T.P. Mukerjee, J.
1. My learned brothers Jagdish Sahai and Beg JJ. have, after a good deal of controversy, agreed upon the following question to be referred to a third judge for opinion in this case:
'Whether, on the facts and circumstances of the case, the cash deposit of Rs. 6,531 can be said to come out and covered by the addition of Rs. 18,000 to the business profits of the assessee ?'
2. The facts giving rise to this reference have been fully stated in the dissenting orders of my learned brothers, but I would recount the same very briefly here. The assessee in this case is a dealer in medicines and in its return for the assessment year 1960-61 it declared a total sale of Rs. 3,86,329 with a gross profit thereon of Rs. 21,149. The Income-tax Officer did not accept the gross profit as disclosed by the assessee and made an addition thereto amounting to Rs. 22,634. There was, in the business books of the assessee, a cash deposit of Rs. 6,531 in the name of his son, Krishna Mohan. The Income-tax Officer rejected the explanation of the assessee that the amount represented the aggregate of gifts received by his son, Krishna Mohan, at the time of his tilak ceremony and he added the sum of Rs. 6,531 to the total income of the assessee as his 'income from an undisclosed source'. It may be stated here that there was another item of deposit amounting to Rs. 7,329 which also was treated by the Income-tax Officer asthe assessee's income from an undisclosed source. I am not required to give any opinion in point as both Sahai and Deg. JJ. have agreed that the amount should be excluded from the assessment.
3. The addition of Rs. 6,531 made by the Income-tax Officer wus maintained by the Appellate Assistant Commissioner along with the addition of Rs. 22,634 in the trading account.
4. The assessee then came to the Appellate Tribunal in second appeal contending, inter alia, that the additions made by the Income-tax Officer, and confirmed by the Appellate Assistant Commissioner, as aforesaid, were unwarranted arid should be deleted. The Tribunal, after a consideration of the various aspects of the case, reduced the addition in the trading account from Rs. 22,634 to Rs. 18,000. As regards the cash deposit of Rs. 6,531 credited in the name of Krishna Mohan, the Tribunal agreed with the Income-tax Officer that the explanation of the assessee that the amount represented money received by the latter at his tilak ceremony had not been substantiated. The Tribunal, however, accepted the submissions of the assessee's counsel that inasmuch as the profit disclosed in the books of the assessee had been rejected and it was assessed by estimate, no separate addition should be made in respect of this cash credit of Rs. 6,531. The Tribunal held that the cash credit of Rs, 6,531 which the assessee had failed to explain, was covered by the addition of Rs. 18,000 maintained in the trading account. The Tribunal, accordingly, excluded the sum of Rs 6,531 from the assessee's total income for the year. The order of the Tribunal in point which has been differently interpreted by my two brother judges is as follows :
'In respect of the cash credit of Rs. 6,531, the assessee has not been able to show that his son was given a sum of Rs. 6,531 at his tilak ceremony. Whatever amount had been given, we have no reasons to take that it remained unexpended. The Income-tax Officer has discussed the reasons and we entirely agree with him. However, the submissions of the learned advocate are that since we are estimating the profits after rejecting the books of the assessee, no addition should be made in respect of this cash credit of Rs. 6,531. We think there is sufficient force in this (underlined by me). As remarked by their Lordships of the Andhra Pradesh High Court, entries with regard to cash credits are made with a view to balance accounts and when they are rejected, it does not justify the department treating them as the income of the assessee from other sources. We have sustained an addition of Rs. 18,000, and the unexplained amount thus stands covered by it. Such being the case, we do not think any separate addition is called for.'
5. Sahai J. took the view that, although the Tribunal found that the assessee's version with regard to this amount of Rs. 6,531 was not correct, the Tribunal was constrained to exclude the amount in view of the decision of the Andhra Pradesh High Court in the case of Maddi Sudarsanam Oil Mills Co. v. Commissioner of Income-tax,  37 I.T.R. 369, 371 (A.P.). The relevant observations in that case which were quoted by Sahai J. are as follows:
'The assessee had recourse to the several entries of cash credits only for the purposes of balancing the accounts with a view to reducing the rate of gross profits. If once the income-tax authorities have rejected the books, they cannot have it both ways, namely, adopting a fiat rate to compute gross profit as well as rely on the books for the purposes of adding unexplained cash credits which were part of the scheme of balancing the accounts.'
6. Sahai J. then observed :
'From the statement of the case, therefore, it is clear that the deduction of Rs. 6,531 from the assessable income of the assessee was made on the basis of the Andhra Pradesh High Court decision and not on a finding of fact that the amount represented the business profits of the assessee.'
7. The learned judge, in these circumstances, was of the opinion that the order of the Tribunal excluding the sum of Rs. 6,531 from the assessable income of the assessee, could not be said to be legally correct.
8. Brother Beg, however, was unable to share the view taken by Sahai J. on the interpretation of the findings of the Tribunal in point. He was of the view that the Tribunal decided the question on the basis of a finding of fact. He found it difficult to find an expression of opinion by the Tribunal on any question of law. He referred to the decision of the Supreme Court in Kale Khan Mohammad Hanif v. Commissioner of Income-tax,  50 I.T.R. 1 (S.C.) in which it has been observed that the question as to the source from which a particular income is derived is one which has to be decided on all the facts of the case. Holding as above he summed up his conclusion as below :
'My view, upon the facts and circumstances of the present case set out above, is that the Tribunal had disposed of the appeal on findings of fact in terms of what was found on facts in the above mentioned Andhra Pradesh High Court's decision. A mere reference to the reported decision did not make it a question of law..... Upon the assessment of facts bythe Tribunal two items of cash credit could be legitimately included as items of income from business already disclosed and taxed.'
9. With great respect, I regret my inability to agree with the interpretation by Sahai J. of the relevant portion of the order of the Tribunal relating to the cash credit of Rs. 6,531 extracted above. It is true that theTribunal did not accept the version of the assessee that the amount represented gifts received by his son, Krishna Mohan, in his tilak ceremony. It is also true that the assessee did not make out any alternative case that the amount in question represented the profits of his business in medicine. In fact, if the assessee did so, he would be setting up an inconsistent plea. On the other hand, if the plea raised by the assessee, namely, that the amount represented money belonging to his son, Krishna Mohan, had found favour with the Income-tax Officer, there would have been an end of the matter. It is only because the explanation of the assessee in point was not accepted that the question has arisen whether the sum of Rs. 6,531 could be treated by the Tribunal to have come out of the profits of the business carried on by the assessee. In this connection it may be recalled that the assessee had disclosed in the returns a gross profit of Rs. 21,149 which was considered too low by the Income-tax Officer. The Income-tax Officer made an addition of Rs. 22,634 as 'extra profit' earned by the assessee in the business and this was confirmed by the Appellate Assistant Commissioner, but reduced to Rs. 18,000 by the Appellate Tribunal.
10. If the order of the Tribunal in point, which has been quoted above, is analysed, it would be seen that the Tribunal categorically rejected the explanation of the assessee with regard to the amount in question and agreed with the Income-tax Officer in the view he had taken thereon. The Tribunal, however, accepted the submission of the assessee's advocate that since the profits disclosed by the assessee in his books had been rejected, and the assessment entailed an addition of Rs. 18,000 as extra profit of the business, no further addition should be made in respect of the cash credit of Rs. 6,531. Having accepted the submission of the assessee's advocate in point, the Tribunal referred to the decision of the Andhra Pradesh High Court, Maddi Sudarsanam Oil Mills Co. v. Commissioner of Income-tax  37 I.T.R. 369 (A.P.) evidently, in support of the course it had taken.
11. At all events, the rule laid down by the Andhra Pradesh High Court in the above case is a rule of commonsense, not of law. A similar rule was expressed by the Supreme Court when it said in Lakhmichand Baijnath v. Commissioner of Income-tax,  35 I.T.R. 416 (S.C.) that if an amount is found credited in the business books of the assessee, it is open to the income-tax authorities to infer that it is a receipt from business. The decision of the Supreme Court in Kale Khan's case is not an authority for the contention that, where the income of the assessee has been estimated on a percentage basis, the unexplained cash credits appearing in the business books must be separately added.
12. As already noted, the Income-tax Officer had included the sum of Rs. 6,531 in the total income of the assessee as 'income from undisclosedsource'. The various sources, income from which is taxable under the Indian Income-tax Act, 1922, have been mentioned in Section 6. They are : (i) salaries, (ii) interest on securities, (in) income from property, (iv) profits and gains of business, profession or vocation, (v) income from other sources, (vi) capital gains. The word 'undisclosed source' means a source which has not been disclosed by the assessee. It may refer to any of the sources mentioned in Section 6 of the Act, not excluding 'profits and gains of business, profession, or vocation.' The mere fact that the explanation of the assessee as to the source of the amount in question was rejected and that tie did not set up the plea in his grounds of appeal that it formed part of his business profit, did not preclude the Tribunal from finding out the correct source thereof. The finding of the Tribunal that the item in question stands covered by the addition of Rs. 18,000 made by the Income-tax Officer in the trading account obviously means that it came out of the profits of the business. It was competent on the part of the Tribunal to come to that finding, although no such ground was set forth in the memorandum of appeal by the assessee. In a recent case, the Supreme Court had to deal with a similar situation. In Commissioner of Income-tax v. S. Nelliappan,  66 I.T.R. 722 (S.C.) there were cash credits amounting to Rs. 19,796 and Rs. 32,700 in the books of the assessee, in fictitious names, relating to the assessment years 1946-47 and 1947-48. The profits of the business carried on by the assessee were assessed by estimate and additions were made by the income-tax authorities to the trading account in each, of the two years in excess of the amounts of the cash credits aforementioned. Besides, the sums of Rs. 19,796 and Rs. 32,700 were also added to total income as 'unexplained cash credits'. The Tribunal deleted these two additions observing that since in each of the two years additions to the book profits had been made in excess of the amounts of the cash credits separate additions of the cash credits 'had become redundant'. In that case, as in the present one, there was ao plea in the memorandum of appeal that the cash credits in question represented undisclosed profits from the business. It was for the first time at the hearing of the appeals before the Tribunal that the counsel for the assesser urged that when the profits of the business had been estimated and additions made to the trading account, separate additions for cash credits were redundant. The questions which came in for consideration of the Supreme Court were :
'(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in deleting the addition to the extent of Rs. 19,796 and Rs. 32,700 in the assessment ?
(ii) Whether the Tribunal is right in law in making out a new case for the assessee inconsistent with the assessee's own plea and interfering with the assessment ?'
13. Shah J. who delivered the judgment of the court upheld the order of the Tribunal and observed as under :
'In hearing an appeal the Tribunal may give leave to the assessee to urge grounds not set forth in the memorandum of appeal, and in deciding the appeal the Tribunal is not restricted to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal, The Tribunal was, therefore, competent to allow the assessees to raise the contention relating to the cash credits which was not made the subject-matter of a ground in the memorandum of appeal. It cannot be said that in accepting the contention of the assessees that the cash credits represented income from the business withheld from the books, the Tribunal made out a new case inconsistent with the assessee's own plea. In any event, the Tribunal is not precluded from adjusting the tax liability of the assessee in the light of its findings merely because the findings are inconsistent with the case pleaded by the assessees.
The first question raised in the application for reference is a question of fact. It is true that there is no direct evidence of any connection between the cash credit entries and the income withheld from the books of account by the assessees. But, if the Tribunal inferred that there was a connection between the profits withheld from the books and the cash credit entries, it cannot be said that the conclusion is based upon speculation. The first question sought to be raised is, therefore, purely one of fact and could not be referred under Section 66.'
14. The facts of the present case are similar to those in the above case and the decision of the Supreme Court applies. It must, therefore, be held that the Tribunal was competent to entertain the submission made by the assessce's counsel at the hearing before it and hold that the sum of Rs. 6,531 came out of and was covered by tbe addition of Rs. 18,000 to the business profits. The finding of the Tribunal in point is a finding of fact which this court cannot interfere with in this reference.
15. My answer to the question referred is, therefore, in the affirmative and in favour of the assessee, The record, of the case may now be sent back to the Bench concerned for appropriate orders.
BY THE COURT
(Jagdish Sahai and Beg JJ.)
Jagdish Sahai, J.
16. The following two questions were referred by the Income-tax Appellate Tribunal for the opinion of this court:
'1. Whether, on the facts and in the circumstances of the case, the cash deposits of Rs. 6,531 and Rs. 7,329 can be said to come out of and covered by the addition of Rs. 18,000 to the business profits of the assessee ?'
17. If the answer to the question No. 1 is in the negative.
'2. Whether, in any case, the said deposits of Rs. 6,531 and Rs. 7,329 could still be rightly deleted from the income of the assessee on the ground that the said amounts appeared to the credit of third parties and, therefore, the onus of proof was not upon the assessee to show the source or nature of cash deposits ?'
18. We wrote different judgments. The view taken by both of us was that the assessee is entitled to the exclusion of the sum of Rs. 7,329. We, however, disagreed on the question relating to the exclusion of the sum of Rs. 6,531. Whereas one of us (Jagdish Sahai J.) took the view that the order of the Appellate Tribunal excluding the sum of Rs. 6,531 from the income of the assessee cannot be said to be correct and for that reason answered question No. 1 in the negative against the assessee and in favour of the department, the other learned judge (Beg J.) constituting the Bench took a contrary view. In view of this difference of opinion, the matter was referred to the third judge, T. P. Mukerjee J., and the following question was referred:
'Whether, on the facts and in the circumstances of the case, the cash deposit of Rs. 6,531 can be said to come out and covered by the addition of Rs. 18,000 to the business profits of the assessee ?'
19. Mukerjee J. has answered the question in the affirmative and in favour of the assessee. In view of the opinion of the learned third judge, the sum of Rs. 6,531 shall also be excluded from the taxable income of the assessee.