TMI Blog1983 (12) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... a distributable surplus of Rs. 92,545 which should have been distributed and hence an additional super-tax at 37 per cent. was payable under s. 104 of the I.T. Act, 1961. The assessees went in appeal. The AAC upheld the order of the ITO. The assessee then went up to the Tribunal. The Tribunal upheld the assessee's case and quashed the order under s. 104 particularly on the ground that in the meanwhile the order imposing penalty for the same matter had been quashed. At the instance of the Revenue, the Tribunal has referred the following question of law for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the provisions of section 104 of the income-tax Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... represented a part of the commercial profits of the assessee. Mr. Bagchi, learned counsel for the Department, invited our attention to a decision of this court in the case of Mehar Singh Co. (P.) Ltd. v. CIT [1977] 108 ITR 607. In that case, the court held that if it could be shown that any artificial or notional or fictional income was included in the calculation for any reason or failure on the part of the assessee, then there would have been some force in the contention of the assessee that the assessed income or the estimated profits could not be said to be the commercial or real profits of the business for the purpose of making an order under s. 23A of the old Act. According to this decision, s. 23A of the old Act would not normall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose of s. 23A of the Indian I.T. Act, 1922. But, where there is no other fact except that the assessee had failed to prove the genuineness of loan transactions, it would not make the amounts added back available for the purpose of considering the distributable surplus and the provisions of s. 23A would not be attracted. This case, in our opinion, is applicable on all fours. Here also the finding of the Tribunal is that the addition was made merely because the assessee failed to prove the genuineness of the loan transactions. They could not, hence, be considered to be profit available for computing the distributable surplus under the provisions of s. 104 of the I.T. Act, 1961. The question whether s. 104 of the I.T. Act, 1961, is a pena ..... X X X X Extracts X X X X X X X X Extracts X X X X
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