Madhya Pradesh High Court
Commissioner Of Income-Tax vs Rajeshree Cinema P. Ltd. on 21 September, 2000
Author: C.K. Prasad
Bench: C.K. Prasad
JUDGMENT
1. This application has been filed by the Revenue under Section 256(2) of the Income-tax Act, 1961, to refer the case to this court on the following questions :
"(1) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in giving a finding that the amount of Rs. 3,20,760 which was added on account of surrender of cash credit represented the undisclosed income from the business of the asses-
see ?'' (2) Whether there was any material evidence before the Income-tax Appellate Tribunal for coming to the conclusion that Rs. 3,20,760 being un-explained cash credits, represented the undisclosed income of the assessee from its business ?"
2. The assessee filed a return for the assessment year 1985-86 in which there were cash credits totalling Rs. 3,20,760 in the books of the assessee. These cash credits were in the name of the late Sanjay Kumar Kasliwal, son of one of the directors of the company, who died in an accident on May 14, 1985. The assessee surrendered these credits on the first day of hearing before the Income-tax Officer and prayed for treating the same as business profits. The Income-tax Officer accepted this fact, but did not accept that these cash credits are fit to be taxed as business income, but treated the same to be income from other sources. For that the Income-tax Officer took into consideration that the assessee had not filed a revised return. The assessee being aggrieved by the decision of the Income-tax Officer, filed an appeal before the Commissioner of Income-tax (Appeals) under Section 246 of the Income-tax Act, inter alia, contending that these credits were never detected by the Income-tax Officer, but surrendered suo motu on the very first day of hearing. It was further contended that the assessee is a private limited company and the only source of income is film exhibition and it has no other source of income. The credits appeared in the name of a trusted person, i.e., the son of one of the directors of the company.
3. The assessee accordingly contended that the only conclusion which could be arrived at is that the credits were referable only to the business income.
4. The Commissioner of Income-tax (Appeals) on an appreciation of the materials placed before him held as follows :
"After going through the facts involved and the decisions cited by learned counsel, there is no doubt that the assessee does not have any other known source of income. The credits were surrendered on the very first day of hearing and in such circumstances, were referable only to the business income, in view of the decision cited above. A mere technical formality of not filing a revised return in any way does not come in the way of treating the credits as business income."
5. Thereafter the Revenue filed an appeal before the Income-tax Appellate Tribunal at Indpre. The Tribunal affirmed the order of the Commissioner of Income-tax (Appeals) in the following words :
"The weight of probability is in favour of this inference, specially when the assessee offered the entire amount of credits to be taxed as its income without any hesitation. There is no material on record to indicate if the late Sanjay Kumar Kasliwal had any other business wherein he could earn the amount representing the cash credits. Thus, in all probability, the amount of cash credit is undisclosed income from the business of the assessee-company. In this view of the matter, I find no reason to interfere with, the order of the Commissioner of Income-tax (Appeals)."
6. Thereafter the Revenue filed an application before the Tribunal to refer the question as set out in this application for our opinion under Section 256(1) of the Income-tax Act. By order dated August 10, 1992, the Tribunal declined to make a reference holding as follows :
"Cash credits totalling Rs. 3,20,760 in the books of account of the assessee-company for the period relevant to the assessment year 1985-86 in the name of the late Sanjay Kumar Kasliwal, son of one of the directors of the assessee-company, could not be explained and, therefore, were offered for tax on the very first date of hearing, in order to avoid any penal provision under the Act. The said amount was, therefore, added to the income of the assessee under the heading 'Other sources'. The stand of the asses-see was that the said income was none the less from business and, therefore, the carried forward losses under the head 'Business' should be allowed as set-off against the said income. This stand of the assessee was turned down by the Assessing Officer. It was, however, accepted by the Appellate Assistant Commissioner ; on appreciation of facts on record, the Tribunal reached the conclusion that the amount of cash credit was undisclosed income from the business of the assessee-company. This finding of the Tribunal is based on appreciation of facts on record. No material question of law, therefore, arises."
7. Thereafter the Revenue has filed this application under Section 256(2) of the Act to refer the case to this court on the same question as set out in this application.
8. From what has been stated above, it is apparent that the Tribunal declined to make reference holding that the findings were based on appreciation of evidence.
9. We are of the opinion that the conclusion based on appreciation of facts does not give rise to any referable question of law ; and, accordingly, we decline to call for a statement of case from the Tribunal;
10. Application stands dismissed accordingly.