Commissioner of Income Tax vs Ansari Cloth Merchant

By this reference u/s 256(1) of the income tax Act, 1961 (''the Act'') the Tribunal, Bench ''A'', Patna, has referred the following question of law to this Court for its opinion:

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the Appellate Assistant Commissioner was justified in deleting the addition of Rs. 17,000 ?"

The material facts giving rise to this reference briefly are as follows:

While framing assessment of the assessee for the assessment year 1974-75, the ITO found that there is a deposit of Rs. 17,000 in the name of Bibi Manauwar Sultana and that the. assessee was not able to prove the genuineness of the said deposit. The ITO, therefore, treated that amount as the income of the assessee. Aggrieved by the order passed by the ITO, the assessee preferred an appeal before the AAC. The AAC found that Bibi Manauwar Sultana had sufficient funds to advance Rs. 17,000 and the explanation of the assessee with regard to the cash credit was satisfactory. In that view of the matter, the AAC deleted the addition of Rs. 17,000. Aggrieved by the order passed by the AAC, the revenue preferred an appeal before the Tribunal, Bench ''A'', Patna. That appeal was dismissed-Aggrieved by the order of the Tribunal, the revenue sought reference and it is at the instance of the revenue that the aforesaid question of law has been referred to this Court for its opinion.

None appeared on behalf of the assessee at the time of hearing. Having heard Mr. S.K. Sharan, the learned counsel for the revenue, we have come to the conclusion that this reference must be answered in the affirmative, in favour of the assessee and against the revenue. The AAC had found that the cash credit of Rs. 17,000 was satisfactorily explained by the assessee and this finding has been upheld by the Tribunal. The learned counsel for the revenue contended that the assessment of Bibi Manauwar Sultana was reopened and was subject-mater of further enquiry. That enquiry, however, cannot affect the finding of the Tribunal that the assessee had satisfactorily explained the cash credit of Rs. 17,000. Therefore, the Tribunal, in our opinion, was right in holding that the AAC was justified in deleting the addition of Rs. 17,000. Our answer to the question referred to this Court is in the affirmative and against the revenue. In the circumstances of the case, the parties shall bear their own costs.