COMMISSIONER OF INCOME TAX Vs. GANGA PRASAD BACHCHULAL

JUDGEMENT

(1.) THIS order will also govern the disposal of M.C.C. No. 5 of 1979. These are applications under Section 256(2) of the I.T. Act, 1961, hereinafter called "the Act".

(2.) THE material facts giving rise to these applications briefly are as follows : THE assessee is an HUF and carries on business in cotton. THE relevant assessment year is 1969-70 for which the assessee filed a return declaring a net loss of Rs. 10 lakhs. During the course of assessment proceedings, the assessee did not produce its books of account in spite of notices under Section 142(1) of the Act. THE ITO, therefore, framed the assessment under Section 144 of the Act on a total income of Rs. 23,80,512. On appeal, the matter was remanded to the ITO for further investigation. After investigation, the ITO sent his report to the AAC. THE AAC examined the matter and held that the entire shortage of stocks worth Rs. 22,30,000 found by the banks with whom the assessee had a cash credit loan account, could not be added as income from undisclosed sources and that as the assessee was enjoying overdraft facilities from the banks, at least 70 to 75 per cent, of the value of the goods was covered by the loans advanced by the banks. In this view of the matter, the AAC held that only a sum of Rs. 6 lakhs could be estimated as the amount invested by the assessee in the purchase of the goods out of its own funds. THE AAC partly allowed the appeal. Aggrieved by the order passed by the AAC, the Department as well as the assessee preferred appeals before the Tribunal, THE Tribunal partly allowed the appeal filed by the assessee to Rs. 5 lakhs, and dismissed the appeal filed by the Department. Aggrieved by the order passed by the Tribunal, the Department submitted applications for making references to this court. But those applications were rejected, and hence the Department has filed the present applications.