KANTAWALA,C.J. - (1.) AT the instance of the Revenue the following two questions are referred for our determination under S. 66(2) of the Indian IT Act, 1922 (hereinafter referred to as "the Act") : "1. Whether, the Tribunal misdirected itself in law in finding that the sum of Rs. 2,00,000 shown as credited to the deceased's account (sic) assessee's reserve fund account. on March 29, 1956, came out of the withdrawals made by it in year 1948 ?" 2. Whether, on the facts and in the circumstances of the case, it was necessary for the Department to prove, in order to bring to tax the unexplained cash credit of Rs. 2,00,000 standing in the assessee. books during the accounting year, that during the year of account there were conditions showing the possibility of the assessee earning large amounts outside the normal course of business ?"
(2.) THE questions referred to relate to the asst. year 1956 67 for which the relevant previous years ends on March 31, 1956. The assessee is a private limited company incorporated in Miraj State in 1944 with a capital of Rs. 11 lakhs, It carried on business in the manufacture and sale of textile goods. There was no income tax in Miraj at that time. The company obtained concessions by way of exemptions from income tax and other taxes under a notification dt. October 28, 1945. The company maintained accounts, but there deposit and investments which did not appear in the said books. The deposits outside the books made in the year 1946 were as follows :
(3.) ITEMS Nos. 1 and 2 in the above table were encashed on March 26, 1948, after maturity. Item No. 4 was kept as a deposit with a view to make investments, in securities, etc. Securities were purchased and they were later on sold, but it is, however, not clear when they were sold. before the Tribunal it was stated that they were sold some time in the year 1947. Item No. 3 in the above table comprises of two deposits, one for Rs. 2] lakhs and the other for Rs. 1 lakh. These deposits were made by one Divekar, a director of the assessee company. In May, 1947, the fixed deposit of Rs. 1 lakh out of item No. 3 was encashed and it is stated to have been paid over to one Bhide, managing director of the assessee company. The balance of Rs. 2 lakhs was renewed as a deposit and alter on when this deposit matured it was encashed and the amount thereof is stated to have been taken over by the mills at Madhavnagar. Bhide who was once the managing director died on November 25, 1953.;