COMMISSIONER OF INCOME TAX Vs. KAILASH RICE MILLS

JUDGEMENT

(1.) THE Income -tax Appellate Tribunal, Chandigarh Bench, Chandigarh (hereinafter referred to as 'the Tribunal'), has referred the following substantial questions of law for the opinion of this Court, which are arising out of ITA No. 169 of 1981 in case of the assessee for the asst. yr. 1979 -80 :

(2.) WHETHER the Tribunal is right in deleting the addition of Rs. 10,000 from the income of the asst. yr. 1979 -80 on the ground that this deposit did not fall in the previous year for this year - the assessee had shown a cash credit of Rs. 10,000 in the name of Prithi Singh. During the course of assessment proceedings, the AO enquired about the genuineness of the said cash credit and asked the assessee to establish its genuineness. By that time, Prithi Singh had expired and the assessee came forward with an affidavit of Dharam Singh son of Prithi Singh in support of his contention. The AO asked the assessee to produce Dharam Singh and to file the evidence of agricultural income and mutation of land, etc. In response to the said requirement, the assessee filed the said cash credit was advanced by Prithi Singh, who had since expired, and his son Dharam Singh felt hesitant to appear before the AO, therefore, in order to put an end to litigation and to avoid multiplicity of the proceedings, the assessee surrendered the above credit subject to no penal action. The AO did not accept the said offer and added the said cash credit of Rs. 10,000 being the assessee's own unexplained income.

(3.) THE appeal of the assessee was dismissed by the AAC and the order of the AO was confirmed. On further appeal by the assessee to the Tribunal, the Tribunal allowed the appeal while observing that in view of the facts stated by the lower authorities, the cash credit was undoubtedly not genuine, but in its opinion it could not be subjected to tax for the assessment year under consideration as it does not fall in the "previous year" which started much after the said credit found place in the books before the business was set up.