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Section 68, read with section 256 of Income-tax Act, 1961 - Cash credits - Whether question pertaining to interpretation of section 68 was question of law - Held, yes FACTS The respondent had in her books of account credited two parties with certain amount. The respondent was constructing a building and the cost of material was debited to the said accounts. The ITO came to the conclusion that the said parties did not exist and that those entries were fictitious. He sought to apply section 68. The Commissioner (Appeals) held that section 68 was not applicable and remanded the case to the ITO for investigating further facts as, according to the Commissioner, if at all, it was only section 69 or section 69B or section 69C which would be applicable. The Tribunal held that section 68 dealt specifically with sums credited in the books of the assessee on account of receipt of money. However according to the petitioner section 68 referred only to sums being credited in the books of the assessee and did not specifically state that the said section applied only on account of credits being there because of receipt of money. On application under section 256(2): HELD The question involved was a pure question of law as it pertained to the correct interpretation of section 68. R.C. Pandey for the Applicant. N.N. Aggarwal for the Respondent. JUDGMENT Kirpal, J.-In the present case, the respondent had in her books of account credited one Messrs. Gupta and Co. with Rs. 48,476 and one S. Surain Singh with Rs. 48,400. The respondent was constructing a building and the cost of material was debited to the said accounts. The Income-tax Officer came to the conclusion that Messrs. Gupta and Co. and S. Surain Singh did not exist and that those entries were fictitious. He sought to apply section 68 of the Act. The Commissioner of Income-tax (Appeals) came to the conclusion that section 68 was not applicable and remanded the case to the Income-tax Officer for investigating further facts as, according to the Commissioner of Income-tax, if at all, it is only section 69 or section 69B or section 69C which would be applicable. The Income-tax Officer filed an appeal and the Tribunal held that…

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