Question of law on cash credits and evidentiary burden justified a reference under the Income-tax Act.

A question of law arose from the Tribunal's order under section 256(2) of the Income-tax Act where the dispute concerned cash credits and the assessee's failure to prove the capacity of the alleged creditors. The Court treated the challenge to the Tribunal's evidentiary conclusion on the cash credits as a proper legal issue arising from the order. On that basis, the reference application was maintainable and was allowed, with a direction to the Tribunal to state the case and refer the question of law.

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Issues: Whether a question of law arose from the Tribunal's order so as to warrant a reference under section 256(2) of the Income-tax Act, 1961.

Analysis: The application concerned the Tribunal's finding on the cash credits of Rs. 55,000 and the assessee's failure to prove the capacity of the alleged creditors. The Court found that the stated question, challenging the Tribunal's conclusion on the evidentiary burden and the treatment of the cash credits as income, did arise from the order of the Tribunal.

Conclusion: The reference application was maintainable and was allowed, with a direction to the Tribunal to state the case and refer the question of law to the Court.

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