Law:

Section:

Section 256, read with sections 68 and 271(1)(c), of the Income-tax Act, 1961 - Reference to High Court - Question of fact - ITO treated certain cash credits shown to have been received by assessee from outside parties as unproved and added same to income of assessee under section 68 and imposed penalty on it under section 271(1)(c) - Tribunal deleted the impugned addition as well as the penalty imposed on the grounds that (i) assessee have given the names and addresses of the creditors, (ii) it had also produced before ITO letters of confirmation, the discharged hundis and particulars of the different creditors including their general index numbers with the Income-tax Department, and (iii) the revenue, apart from issuing notices under section 131 to creditors at instance of assessee, did not pursue the matter further, nor it examine the source of income of the said alleged creditors to find out whether they were credit-worthy or were such who could advance the alleged loans - Whether any question of law arose from Tribunal's order - Held, on facts, no Facts For the accounting year ending on 31-12-1961, corresponding to the assessment year 1962-63, the ITO did not accept the assessee's accounts showing cash credit of Rs. 1,50,000, shown to have been received by way of loans from three individual creditors of Calcutta under hundis. The assessee produced before the ITO letter of confirmation, the discharged hundis and particulars of the different creditors and general index numbers with the Income-tax Department. Attempts had been made to bring those creditors before the ITO by issue of notices under section 131, but the said notices were returned with the endorsement 'left'. The ITO, therefore, treated the entire amount of Rs. 1,50,000 as unproved cash credit and added the same to the income of the assessee. The appeal of the assessee to the AAO was dismissed. Thereafter there was further appeal to the Tribunal. In the meantime on the basis of assessment order proceeding was taken under section 271(1)(c) and the IAC imposed a penalty of Rs. 50,000. An appeal against the imposition of penalty was also filed before the Tribunal. The Tribunal noted that if the…

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