Law:

Section:

Section 256(2) of the Income-tax Act, 1961-Reference-question of fact-Whether a finding arrived at by tribunal that cash credits appearing in assessee's books represent concealed income of assessee gives rise to a question of law even when such a finding is neither perverse nor based on mere surmises and conjectures-Held, no Facts In the course of the assessment proceedings for the assessment year 1968-69, the ITO found cash credits amounting to Rs. 24,000 and Rs. 6,500 in the account books of the assessee. Not satisfied with the assessee's explanation in this regard, the ITO added both the amounts in her total income, treating the same as the assessee's income from undisclosed sources. The assessee's explanation in respect of the sum of Rs. 24,000 was that she had obtained the said amount as a loan from the Life Insurance Corporation, but she did not produce any evidence before the ITO to substantiate that explanation. In respect of the sum of Rs. 6,500 the assessee had stated before the ITO that the same was kept in her tijori. On appeal, both the AAC and the Tribunal upheld the ITO's order. The Tribunal held that the assessee had failed to furnish proper explanations with regard to the impugned sums. Subsequently, in penalty proceedings, initiated under section 271(1)(c), the IAC imposed penalty upon the assessee in respect of the impugned sums. On appeal, the Tribunal held that as no fresh evidence was led by the assessee in respect of the sum of Rs. 24,000 even during the penalty proceedings and that as the explanation offered by the assessee was not convincing, it was not prepared to presume that a loan could have been taken by the assessee from the LIC without there being any evidence in respect thereof. It again held that the explanation of the assessee in respect of the sum of Rs. 6,500 was improbable. Accordingly, it upheld the penalty order. The Tribunal also rejected the assessee's application under section 256(1) for referring the matter to the High Court. On an application under section 256(2), the assessee contended that as the IAC did not rely upon the Explanation to section 271(1)(c) for imposing penalty, the Tribunal could not have shifted the…

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