COMMISSIONER OF INCOME TAX Vs. KRISHNA MINING CO

JUDGEMENT

(1.) THE assesses is a firm carrying on business in mica. In the assessment year 1958-59 the Income-tax Officer noticed that there was a sudden fall in the production of cut mica during the months of September, October and November, for which there was no satisfactory explanation by the assessee. On the basis of the figures for the previous and subsequent months as disclosed by the books of the assessee, the Income-tax Officer came to the conclusion that the production of cut mica was understated and estimated the value of such deficit production at Rs. 1,20,000. THE Income-tax Officer also noticed that there were three cash credits on June 11, 1957, June 25, 1957, and August 6, 1957, amounting to Rs. 60,000. THE assessee's explanation that these amounts were borrowed from one Arjundas Pokardas was not accepted by the Income-tax Officer. THE Income-tax Officer also disallowed a sum of Rs. 1,350 said to have been paid to Arjundas Pokardas by way of interest. He treated the sum of Rs. 61,350 as the income of the assessee from " other sources ". He thus added a total sum of Rs. 1,81,350 to the income returned by the assessee. On appeal by the assessee, the Assistant Commsssioner upheld the finding of the Income-tax Officer, but thought that the addition of Rs. 1,20,000 and the addition of Rs. 61,350 may be merged. He said :

(2.) BOTH the department and the assessee preferred appeals to the Income-tax Appellate Tribunal. The Tribunal held that the yield of cut mica during the months of September, October and November was not correctly brought out in the books of the assessee and that an estimate was called for. The Tribunal estimated the value of the deficit yield at Rs. 60,000. The Tribunal also found that the alleged borrowals from Arjundas Pokardas were not true and that the cash credits represented income receipts. At the end of paragraph 14 of its order the Tribunal recorded the following finding:

(3.) THE principal question raised by the department before the Tribunal when requesting the latter to state a case was whether the Tribunal having found that the cash credits were unexplained, was justified in holding that there should be only one addition of Rs. 60,000 notwithstanding the fact that the suppression of yield occurred during a period much later than the period during which the cash credits appeared. THE Tribunal was of the opinion that the question raised by the Commissioner was a question of law but that the first question suggested by the Commissioner was sufficient to cover the issue between the parties. THE Tribunal stated :