1988 PLP 662 (PTD)

S.S. CHADHA, J.--These petitions under section 256(2) of the Income-tax Act, 1961, pray for a direction to the Income-tax Appellate Tribunal, Delhi Bench-B (for short called "the Tribunal"), to state the case and refer questions Nos. 6 and 9 to this Court in addition to questions Nos. 1 to 5 already referred. The year of assessment is 1963-64. The assessee received rental income from a property which he had agreed to purchase from M/s. Bharat Insurance Co. under the agreements of 1955 and 1959. The assessee had submitted the details , of receipts and expenses from such rental income which disclosed an excess of Rs.11,973 on the receipt side and this excess was worked out after deducting interest of Rs.43,482. The Income-tax Officer held that the interest of Rs.43,482 was not allowable and that the rental income was also taxable and thus added the income of Rs.55,455. On appeal, the Appellate Assistant Commissioner came to the conclusion that the assessee could have borrowed money to pay the unpaid price and on the analogy that the interest paid on such borrowed capital would be allowable as expenditure, allowed the sum of Rs.43,482 as interest in respect of the unpaid purchase consideration. The addition of the rental income was confirmed. The Tribunal accepted the assessee's contention that the rents are not assessable in the assessee's hands. The appellate order states, "However, the Appellate Assistant Commissioner has allowed the assessee deduction in respect of the interest paid from the property income taxed by the officer. This would not any longer be available to the assessee and the net relief the assessee will get as a result of this finding of ours will be only Rs.11,973 (vide para. 60 of the assessment order read with para. 30 of the Appellate Assistant Commissioner's order)." The Tribunal declined to make reference of the following questions: "(6) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the rental income of Rs.11,973 from the properties agreed to be purchased as per agreement, dated August 31, 1959, was not assessable in the hands of the assessee? (7) Whether, on the fact and in the circumstances of the case, the Tribunal was justified in confirming the Appellate Assistant Commissioner's order deleting the interest of Rs.43,482? (8) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the income of Rs.55,455 (Rs.11,973 + 43,482) could not be assessed as income from other sources? (9) Whether, on the facts and in the circumstances of the case, was the Tribunal right in deleting the addition of Rs.1 lac from the assessee's income from undisclosed sources?" So far as question No. 6 is concerned, it is conceded, and in our view rightly, that this question 'of lave arises from the order of the Tribunal and ought to have been `referred. So far as question posed as questions Nos. 7 and 8 are concerned, they have been framed under some misapprehensions or erroneous understanding of the order of the Tribunal. As already noticed, the Appellate Assistant Commissioner directed the reduction of the amount of interest of Rs.43,482 from the computation of Rs.55,455-and the Tribunal took the view that this would not any longer be available to the assessee. The net relief the assessee got under the orders of the Tribunal was only Rs.11,973. Mr. Anoop Sharma states that this sum of Rs.43.482 has, in fact, been added in the computation of income by the Income-tax Officer in giving effect to the order of the Tribunal. If it is not so, it would be open to the Department to rectify the order so as to include this income of Rs.43,482. No question of law arises as relating to questions Nos. 7 and 8. So far as question No. 9 is concerned, the conclusion of the Tribunal that the sum of Rs.1 lakh cannot represent a fresh item of income accruing to the assessee during the previous year was a conclusion of fact and no question of law arises in that regard. The Tribunal has dealt with this question in para. 10 of its order. An alternative contention was raised before the Tribunal that huge addition of Rs.65 lakhs has been made in the hands of the assessee in past years and out of it at least a sum of Rs.20.56 lakhs was available for being credited. The Tribunal took the view that having regard to the intangible additions made in the earlier orders and comparatively petty amounts involved by way of cash credits, the assessee's plea that even if these credits are taken to represent the assessee's income they could have come out of the income assessed in the past and do not deserve to be added again separately this year. In Anantharam Veerasinghaiah & Co. v. C.I.T. (1980) 123 I T R 457 (S C), their Lordships held that when an intangible addition is made to the book profits during an assessment proceedings, it is on the basis that the amount represented by that addition constitutes the undisclosed income of the assessee and that income, although commonly described as intangible, is as much a part of his real income as that disclosed by his account books and that it has the same concrete existence. It could be available to the assessee as the book profits could be. In our view, the Tribunal, in this case, from an overall consideration of all the relevant facts and circumstances, came to a finding of fact that the cash credits could reasonably be attributed to the income assessed in the previous year. Mr. Wazir Singh has invited our attention to C.I.T. v. Altht Bangarayya (1975) 100 I T R 10 (S C), as also to the provisions of section 68 of the Income-tax Act, 1961, and urges that a question of law does arise from the order of the Tribunal. The question whether an unexplained amount could be covered by intangible additions of the previous years was then not decided by the Supreme Court when a view was taken that a question of law whether the Tribunal's order -was valid arises out of the order of Tribunal. Even in section 68, the assessee could offer an explanation about the nature and source of the cash credits found in the books of account of the assessee. The Income-tax Officer could charge the income only on coming the conclusion about the explanation of the assessee. In this case, the explanation of the assessee was accepted by the Tribunal that the cash credit represents the assessee's income that could have come out of the income assessed in the past. The petitions are partly allowed. The Tribunal is directed to state the ease and refer Question No. 6 to this Court in accordance with law. M.B.A/463/T Petitions allowed partly.