D.S.Tewatia, J.

1. In this reference under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as " the Act "), the question referred for the opinion of the High Court is :

" Whether, on the facts and circumstances of the case, the Tribunal was right in law in holding that the provisions of Section 271(1)(iii) of the Act, as existing before its amendment with effect from April 1, 1968, would be applicable to the present case ? "

2. The reference initially was set down for hearing before a Division Bench which, in turn, referred it to a larger Bench and that is how the matter is before us.

3. Before proceeding with the consideration of the question posed, the necessary facts having a bearing upon the said question deserve to be taken notice of.

4. During the course of assessment proceedings for the assessment year 1963-64 of M/s. Ram Singh Harmohan Singh, Arnritsar (hereinafter referred to as "the assessee "), the ITO computed the total income of the assessee by adding thereto the following amounts which his account books showed as cash credits : Rs.

1. Messrs. Amir Chand Moti Ram 42,000

2. Messers B. Mohan Singh and Sons 20,000

3. Interest in the name of Mes