Commissioner Of Income-Tax vs Sita Ram Vijay Kumar
1995 Latest Caselaw 265 Del

JUDGMENT

Dr. M.K. Sharma, J.

1. By this application under section 256(2) of the Income-tax Act, 1961, the Revenue seeks a direction to the Income-tax Appellate Tribunal to state a case and refer to this court for its opinion, the following question of law, relevant to the assessment year 1984-85 :

"Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in deleting from the assessable income for the assessment year 1984-85, the unexplained amount of Rs. 7 lakhs ?"

2. The facts relating to the question proposed to be referred by the Revenue are that in the bank accounts of the assessee-firm with the Vysya Bank and the Vijaya Bank credits aggregating to Rs. 7 lakhs were found. The assessee tried to explain that the credits represented cash sales made by the assessee. The aforesaid explanation of the assessee was rejected by the Income-tax Officer and an amount of Rs. 7 lakhs was added as unexplained investment from undisclosed sources. The assessee challenged this decision in appeal before the Commissioner of Income-tax (Appeals) which was rejected. Thereafter, the matter was brought on appeal before the Appellate Tribunal, who, after hearing the parties, deleted the aforesaid addition. Being aggrieved, the Revenue filed an application under section 256(1) before the Tribunal for referring the aforesaid question to this court for its opinion which was rejected, holding that no legal controversy giving rise to a referable question of law arises out of the order of the Tribunal.

3. We have heard learned counsel for the Revenue as also the assessee. It appears that the learned Tribunal has allowed the appeal and rejected the reference application on the ground that the additions have been made under section 69 and not section 68 of the Income-tax Act, 1961, and, therefore, the additions could not be made in the assessment year under consideration and as such no referable question of law arises.

4. On the other hand, the case of the Revenue is that the provisions of section 68 of the Income-tax Act are applicable to the facts and circumstances of the case, according to which if a sum is found credited in the books of the assessee maintained for any previous year, the cash credit has to be treated as the income of the previous year and the financial year may not be taken as the previous year for such cash credit. In our view, the provisions of sections 68 and 69 of the Income-tax Act call for consideration in the instant case. Accordingly, we feel that a question of law does arise out of the order of the Tribunal in the instant case.

5. Learned counsel for the assessee submitted before us that the words "unexplained" amount of Rs. 7 lakhs do not arise out of the order of the Tribunal inasmuch as the Tribunal has never held that the amount of Rs. 7 lakhs was unexplained, which was a mere submission of counsel for the Revenue. On going through the order of the Tribunal passed in appeal, we are satisfied that the said word "unexplained" does not arise out of the order of the Tribunal as the Tribunal has not given any definite finding holding that the said amount was unexplained and accordingly, we reframe the question as proposed by the Revenue in the following manner in exercise of the powers vested in us :

"Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in deleting from the assessable income for the assessment year 1984-85 an amount of Rs. 7 lakhs ?"

6. Accordingly, this application is allowed and we direct the Income-tax Appellate Tribunal to state a case and refer the aforesaid reframed question to this court for its opinion. No costs.