Law:

Section:

Section 256, read with sections 68 and 143, of the Income-tax Act, 1961 - Reference - Question of law - ITO held that cash credits appearing in assessee's account in name of a trust were assessee's own funds and made additions accordingly - ITO also held that shares purchased by certain persons in a company of assessee's group actually belonged to assessee as they were his benamidars - Trust was alleged to have been created through donation but there was no evidence as to who were donors - Further donations collected were lying uninvested in cash with treasurer of trust for a long time - Tribunal held that said trust was genuine - It also held that shares did not belong to assessee, without going into findings of fact recorded by ITO - Accordingly Tribunal deleted additions made by ITO - Whether questions of law arose from Tribunal's decision - Held, on facts, yes Facts During the assessment for the assessment years 1962-63 to 1964-65, the ITO issued a letter to 'B', the assessee, asking him to produce evidence and prove (i) that the cash credits appearing in his account in the name of KF Trust were genuine and (ii) that 39,000 shares of KT Ltd., standing in the name of M, O, D, P, etc., were not really his own investment. After examining the assessee's evidence and on the basis of documentary evidence and the Government records and on the basis of local enquiries made, the ITO had come to the conclusion that no trust in the name of KF Trust really existed and even if it existed, it had no funds of its own and that the name KF were used by the assessee as a camouflage to put through his unaccounted money. Accordingly, he added the impugned cash credits to the assessee's income. All interest and dividend received in the name of the trust were also included by the ITO in the assessment of the assessee as his own income. The ITO was also of the opinion that the moneys advanced in the name of the trust to several persons in connection with the acquisition of 39,000 shares of KT Ltd., which were issued in 1958, actually belonged to the assessee. Accordingly, the dividend on the said shares was treated as the income of the assessee. The persons in whose names the…

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