COMMISSIONER OF INCOME TAX Vs. KRISHNA PAPER MART

JUDGEMENT

(1.) THIS income-tax reference has been made under Section 256(2) of the Income-tax Act, 1961.

(2.) WE have heard learned counsel for the Department and Sri B.L. Srivastava, learned counsel for the assessee. The facts of the case are that the assessee is a firm which sold papers to a mill on commission basis on behalf of Shri L.D. Laddha. In connection with these transactions, the respondent-firm paid Rs. 2,34,317 to Shri L.D. Laddha on various dates. According to the details of the payments, as contained in the books of account of the assessee-firm, they were all in sums less than Rs. 2,500. But this fact was disputed by this Department. The payee had shown in his books of account receipt of such payment in one lump sum and the payments in instalments as shown in the books of account of the assessee were not reflected in his books, Shri L.D. Laddha deposited money in the books of the same dates on which he received cash from the assessee-firm. All such deposits, in the bank also exceeded Rs. 2,500.

(3.) IN our opinion, the Tribunal erred in law by holding that the Department did not give an opportunity to the assessee to explain the discrepancy because as pointed out above, the assessee was given an opportunity to explain the payments exceeding amount Rs. 2,500.