Law:

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Section 68, read with section 256 of the Income-tax Act, 1961 - Cash credit - Assessment year 1978-79 - While completing assessment of assessee-firm, ITO held that amount credited to account of 'S', wife of one of partners was not satisfactorily explained and assessed it under section 68 in hands of assessee-firm - On appeal, AAC deleted addition - On further appeal, Tribunal held that ITO had rightly taxed sum in question as assessee's income - Whether question as to whether there was material before Tribunal for holding that amount credited in partner's wife's account represented income of assessee-firm from undisclosed sources, was a question of law arising out of order of Tribunal - Held, yes FACTS While framing the assessment of the assessee-firm, the ITO held that the amount credited in the account of 'S', wife of one of the partners, was not satisfactorily explained and the amount was, therefore, includible in the income of the assessee. Against said order, the AAC allowed the assessee's appeal. On appeal by the Revenue the Tribunal set aside the order passed by the AAC and held that the ITO had rightly taxed the sum in question as the assessee's income under section 68. The application for making a reference submitted by the assessee was rejected. On application under section 256(2): HELD The question as to whether there was material before the Tribunal for holding that the amount credited in account of partner's wife represented income of the assessee-firm from undisclosed sources, did arise for reference out of order passed by the Tribunal. Accordingly, instant application was to be allowed. Note: The case has been decided in favour of the assessee. S.C. Goyal for the Applicant. Mukati for the Respondent. JUDGMENT G.G. Sohani, J.-This is an application under section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). The material facts giving rise to this application, briefly, are as follows: The applicant is a registered partnership firm carrying on business at Indore. While framing the assessment of the assessee for the assessment year 1978-79, the Income-tax Officer held that the sum of Rs. 35,000 credited in the account of…

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