Ajit K. Sengupta, J. - (1.) In this reference under Section 256(2) of the Income-tax Act, 1961, for the assessment year 1974-75, the following question of law has been referred to this court : "Whether, on the facts and in the circumstances of the case and having regard to the fact that the assessee-company claimed before the Income-tax Officer that the unexplained deposits represented short-term loans advanced by one M/s. Hukumchand Santalal of Post Office Sonada, Darjeeling, the Tribunal was justified in holding that the cash credit appearing in the books of the assessee amounting to Rs. 1,28,639 should be treated as income of the assessee-company from its tea business thus allowing the benefit of exemption under Rule 8 of the Income-tax Rules, 1962, even though the assessee did not discharge the onus of proving the source of the deposits ?"
(2.) We reframe the question as follows : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the cash credit appearing in the books of the assessee amounting to Rs. 1,28,369 should be treated as income of the assessee-company from its tea business ?"
(3.) Shortly stated, the fact is that the Income-tax Officer, in the course of the examination of the books of account, detected a current account in the name and style of " Kayah" in the assessee's tea garden books. The entire account has been annexed to the relevant assessment order as annexure "A". The account reflected income and outgoing of cash from January 25, 1973, to December 31, 1973, leaving a credit balance of Rs. 51,717.67 which was carried forward. The assessee, according to the Income-tax Officer, did not comply with his requisition for proving the nature and source of the cash credit account, though, however, it was lastly claimed to have been the amount of one M/s. Hukumchand Santalal, P.O. Soneda, Darjeeling, who admitted this by letter dated February 25, 1977, and also supplied the Income-tax Officer with a copy of the details and payments in that account from January 1, 1973, to December 31, 1973. The Income-tax Officer found discrepancies in the accounts while tallying the parties' statements with the assessee's accounts. The said party was not an income-tax assessee and, in those circumstances, the Income-tax Officer held that the party had no credit-worthiness and, secondly, the assessee failed to prove the nature and source of the cash credit. In the circumstances, the Income-tax Officer took the peak credit of the incoming and outgoing of the cash which was calculated at Rs. 1,28,369 and the said amount was treated as assessed income from undisclosed sources.;