Law:

Section:

Section 256 of the Income-tax Act, 1961 (Corresponding to section 66 of the Indian Income-tax Act, 1922) - High Court - Reference to - Assessment year 1946-47 - Entry of certain amount credited in books of assessee-firm in name of third party, was treated by ITO as income from undisclosed source and was included in assessee's assessable income - Said amount was also included in assessee's income for excess profits tax - Question raised by assessee before assessing authority and also in appeal before Tribunal was whether amount in question was income or not and Assessee had not contended that income in question was not income from business - However, assessee applied to Tribunal under section 66(1) if 1922 Act for stating case to High court and calling upon it to answer whether amount in question was liable to be assessed to excess profits tax merely on its being found to be its income from undisclosed source - Tribunal refused to state case holding that question raised by assessee did not arise out of order passed by it - Whether question sought to be referred was raised before Tribunal or not was essentially matter of fact and High Court when answering reference had to take all facts from statement of case and it could not itself decide any question of fact - Held, yes - Whether since statement contained recital that question sought to be referred was not raised before Tribunal, it did not arise out of order of Tribunal and, therefore, reference was to be returned unanswered - Held, yes FACTS During assessment proceedings the ITO discovered an entry of certain amount credited in the business accounts of the assessee-firm in the name of 'N'. The ITO treated it as the assessee's income 'from undisclosed source' and included it in its assessable income. It was included in the assessee's income also for the purpose of excess profits tax. The only question raised by the assessee during the assessment proceedings was whether the amount in question was its income or not. It took the stand on its being money deposited by 'N' with it; it never contended that it was not its income from business. The order of the assessing authority assessing it on the amount was upheld…

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