by Tribunal was one of fact and, thus, no question of law arose out of Tribunal's order - Held, yes FACTS For the objects found in the books of accounts the ITO rejected the returns of the relevant assessment years and made assessments to best of his . In the assessment year 1963-64, the ITO found cash credits to the tune of Rs. 1,20,000. Having come to hold that the assessee had failed to establish the cash credits, he took the peak amount of Rs. 70,000 as income of the assessee from undisclosed sources. In the second year, under similar circumstances, he added a sum of Rs. 20,000 to the profits of the assessee from undisclosed sources. The appellate authority upheld these additions. On second appeal, the Tribunal on a proper appraisal of the evidence, that the initial burden cast on the assessee had been discharged. The assessee by making a request to the ITO to cause summons issued on creditors got the reply as to the existence of the creditors. Significantly, the ITO did not dispute the existence of the creditors but what he disputed was the genuineness of the loans. On an application under section 256(2) : HELD The conclusion, of the Tribunal seemed to have been reached on a consideration of the totality of the evidence placed on the record. Undoubtedly, it was open to the Tribunal to form an opinion that the explanation offered by the assessee was satisfactory in regard to the…

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