ASST.COMMISSIONER OF INCOME TAX vs. SHRIRAM DHUPPAD M/S C.G.AUTO CARE

This is an appeal Ele‘] by the Revenue (Commissioner of Income Tax) und1vr Section 260—A of the Income Tax Act, against the o ler dated 7/ 12/2005 passed by Income Tax Appellate Funal (for short called the Tribunal) in I'I‘ (SS) A No. 76/Nag/ 2004. 2. By impugned order, the Tribunal allowed the assessee’s appeal and dismissed that of the Revenue which arose out of the order passe. by the CIT (appeal). L

So the quesnon whlch anses for cons1deratlon In thls appeal 1s whether Tnbunal WAS Jusniied 1n allowmg K E:

Few facts necessaxy for the disposal of the appeal need. mention infra. 1

A search and seizure operation was carried out 1 under Section 132 of the Act in the res1dent1a1 premises of the assessee (respondent herem) — an md1v1dua1 on 20 12 2001 Simultaneously, Similar search operations were also carried out 1n the premises of his other family members So far as the assesee 1s concerned he 1s a professor 1n one college He also derives income from one busmess concern by name Chattrsgarh Auto Care Raipur l l l

In search operation, cash, jewellery, gold, silver and other valuables were seized. This led to initiation of assessment proceedings for the block period (1.4.95 to 31.3.2001) under Section 158BC/ 143(3) ibid The A.O. made the assessment making certain additions .It was then challenged in appeal before the CIT (appeals) by the assessee who got partial relief in it the appeal. The assessee then tiled further appeal before; the Tribunal against that part of the order which decliir‘ d to grant him the relief against that part of the order of CIT (Appeals) which ed certain relief to the assessee. The Tribunal dismiss d the revenue’ appeal and allowed in part the appeal of th assessee which has now given rise to nhng of this appeal only by the Revenue (commrss1oner of Income Tax) h i i whereas revenue nled an appe‘ l t

“Heard Shn’ Amit Choudhary, learned counselfor the appellant.

Learned Counsel for the iEIespondcnt (assesses) at H that non'e of the afoxementioneti thnee questions mined 1i the threshold mged by mising ohe preliminary objection ‘x by the Comt at the time of ad$lission can be caHed as “substant'al questions of 1aw"‘w1thm the meaning of Sech'on 260—A of the Act. Lealne‘d Counsel contends that by virtue of Sub Section (4) of Section 260-A ibid, the respondent has a right to raise siuch objection at the time of final hearing of the appeal anil hence even if this court had admitted the appeal on aforementioned thine questions of law yet admission of appeal on such questions 1s not binding on thf respondent because 1t was done behind thelr back rned Counsel contends that it is due to this legal right given to the respondent under Section 260—A (4), this i H w it rt has to re- examine this issue at the instance of the irespondent and Iecoxd a hnding as to whether three questions though named satisfy the requirements of sulb‘stantial question of law for hnal hearing of appeal on suj‘h questions or not before proceeding to decide the apti a1 on merits. Leaxned Counsel contends that all the ‘ iree questions framed are essentially the questions of fact and hence the appeal is liable to be dismissed as involving no substantial q l uestions of law within the meaning of secu‘on 260—A ihid. ‘ ia i u

In mply, learned Counsel for the appellant almost conceded and rather fairly that it may be (1%cult for him to support Wing of question 1 and 3 as substantial questions of law within the meaning of Section 260—A of the Act, He however contends that so far as question No. 2 is concerned, the same does satisfy the rigour of substantial question of law and hence the appeal was rightly admitted on questionl no 2. In other words, according to him, this court shoguld examine the nnding of the Tribunal on merits treating the said question to be the substantial question of law withEin the meaning of section 260-A and answer the same on 'iits merits. i I

Having heard the learned Counsel for the parties and on perusal of the record of? the case, we are inclined to uphold the preliminary objection of the learned counsel for the respondent. l

In our opinion, all the three questions proposed by the appellant and framed by this court at the time of admission of appeal on 26.4.2006 terming them as “substantial questions of law “til; not satisfy the attributes of substantial question of lav but are essentially the quesn'ons of facts and does n arise out of the case and hence the appeal is liable to be§ dismissed as involving no substantial question of law. El

Indeed, mere perusal ofiSection 260-A which is modelled on Section 100 of C. . Code would go to show that even though the appeal t have been admitted for dual hearing on certain su stantjal questions of law framed by the court at the instance of the appellant , yet at the time of iinal hearingl; of such appeal, if the respondent raises an objection that the questions framed W o‘ ' h

So the sin qua none for admitting and deciding the appeal on merits under Section 260-A of the Act is involving and arising of subs ' question of law in the appeal. It is only then the appe an be admitted for final hearing on such question else not .,.§¢-

In our opinion, learned counsel for the appellant was not able to substantiate as to how question no 1 can be said to satisfy the rigour of section 260~A ibidr and thus can be tanned as substantial questiou of law. In fact, we too are of the considered View on examining the controversy that so far as framing of question no 1 is concerned, it is essentially a question of fact and does not arise out of the case. i

In the first place, the question No. 1 is general in nature (and does not challenge: any particular finding of deletion relating to cash seized. Second, it is not shown as to which finding and whyf such iinding is bad and hence constitute substantial qilestion of law‘P. Third, the question No. 1 apaxt fmm beiiig totally vague is equally incapable of being answemd oni its merits and lastly it has no involvement of any legal issue much less substantial issue of law. i

In the light of thesel’ reasoning, we have no hesitation in upholding the objection of the respondent that question no 1 does not arise out of the case and even if arise the same is not a s‘ bstantial quesn'on of law Within the meaning of section 260 A of the Act but a pure question of fact ‘i

Coming to the questioni‘no 3 1t also suEers nom the same mnrmtties which are noticed by 11s while examining the question No. I supra. In the dist place, again it involves question re ‘ting to deletion of certain amount which is essentially a question of fact Second once the explananon on‘exed by the assesses Opposing certain additions made by the authorities was accepted a and a finding of fact was returned then such nndmg

In the light of these ieasoning, we hold that question no 3 also does not arise out of the case and even 1f anse, the same is not a substantial question of law Within the meaning of section 260—A of the Act and hence

Coming to now the jsecond quesh'on it is necessaiy to mention some facts of this case to appremate the issue that centres around to‘ this question

In the block assessment period the A O added a sum of Rs. 3, 64,830 Heating this sum to be an income ham undisclosed source. The case of the assessee on this issue was that this amount was falling in the assessment year 2001-2002 and for that lassessment year, he had already paid advance tax an§d TDS much earlier to commission of raid and secondly had also filed the return under section 139 of the Act foir that year disclosing this income. He contended that rain in question was canied out on 20.12.2001 whereas he filed the return though subsequent to date of raid but he could do so because revenue was aware of payment of advance tax and TDS made by him prior to commission of raid. 34'

The CIT (appeal) as also Tribunal accepted the stand taken by the assessee and by placing reliance on the decision of Bombay High Court reported in 2491TR 501, held that addition of RS 3, 64.830 in block period assessment as an income from undisclosed source made by A.O. was bad in law and hence had to be deleted horn the total income of the assessee under Section 1583C. It is this miding which is now under challenge by the Revenue in this appeal by framing question no 2. j x t r .H I: » ‘ , we are inclined to hold In our considered v that this question also does igiot involve any question of law much less substantial Question of law within the meaning of Section 260-A of the Act .

In our considered opinion, the CIT( appeal ) so also the Tribunal were fully justiiied in coming to this conclusion by rightly placingl‘ reliance or the decision of the Bombay High Court mpcimad in 2001(118) Taxman ~835 ( Bom) .CIT vs ShamhlyBalram that the question proposed is not a substantial Question of law.

In some what identi‘ al facts of the case, which are subject matter of this caste, the Bombay High Court i held that when the assessee had paid tax such as (’I‘DS) and advance tax and had alsot; nled the regular returns for the year under considerati and further when the nnding of addition is not b‘ sed on any incriminating documents recovered in s operation, then such amount can not be taken as income nom undisclosed sources in hands of assessee‘ in a raid case. It was held that on such facts, no sub ‘ ial question of law can be said to arise within the meaniiig of section 260—A ibid. o e h s t 1!

Now so far as facts of th1s case are concerned as stated supra they am snmlar to the facts mvolved 1n Bombay case In thls case also, the assessee tiled the Justice Kapadia, (as his Loniship then was, as judge of the Bombay High Court and presently the Chief Justice of India) speaking for the bench held as under:— e

In the light of these admitted nndmgs, we are of the View that this question also therefore does not involve any substantial question of law Within the meaning of Section 260—A as was held by the Bombiay High Court in the case of Shamlal (supra) and we respectfully follow the law laid down by the Bombay High Cotiirt for holding this issue against the appellant (Revenuew l M

In the light of foregoing‘ discussion, we are of the considered view that all the three questions framed on 26.4.2006 axe not substantial :Liestions of law within the meaning of Section 260-A. H H \l

As a consequence of l‘aforesaid discussion, the appeal is found to be devoid 10f any merit involving no substantial question of lawl It thus fails and is accordingly dismissed. l Sdl— Sapre TL, , ,, Sd/— Mamndra M01131! Shnvastava‘ Abhay Manohar Sapre Judge ‘ /* "7 ' Judge Tiwari