Madhya Pradesh H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the cash credit amounting to Rs. 55,000 was the income of the assessee as the assessee had failed to prove the capacity of the creditors, Shri Bherulal and Shyamlal, to advance the amounts of Rs. 35,000 and Rs. 20,000, respectively ?

Counsel Appeared

Chitale,for the Assessee : R.C. Mukati, for the Revenue

G. G. SOHANI, ACTG. C. J. :

This is an application under s. 256(2) of the IT Act, 1961 (hereinafter referred to as “the Act”). The material facts giving rise to this application, briefly, are as follows :

The assessee is assessed in the status of a registered firm. While framing the assessment of the assessee for the asst. yr. 1975-76, the ITO held that certain cash credits were not satisfactorily explained by the assessee. In this view of the matter, the sums so credited were added to the income of the assessee by the ITO as income from undisclosed sources. On appeal, the CIT(A) deleted those additions. Aggrieved by the order passed by the CIT (A), the Revenue preferred an appeal before the Tribunal. The Tribunal held that the capacity of Shri Bherulal and Shri Shyamlal who were alleged to have advanced the amount of Rs. 35,000 and Rs. 20,000 to the assessee was not proved. The Tribunal, therefore, set aside the order passed by the CIT(A) in that behalf. Aggrieved by the order passed by the Tribunal, the assessee sought a reference, but as the application submitted in that behalf was rejected, the assessee has filed this application.

2. Having heard learned counsel for the parties, we have come to the conclusion that the following question of law does arise out of the order passed by the Tribunal :

“Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the cash credit amounting to Rs. 55,000 was the income of the assessee as the assessee had failed to prove the capacity of the creditors, Shri Bherulal and Shyamlal, to advance the amounts of Rs. 35,000 and Rs. 20,000, respectively ?”

3. The application is, therefore, allowed. The Tribunal is directed to state the case and to refer the aforesaid question of law to this Court for its opinion. In the circumstances of the case, parties shall bear their own costs of this reference.

[Citation : 175 ITR 292]