RAJENDRA PRASAD Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of the assessee, the Income-tax Appellate Tribunal, Patna Bench, Patna, referred to this court under Section 256(2) of the Income-tax Act, 1961, the following questions of law for its opinion. The question relates to the assessment year 1981-82 :

(2.) THE assessee is a contractor. For the assessment year in question, he did not maintain any books of account. During the course of the assessment proceedings, the Income-tax Officer, working backwards from the peak amount of the bills received by the assessee for the contract work done, came to the conclusion that the investment to the extent of Rs. 46,000 in the assessee's business stood unexplained. THE explanation of the assessee was that he had taken a loan from one, Shri Sheo Shankar Prasad, who also happened to be a contractor. Shri Sheo Shankar Prasad confirmed the assessee's statement and in support showed that he had withdrawn from his bank account a total sum of Rs. 45,620. THE case of the assessee further was that this loan amount had since been repaid by him by drawing a cheque for a sum of Rs. 46,000 in favour of self. THE stand taken by the assessee did not find favour and the Income-tax Officer having not been satisfied with the explanation furnished by the assessee treated the entire amount of Rs. 46,000 as income from undisclosed sources. THE assessee filed an appeal before the Appellate Assistant Commissioner which was also dismissed. THE Appellate Assistant Commissioner was also of the view that the letter of confirmation given by Mr. S.S. Prasad was too vague in material respects to be accepted. THE Appellate Assistant Commissioner was intrigued by the fact as to why the assessee did not issue a cheque straightaway in favour of Mr. S.S. Prasad and instead, issued a self cheque. THE assessee then filed an appeal before the Appellate Tribunal which was also dismissed. THE Appellate Tribunal held as under :