COMMISSIONER OF INCOME TAX Vs. MADURI RAJAIAHGARI KISTAIAH

JUDGEMENT

(1.) AT the instance of the CIT and pursuant to the direction given by this court, the Income-tax Appellate Tribunal, Hyderabad Bench, submitted under Section 256(2) of the I.T. Act, 1961, an agreed statement of the case for our opinion on the following question :

(2.) IN order to appreciate the scope of the question, it is necessary to briefly state the material facts that gave rise to the same. The respondent-assessee is a firm constituted by two partners, Sri Maduri Rajeswara Rao and Sri Maduri Narasimha Rao, carrying on business in cloth. For the assessment year 1960-61 (corresponding accounting year commencing from November 11, 1958, and ending with November 30, 1959), the ITO did not accept the returns submitted by the assessee but added two amounts, Rs. 47,348 towards extra profit in the trading account, and Rs. 1,41,729 towards explained cash credits under the head "INcome from other sources". On appeal, the A AC sustained the addition of Rs. 47,348 to the account of gross profits but, however, the addition of Rs. 1,41,729 as income from undisclosed sources was found referable to two periods, viz., November 11, 1958, to Aprill, 1959, and April 1, 1959, to November 30, 1959. It was found that the unexplained cash credits pertaining to the period prior to April 1, 1959, do not fall under the year of account and, hence, they have to be deleted. The amount of unexplained cash credits for the period subsequent to April 1, 1959, was found to be Rs. 51,008. Since addition of Rs. 47,348 was upheld by him on account of low gross profit, the AAC thought that no further addition on account of cash credits was justified and deleted the addition of Rs. 51,008.

(3.) THE assessee did not prefer any appeal against the decision of the AAC confirming the addition of Rs. 47,348 as extra profit in the trading account of the business made by the ITO. Hence, the assessment to the extent of that addition towards the gross profit account of the business has been allowed to become final. In the appeal before the Tribunal, the question was whether the ITO was competent and justified in making a further addition of Rs. 51,008 towards the unexplained cash credits under the head " Income from other sources " having made an addition of Rs. 47,348 as extra profit in the trading account. THE ITO, the AAC as well as the Tribunal have concurrently held that the assessee had not substantiated his claim but failed to establish that the sum of Rs. 51,008 found in the form of cash credits in the accounts of the assessee really represented genuine loans or credits. This finding is one of fact which has been arrived at by the Tribunal on the material on record. Such finding is binding on this court.