Law: Income Tax Act, 1922

Section: 66

Income-tax Act (XI of 1922)----S. 66-Reference to High Court-Question of fact-Tribunal, on assessment of material, forming opinion that explanation offered by assessee in regard to nature and source of cash credits was satis­factory-Held, finding of Tribunal was one of fact and did not give rise to a question of law-Reference rejected-Indian Income-tax Act, 1961, S. 256. JUDGMENT R. N. MISRA, J. -These are applications under section 256(2) of the Income-tax Act of 1961 (hereinafter called, "the Act") on behalf of the revenue. The relevant assessment years are 1963-64 and 1964-65. The assessee is engaged in the business of hardware and paints. For defects found in the books of accounts the income-tax Officer rejected the returns of both the years and made assessments to the best of his judg­ment. In the assessment year 1963-64, he 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. Upon further appeal by the assessee, the Appellate Tribunal dealing with the matter said: "...The assessee filed confirmation letters and discharged hundi papers in support of the genuineness of the loans. The Income-tax Officer, however, was not convinced with the bare hundi papers and con­firmation letters and therefore, called upon the assessee to produce the creditors/persons along with their books of account in support of the genuineness of the loans. The assessee failed to do so. The Income-tax Officer also noticed difference in G. I. R. numbers of the parties as furnished by the assessee and that found in the income-tax records of those parties. The Income-tax Officer, however, issued notices under section 131 of the Income-tax Act, 1961, to the creditors at the addresses furnished by the assessee. In obedience to the notices, the creditors did not appear in person but wrote back: `I maintain no books of account and in the absence of…

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