An order of the Income-tax Appellate Tribunal will give rise to a question of law where it reverses the decision of the Revenue authorities in appeal without meeting the reasons recorded therein and the material referred to in support thereof by the authorities below.

( 1 ) THE Commissioner of Income-tax, Meerut, has made this application under Section 256 (2) of the Income-tax Act (for short, "the Act") with a prayer that the Income-tax Appellate Tribunal, new Delhi (Bench-A), may be required to refer the following question as a question of law to this court for its opinion : "whether, in the circumstances of the case, the Income-tax Appellate Tribunal was legally correct to delete the credit appearing in the name of Sri Ratish Chand Gupta ?"

( 2 ) WE have heard learned standing counsel and Sri P. K. Jain, who appeared on behalf of the respondent. Messrs. Sarvodaya Furnishers and Electricals (P.) Ltd. , Meerut, the respondent, is a private limited company registered under the Companies Act. The dispute is in respect of the assessment year 1985-86. During the course of the assessment proceedings for that year, the income-tax Officer noticed certain deposits in the account books of the assessee and one such deposit was of Rs. 50,000 appearing in the name of Ratish Chand Gupta. To substantiate the plea that the deposit in question was genuine and the money was taken on loan, the assessee filed a confirmation from the depositor which was to the effect: "i confirm the above account. I am assessed to income-tax in Circle-I (4), Meerut. "

( 3 ) AN initial inquiry into the matter conducted by an Income-tax Inspector revealed that there was no assessee by the name of Ratish Chand Gupta in the circle mentioned in the confirmation. Subsequently, the assessee submitted a certain assessment order said to have been made in the name of the depositor. However, the Income-tax Officer not being satisfied with the explanation of the assessee brought to tax the deposit in question as the income of the assessee from undisclosed sources under Section 68 of the Income-tax Act.

( 4 ) IN appeal, the assessment order was upheld by the Commissioner of Income-tax (Appeals ). On further appeal when the matter came before the Income-tax Appellate Tribunal, it deleted the addition by saying that the identity of the depositor and the source of the deposit had been proved from the overwhelming evidence that had been placed before the Commissioner of income-tax (Appeals ).

( 5 ) LEARNED standing counsel contended that the order of the Income-tax Appellate Tribunal does give rise to a question of law proposed in the application. It was contended that the Income-tax appellate Tribunal while recording its decision has not addressed itself to the various aspects on which the addition in question was made by the Income-tax Officer. Further, the additional evidence on which the Tribunal rested its decision had not been admitted by the Commissioner of Income-tax (Appeals) which was filed before him. It was contended that the Tribunal could not have relied upon the additional evidence without recording a finding that the Commissioner of Income-tax (Appeals) had erred in rejecting the additional evidence. Moreover, the Tribunal acted upon the additional evidence on its face value without directing any inquiry as to its correctness.

( 6 ) ON a consideration of the assessment order, we find that the Income-tax Officer has referred to a number of circumstances in support of his conclusion that the deposit in question was not genuine. For instance, we found that there was no past assessment record of the depositor on september 24, 1987, when he filed the confirmation nor was he an assessee of Circle I (4), meerut, as asserted in the confirmation. It was found as a fact that for the first time on October 7, 1987, returns of income for the assessment years 1985-86 to 1987-88 were filed and the assessment was completed on October 21, 1987. The income returned for those years was to the tune of Rs. 15,000 to Rs. 18,100 under the head "income from interest/commission/business" and no further details were either given or were available. The process server could not serve the assessment order at the address given as the deposit