Cash credit explanation treated as a factual issue, leaving no referable question of law in penalty proceedings.

The Delhi High Court considered whether levy of penalty for concealment under section 271(1)(c) was justified and whether the assessee's explanation for a cash credit gave rise to a referable question of law under section 256(2). The assessment authorities and the Tribunal found that the source of the loan was not properly proved and rejected the explanation on the material before them. The Court treated the acceptability of that explanation as essentially a question of fact, and because the lower forums had already reached a factual conclusion adverse to the assessee, it found no referable question of law.

---

---

Issues: Whether the Tribunal was justified in upholding levy of penalty for concealment under section 271(1)(c) of the Income-tax Act, 1961, and whether the assessee's explanation regarding the cash credit gave rise to any question of law under section 256(2) of the Income-tax Act, 1961.

Analysis: The assessment authorities and the Tribunal examined the assessee's explanation for the cash credit and found that the source of the loan was not properly proved. The Court held that the acceptability of an assessee's explanation in such circumstances is essentially a question of fact. Since the forums below had analysed the material and reached a factual conclusion adverse to the assessee, the case did not raise any referable question of law.

Conclusion: No question of law arose from the Tribunal's order, and the reference was declined.

---