Law: Income Tax Act (XI of 1922)

Section: 13

Income-tax Act (XI of 1922), S. 13-Cash credit-Entry styled as `deposit account'Failure to disclose name of depositor cannot inevitably lead to conclusion that credit is income from undisclosed source-Acceptance of assessee's explanation depends on facts and circumstances-Not a question of law. JUDGMENT   FARUQUI, J.-This is an application under section 66 (2) of the Income-tax Act by the Commissioner of Income-tax, Central Karachi praying that this Court order the Income-tax Appellate Tribunal to state the ease and refer the following alleged question of law   "Whether in the circumstances of the case, the cash deposit of Rs. 15,000 in an undisclosed name, was not income from . undisclosed source."   2. The facts briefly stated are these : The respondent is a registered firm dealing in G. 1. pipes, fittings, hardware and motor cycles. The Income-tax Officer noticed a cash credit entry of Rs. 15,000 dated 7th September 1953 in an account styled as "Deposit Account" in the books of the respondent. The Income -tax officer felt suspicious about the nature of this cash receipt and called upon the assessee to explain its source. The explana tion offered was that the deposit in question represented cash received as an advance from a customer and the money was to be returned in case the transaction did not materialise. There was an entry in the same account showing that the said amount of Ids. 15,000 was returned on 1st October 1953. The Income-tax officer disbelieved this explanation and treated this amount as respondent's income from undisclosed source. The matter was taken in appeal to the Appellate Assistant Commissioner by the assessee who upheld the finding of the Income-tax Officer. The assessee then took the matter in a second appeal before the Tribunal, and his plea that the sum represented a capital receipt was accepted by the Tribunal and in doing so they observed as follows :   "It is also urged that the book result of the assessee has always been accepted in the past and even for the year in question ; there was no good reason to doubt the explanation offered for this item. Further that the…