Law:

Section:

Section 254 of the Income-tax Act, 1961 [Corresponding to sections 33(6) of the Indian Income-tax Act, 1922 - Appellate Tribunal - Order of - Assessment year 1949-50 - ITO brought certain amount to tax as assessee's income from undisclosed sources - On second appeal, Tribunal accepted assessee's offer to be assessed on certain amount and reduced addition made by ITO - High Court held that orders of Tribunal was based on no reasoning and was on that account speculative - Whether it was duty of Tribunal to dispose of appeal after hearing assessee and Commissioner in light of evidence and according to law - Held, yes - Whether since Tribunal failed to do so, order passed by High Court was to be affirmed - Held, yes FACTS The assessee a trader, had brought into the books of accounts an opening cash balance. In course of proceedings for assessment the assessee was called upon to explain the credit entry and to produce the books of accounts of the relevant assessment year. The assessee stated that the account books were lost. The ITO did not accept the explanation offered by the assessee and the unexplained amount was brought to tax by ITO as income from the undisclosed sources. On appeal, the AAC confirmed the order of the ITO. On second appeal, the Tribunal accepted offer of the assessee to be assessed on a certain amount on the ground that assessee had some cash having regard to trade in jeggery, and that assessee got on partition in HUF certain amount. It, accordingly, reduced the income brought to tax by ITO. The High Court found that Tribunal's order was based on no evidence and consequently, it set aside the said order. On appeal to the Supreme Court: HELD The recorded by the Tribunal had not the merit of clarity or of consistency. The Tribunal commenced by disbelieving the explanation of the assessee relating to the source of the credit entry. After some inconclusive statements it proceeded to record that it was not unlikely that the assessee had some cash on hand from profits earned in the trade from jaggery, and from assets received on partition of the joint family of which the assessee was a member. In estimating the income from undisclosed sources, the…

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