SENGUPTA,J. - (1.) IN this reference under s. 256(2) of the IT Act, 1961 ('the Act') for the asst. yr. 1985-86 the following question has been referred to this Court: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in confirming the deletion of addition of Rs. 8,99,086 made as income from undisclosed source and Rs. 3,49,903 as income from other sources under s. 69A of the IT Act, 1961, and whether the findings relating to such deleting are unreasonable or perverse?
(2.) THE facts, briefly stated, are that in the capital account of the assessee there was a sum of Rs. 8,99,086 shown as addition thereto. The assessee explained that the amount was introduced in the capital account out of the proceeds of the fixed deposits. The assessee was not able to produce the fixed deposit receipts before the ITO for verification. Therefore, the ITO held that the source of the addition in the capital account was not explained and proceeded to assess the amount as cash credit under s. 68 of the Act. On appeal, the assessee produced the fixed deposit receipts before the CIT (A). The balance sheet was also produced before him. The assessee also pointed out the transfer entries made in respect of the said amount from his personal account to his business account. The personal account had been considered in the wealth-tax assessment of the assessee. After going through the assessment records and the material produced by the assessee, the CIT (A) found that the amount of Rs. 8,99,086 had in fact been transferred to the capital account from the assessee's personal account. He, therefore, deleted the addition. On appeal by the Department, the Tribunal agreed with the findings of the CIT (A) and dismissed the ground. During the assessment year in question, the assessee received advance of Rs. 3,49,903 against orders from various parties. The ITO found that the assessee did not file details of such advances and could not names and addresses of the parties from who they were taken. The assessee asked for some time to furnish the details. However, this was not allowed. The amount of advance was added in the assessment under s. 69A . The assessee filed an appeal to the CIT (A) who found that the ITO was under a misconception regarding the provisions of s. 69A. He perused the balance sheet and found that the assessee had received the advances from various parties. He further found that the amount was shown as liability in the balance sheet in the same way as they appeared in the balance sheets for all the years prior to and subsequent to the years under appeal. He noticed that the fact that the assessee had received advances was never disputed in the assessment in any of the earlier years. He found that the advances were duly reflected in the balance sheet and were shown as liabilities in the balance sheet year after year which was also accepted in the assessments. The CIT (A) also held that the names and addresses of the parties from whom the advances were received were mentioned and that the advances were received by the assessee for making gold ornaments. In this view of the matter he deleted the addition. On appeal by the Department, the Tribunal agreed with the findings of the CIT (A) and dismissed the appeal.
(3.) THE learned counsel appearing for the Revenue has drawn our attention to the order of the ITO and submitted that the finding was based on sufficient materials and the assessee did not in spite of several particulars given satisfactorily explain the source of the capital account or the advances received from various parties. Accordingly, the CIT (A) and the Tribunal were not justified in deleting the addition made by the ITO. He has drawn our attention to the findings of the different authorities.;