- (1.) The Tribunal, Allahabad, has referred the following question of law under Section 256(1) of the IT Act, 1961 (hereinafter referred to as the Act), for opinion to this Court : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the, addition of Rs.1,01,399,even though it represented unexplained cash credits and demand (sic-deemed) income under Section 68 of the IT Act, 1961 ?".
(2.) Briefly, stated the facts giving rise to the present reference are as follows : During the course of assessment for the asst. yr. 1976-77 the ITO in the course of examination of the assessee's books of account, noticed various deposits in the names of 108 parties. On being asked to explain the nature and source of these deposits, the respondent-assessee was unable to furnish the addresses of depositors. However, he submitted that patients used to come for treatment at his place and were required to make a deposit. Part of the deposit was adjusted towards the fees and expenses and remaining part was treated as deposit till such a time it was refunded to the depositor. The ITO, however, added the entire amount from unexplained sources by invoking Section 68 of the Act, Addition was deleted by, the CIT(A) on the ground that they were mere deposits and could not be treated as income. He found that the respondent-assessee had been maintaining regular accounts of patients for the moneys deposited by them, for the fee charged from them and refund of balance allowed to them. After examining number of items forming part of Annex. C to the assessment order, the CIT(A) found support for the above finding. The Revenue's appeal before the Tribunal has failed.
(3.) We have heard Shri Shambhu Chopra, the learned standing counsel for the Revenue, and Shri Shakeel Ahmed, the learned counsel appearing for the respondent-assessee.;