SAHU AND COMPANY Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) PURSUANT to a direction issued from this court under Section 256(2) of the I.T. Act of 1961 (hereinafter referred to as "the Act") on the assessee's applications, the Income-tax Appellate Tribunal, Cuttack Bench, stated a case and referred the following question for the opinion of the court :

(2.) THE assessee is a registered firm and the references relate to the assessment years 1960-61 and 1961-62, corresponding to the calendar years 1959 and 1960. THE assessee filed returns of income for the assessment year 1961-62 and claimed deduction on account of payment of interest on loans. Subsequently, it filed a return for the assessment year 1960-61 on May 8, 1961, in response to a notice under Section 148 of the Act. In the course of the assessment proceedings, the ITO noticed cash credits in the names of different parties in the assessee's accounts. A letter was given to the ITO on behalf of the assessee on January 17, 1967, saying :