COMMISSIONER OF INCOME-TAX Vs. RAMAN INDUSTRIES

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Chandigarh Bench, at the request of the Commissioner of Income-tax, Patiala, referred the following question of law for decision of this court under Section 256 (1) of the I. T. Act, 1961 (hereinafter referred to as "the Act"):

(2.) BRIEFLY the facts which have given rise to this reference are as follows :

(3.) THE assessee is a registered firm and manufactures and sells tool bits. For the accounting year ending March 31, 1965, relevant to the assessment year 1965-66, the assessee filed a return of income on September 30, 1965, wherein it showed its income as Rs. 10,365. While making the assessment the ITO noticed that the assessee had purchased goods worth Rs. 96,648 for which bills were not produced by it. He also categorised 26 separate cash credits, the peak of which on February 8, 1965, came to Rs. 60,882. The assessee, when asked to explain the source of the credits, did not furnish any explanation, but said that the amount of Rs. 60,882 be included in the assessment subject to an adjustment of Rs. 31,000 which had been taxed in the earlier year. The ITO allowed the deduction of Rs. 31,000 as claimed and assessed tax at Rs. 29,882 as income from undisclosed sources. The assessee also agreed to pay tax on business income of Rs. 30,118 as against the income of Rs. 10,365 as declared by it earlier. Thus, the assessment was completed on February 26, 1970, at a total sum of Rs. 60,000. The assessee did not file any appeal against the assessment order.