Law:

Section:

Section 68, read with section 256, of the Income-tax Act, 1961 – Cash credits – Assessment year 1962-63 – While completing assessment ITO found cash credit in name of ‘T' and added it to income of assessee – Tribunal upheld addition on findings that ‘T' was name lender and was earning paltry amount of Rs. 5,000 to Rs. 6,000 annually; that credit – worthiness of ‘T' had not been established and his confession that his loans were all bogus had not been retracted by his subsequent evidence – Whether findings of Tribunal were perverse – Held, no – Whether High Court in reference jurisdiction was competent to find out facts for itself – Held, no FACTS In the assessment year 1962-63, the ITO noticed certain cash credits in the books of account maintained by the assessee. On item of such credits was in the name of one ‘T'. That amount was added back by the ITO to the income of the assessee. On second appeal, on evidence, the Tribunal held that ‘T' was admittedly a name – lender and was earning a paltry sum of Rs. 5,000 to Rs. 6,000 annually. The Tribunal held further that the credit-worthiness of ‘T' had not been established and his confession that his loans were all bogus had not been retracted by his subsequent evidence. The Tribunal concluded that the genuineness of the loans from ‘T' to the assessee was not established. The addition made by the ITO was accordingly upheld by the Tribunal. On reference : HELD In the instant case, it could not be said that the findings of the Tribunal in the instant case was perverse in the sense that on the evidence on record no reasonable person could come to the conclusion that the disputed loans were not genuine on the materials on record. It was a part of the evidence of ‘T' that he was earning only Rs. 5,000 to Rs. 6,000 per year; and that he was in the habit of lending his name to fictitious loans. On this part of the evidence it was possible for the Tribunal to come to the conclusion that the loans in the instant case were not genuine. No doubt on the same materials it was possible to come to a different conclusion but in the reference jurisdiction the Court was not competent to find facts for itself. Note: The case has been…

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