Interpretation of unexplained cash credits in business books for assessment year 1966-67 under Income-tax Act

The High Court of Calcutta addressed the interpretation of unexplained cash credits in a company's business books for the assessment year 1966-67 under section 256(1) of the Income-tax Act, 1961. The Court affirmed the Tribunal's decision that a specific sum credited on the first day of the company's incorporation represented income from other sources, not business income. The income was deemed to be from other sources due to lack of evidence or explanation from the assessee on its source. The judgment favored the Revenue, with no order as to costs. Judge Bhagabati Prasad Banerjee concurred with the decision.

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Issues: Interpretation of unexplained cash credits in a company's business books for the assessment year 1966-67 under section 256(1) of the Income-tax Act, 1961.

Summary:
The High Court of Calcutta addressed a case involving unexplained cash credits in a company's business books for the assessment year 1966-67. The Tribunal referred the question of law under section 256(1) of the Income-tax Act, 1961, regarding the classification of a specific sum of Rs. 1,50,000 credited on the first day of the company's incorporation. The Tribunal found that this sum represented the assessee's income from other sources, not from business, and this inclusion was undisputed. The Tribunal inferred that the amount credited on the first day of the accounting year was a credit item, and in the absence of evidence or explanation from the assessee on how this income was earned, it was deemed income from other sources.

The Court affirmed the Tribunal's decision, stating that the income in question was rightly treated as income from other sources. The judgment was in favor of the Revenue, with no order as to costs. Judge Bhagabati Prasad Banerjee concurred with the decision.

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