Question of law on cash credit under section 68 found fit for reference where supporting material was in issue.

Whether a question of law arose for reference depended on the Tribunal's finding that a cash credit standing in an assessee-linked account represented income from undisclosed sources under section 68 of the Income-tax Act, 1961. The High Court treated the proposed reference as turning on whether material existed to support that factual finding, and concluded that this issue was fit to be examined as a question of law under section 256(2). The reference request was therefore accepted.

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Issues: Whether, on the facts and in the circumstances of the case, a question of law arose from the Tribunal's order so as to require a reference under section 256(2) of the Income-tax Act, 1961.

Analysis: The application concerned the Tribunal's finding that the cash credit of Rs. 35,000 standing in the account of Smt. Shilabai represented the assessee's income from undisclosed sources under section 68 of the Income-tax Act, 1961. The Court held that the proposed question turned on whether there was material before the Tribunal to support that finding, and that this issue raised a question of law fit for reference.

Conclusion: A question of law was held to arise, and the request for reference was accepted.

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