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Issues involved: Interpretation of section 68 of the Income-tax Act, 1961 regarding unexplained cash credits appearing in the books of the assessee within one month of commencing business for the assessment year 1963-64.
Summary: The High Court of Calcutta addressed a reference under section 256(1) of the Income-tax Act, 1961, concerning the taxability of unexplained cash credits amounting to Rs. 8,100 in the books of a firm that commenced business in November 1961 for the assessment year 1963-64. The Income Tax Officer (ITO) added the cash credits to the assessment, which was later corrected by the Appellate Assistant Commissioner (AAC) to Rs. 16,300. The Tribunal, comprising judicial and Accountant Members, disagreed on the genuineness of the cash credits. The judicial Member opined that the Rs. 8,100 credit within one month of the previous year's commencement could not represent the income of that year, a view supported by the Vice-President. Reference was made to the decision in CIT v. Bharat Engineering and Construction Co. [1972] 83 ITR 187 (SC) regarding the assessability of cash credits on the first day of the accounting year. Despite the differing opinions, the Court ruled in favor of the revenue, stating that under section 68 of the Act, unexplained amounts may be assessed as income for the relevant accounting year even if credited on the first day. The Court answered the question in the negative, supporting the revenue's position, with no order as to costs. Judge R. N. Pyne concurred with the judgment.
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