COMMISSIONER OF INCOME TAX Vs. BAISHNAB CHARAN MOHANTY

JUDGEMENT

(1.) ON an application being filed by the Department under sub s. (2) of S. 256 of the IT Act, 1961 (hereinafter referred to as "the Act"), this Court formulated the following question and called upon the Tribunal to submit a statement of facts. The question formulated was :

(2.) UNDER S. 68 of the Act if any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not satisfactory, then the sum so credited may be charged to income tax as the income of the assessee of that previous year. For the asst. year 1983 84, cash credits were found in the names of Mineral Chemical Mart, Calcutta, and Mineral Supply Agency, Calcutta, amounting to Rs. 25,000 and Rs. 32,000, respectively. The AO added the aforesaid amounts to the income of the assessee. The AO did not accept the explanation of the assessee that the assessee was having a business relationship with the two firms at Calcutta. The AO had observed that the assessee could not prove the genuineness of the transactions either by furnishing confirmation letters or by producing the parties. Being aggrieved by the order of assessment, the assessee having preferred an appeal, the appellate authority came to hold that it cannot be denied that both the Calcutta parties were having trading transactions with the appellant for quite some time and were sending various amounts by cheque or by cash towards advance payment for supply of materials. But taking into consideration the fact that the assessee had returned several amounts as he did not want to continue the business relationship due to the difficulties in encashment of the cheques received, the appellate authority came to hold that sufficient opportunity should be given to establish the genuineness of the transactions. On consideration of the report of the inspector sent by the ITO, Calcutta, the appellate authority came to hold that it is quite obvious that the creditors were operating from the addresses at Calcutta, but the persons concerned were not traceable at the time of enquiry. He believed the transactions between the parties and held :

(3.) MR . Ray, appearing for the Department, argues with vehemence that even though the question whether a particular transaction is genuine or not is a question of fact, if the finding of the Tribunal on such question of fact is a finding which no reasonable man could have come to, then it would be a question of law arising out of the order and, consequently, the said finding cannot be sustained. Mr. Rath, appearing for the assessee, on the other hand, contends that all relevant materials having been duly considered by the second appellate authority and the conclusion having been arrived at, the same cannot be said to be a finding either based on no evidence or perverse and, therefore, no question of law arises.