Law:

Section:

Section 256, read with section 271(1)(c), of the income-tax act, 1961-Reference-Question of fact-ITO held that amount deposited in bank by assessee for purchasing sugar was paid out of income from undisclosed sources and, consequently, added said amount to asses- see's income-IAC levied penalty under explanation to section 271(1)(c)-Tribunal cancelled penalty holding that on evidence on record, assessee must be treated as having discharged onus cast on him under explanation to section 271(1)(c)-whether, any question of law would arise from tribunal's order-Held, on facts, no Facts The assessee-firm agreed to purchase sugar from a firm S at an outstation, M, through another firm 'R' Under this contract, the assessee had to pay Rs. 28,575 to S and Rs. 11,050 to firm 'R' and the delivery of sugar had to be taken on 5-12-1967. In pursuance of this contract, Rs. 28,575 were deposited through U, partner of firm R, in a bank at the outstation M, on 4-12-1967 for purchasing a draft in favour of S. The assessee also paid the sum of Rs. 8,550 and Rs. 2,500 to firm 'R' on 4-12-1967 and 5-12-1967, respectively, and a sum of Rs. 417 was spent on travelling expenses and carriage charges of the sugar. When asked to explain the source in the course of assessment proceedings, the assessee contended (i ) that it had cash balance of Rs. 9,042 on the morning of 4-12-1967, (ii) that it had received two sums of Rs. 15,000 and Rs. 16,900 from two other parties before 8 A.M. on 4-12-1967, and (iii) that after collecting these amounts, a partner of the assessee-firm went to the outstation and remitted the amount to the bank before it was closed. The ITO did not accept the explanation and, by holding that the entire amount represented income from undisclosed sources, added the amount to the returned income of the assessee. Major portion of the addition was sustained by the AAC and the Tribunal. Subsequently, the IAC levied penalty under Explanation to section 271(1)(c). On appeal, on the material available on record, including the affidavits of parties to the various transactions, the Tribunal found that on the morning of 4-12-1967, the assessee had about Rs. 40,000 in cash with it. It…

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