Section 68 and limitation for tax reference petitions: unexplained cash credits raised a pure question of law, while affidavit evidence saved time.

Section 68 was treated as the governing provision for credits found in the assessee's books, and the controversy on unexplained cash credits was characterised as a pure question of law requiring a reference on the correct scope of that provision. The Tribunal was therefore directed to state the case on the applicability of section 68 to the additions made. On limitation, the petition under section 256(2) was held to be in time because the asserted date of receipt of the Tribunal's order was supported by affidavit and remained unrebutted.

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Issues: (i) whether the Tribunal was justified in holding that additions on account of unexplained cash credits did not fall within section 68 of the Income-tax Act, 1961; and (ii) whether the petition under section 256(2) of the Income-tax Act, 1961 was barred by time.

Issue (i): whether the Tribunal was justified in holding that additions on account of unexplained cash credits did not fall within section 68 of the Income-tax Act, 1961.

Analysis: Section 68 was treated as the governing provision for credits found in the books of the assessee, and the controversy turned on its correct scope and application to the credited sums shown in the books. The dispute raised a pure question of law requiring the Tribunal to state the case and refer the formulated question for decision.

Conclusion: The Tribunal was directed to state the case and refer the question of law on the applicability of section 68 to the additions made on account of unexplained cash credits.

Issue (ii): whether the petition under section 256(2) of the Income-tax Act, 1961 was barred by time.

Analysis: The date of receipt of the Tribunal's order was supported by affidavit, and no material was produced to rebut that statement. On the record, the court found no basis to disbelieve the asserted date of service and held the petition to be within time.

Conclusion: The limitation objection was rejected and the petition was held to be in time.

Final Conclusion: The application succeeded, and the Tribunal was required to refer the question of law to the High Court, with no order as to costs.

Ratio Decidendi: Whether sums credited in the assessee's books fall within section 68 is a pure question of law warranting a reference when the controversy concerns the correct legal scope of the provision; a limitation plea fails where the asserted date of service is supported by uncontroverted affidavit evidence.

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