Chandrashekhar, J.:— In this application under sub-s. (2) of s. 256 of the I.T Act, 1961, the Revenue has sought for a direction to the Income-tax Appellate Tribunal (hereinafter referred to as “the Tribunal”) to refer to this court the following two questions of law:
“1. Whether, on the facts and in the circumstances of the case, the order of the Tribunal is not vitiated in law as it is either on assumptions not supported by evidence or on evidence which could not be used against the Department as no opportunity was given to it?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in cancelling the penalty of Rs. 8,000 imposed by the Inspecting Asst. Commissioner of Income-tax under section 271(1)(c) of the I.T Act, 1961?”
2. The order of the Tribunal shows that from certain circumstances in the case, it (the Tribunal) inferred that the assessee had surrendered a sum of Rs. 7,000 at the persuasion of the ITO. It is well settled that the evidence may be direct or circumstantial.
3. It is quite clear that there was circumstantial evidence which formed the basis for the aforesaid conclusion of the Tribunal. Hence, question No. 1 does not call for reference to this court. As question No. 2 is based on question No. 1, it follows that question. No. 2 also does not call for reference to this court.
4. In the result we dismiss this application. But, in the circumstances of the case, we direct the parties to bear their own costs.