Law:

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Section 147, read with section 256 of Income-tax Act 1961 - Income escaping assessment - position prior to 1-4-1989 - Assessment year 1965-66 - ITO had accepted certain cash credits found in name of a firm 'G' as genuine - Later, he reopened assessment on basis of a statement given by said firm's proprietor before another ITO that he was doing hawala business, and made addition on that account - Tribunal, however, cancelled reassessment on ground that assessee disclosed fully and truly all material facts at time of assessment and therefore, ITO was not justified to change his opinion on basis of some uncorroborated evidence so as to reopen assessment - Whether Tribunal's findings were findings of facts, and therefore, no question of law arose out of order passed by Tribunal - Held, yes FACTS For the relevant assessment year while making the assessment the ITO found certain cash credits in the name of a firm 'G'. The ITO after investigation accepted the same as genuine and completed the assessment. Later on, based on a statement of the said firm's proprietor before some other ITO that he was doing hawala business, the ITO reopened the assessment under section 147(a) and made addition as income from undisclosed sources. On second appeal, the Tribunal observed that this was a case where the assessee positively produced evidence to substantiate its version, and apart from producing its own account books, the assessee produced the account books of the party concerned i.e., firm 'G'. The assessee also produced the representative of that firm, who not only admitted the genuineness of the loans in a clear and unambiguous manner, but also positively stated that the party concerned had sufficient cash balances at its disposal. The Tribunal, thus, deleted the addition by holding that the assessee disclosed fully and truly all material facts necessary for its assessment and when that was done, the ITO was not justified to change his opinion on the basis of some uncorroborated evidence that came to his notice later on. The Tribunal also observed that since the assessee did not get a change to cross-examine the said representative, the statement recorded at its back could…

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