C.I.T. vs. GB. SUBH RAO

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ITA/161/1999HC ChhattisgarhCGHC01000521199925 July 2012Bench: HON'BLE SHRI JUSTICE ABHAY MANOHAR SAPRE,HON'BLE SHRI JUSTICE G. MINHAJUDDIN6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the appeal did not involve any substantial question of law. The Court observed that the case primarily involved a pure question of fact, not a substantial question of law. It stated that it could not undertake a re-examination of the factual issues or draw factual inferences. The Court emphasized that concurrent findings of fact by two appellate authorities (CIT (Appeals) and ITAT) are binding on the High Court. The Court noted that the CIT (Appeals) and the Tribunal had examined the assessee's explanation and evidence in detail and found substance in it. Regarding Section 132(4A), the Court acknowledged the presumption that material found in possession belongs to the assessee, but clarified that this presumption is rebuttable. In this case, the assessee provided a satisfactory explanation with evidence proving the legal source of the income, thus rebutting the presumption. Consequently, the appeal was dismissed as it did not involve a substantial question of law, and even if one were considered to exist, it would be answered against the appellant (Revenue) and in favour of the respondent (assessee).

What were the facts?

The Revenue (Commissioner of Income Tax) filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated 26.07.1999 passed by the Income Tax Appellate Tribunal (ITAT). The ITAT had dismissed the Revenue's appeals in ITA Nos. 265/Nag/96 and 264/Nag/96, thereby upholding the order of the Commissioner of Income Tax (Appeals). The dispute pertains to assessment years 1989-90 and 1990-91, following a raid conducted under Section 132 of the Act. The Assessing Officer had made additions of Rs. 3,20,000/- and Rs. 1,69,000/- as unexplained investment in the construction of house property. The CIT (Appeals) deleted these additions, and the ITAT confirmed this deletion.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was legally justified in upholding the order of the CIT (Appeals) deleting the additions of Rs. 3,20,000/- and Rs. 1,69,000/- made as unexplained investment in the construction of house property respectively in assessment years 1989-90 and 1990-91, without considering the specific provisions of Section 132(4A) of the Income Tax Act, 1961? (Question of mixed law and fact, turning on Section 260A and Section 132(4A)). Assessee's Contention: The assessee contended that the amounts in question belonged to her family members living with her, specifically Mr. S.K. Murthy, who was a man of means and had the capacity to earn the money. The CIT (Appeals) and the Tribunal accepted this explanation and evidence. Revenue's Contention: The Revenue contended that the Tribunal erred in accepting the assessee's explanation, arguing that the assessee failed to offer a plausible and good explanation for the source of her income. The Revenue argued that if the Assessing Officer was right in making the additions, the appellate authorities were wrong in deleting them.

Which sections of the Income-tax Act were involved?

Section 260A,Section 132,Section 132(4A)

AI-generated summary — verify with the full judgment below

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HIGH COURT OF CHHATTISGARH AT BILASPUR D.B: HON’BLE MR. ABHAY MANOHAR SAPRE 85 HON’BLE MR. G. MINHAJUDDIN, JJ. Income Tax Appeal No.161 of 1999 APPELLANT / Commissioner of Income Tax (Revenue) Versus RESPONDENT / Dr. (Smt.) G.B. Subha Rao (Assessee) Income Tax Appeal under Section 260A of Income Tax Act 1961. Present: Shri Anand Dadariya, counsel for the Appellant. Shri Shashank Dubey, Sr. Advocate with Shri Neelabh Dubey, counsel for the respondent. ORDER (26th July, 2012)‘ The following order of the Court was passed by Abhay Manohar Sapre, J. Heard. 2. This is an appeal flled by the Revenue (Commissioner of Income Tax) under Section 260—A of the Income Tax Act, against order dated 26.07.1999 passed by Income Tax appellate Tribunal (for short called ‘the Tribunal’) in ITA No.265/Nag/96 and 264/Nag/96. 3. By impugned order, the Tribunal dismissed the appeals filed by the Revenue and ulajheld the order of the Commissioner of Income Tax (Appeals). i 4. So the question that arises for consideration in this appeal is Whether the Tribunal was justified in dismissing the Revenue’s appeal or/ and whether this appeal involves any substantial question of law within the meaning of Section 260—A ibid.

5.

This appeal was admitted for fmal hearing on following substantial question of law:— “Whether on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was legally justified in upholding the order of -CIT (Appeals) deleting the additions of Rs.3,20,000/- and Rs.1,69,000/— made as unexplained investment in construction of house property respectively in assessment years 1989—90 and 1990-91, without considering the specific provisions of Section 132 (4A) of the Income Tax Act, 1961 ?” 6. The issue relates to certain additions which were made by the Assessing Officer in the course of assessment proceedings initiated against the assessee under the Act for the assessment years 1989—90 and 1990—91 pursuant to raid conducted in her house under Section 132 ibid. The A.O. did not accept the explanation offered by the assessee and treating the said amount to be that of the assessee, added in her total income. The assessee filed appeal before CIT (Appeals). The CIT (Appeals) allowed the appeal and deleted the addition of Rs.1,69,000/— and Rs.3,20,000/— made by the A.O. on account of unexplained investment in constrjuction of house property. The Revenue felt aggrieved, filed appeal to Tribunal against the order of CIT (Appeals). The Tribunal again in detail went into the factual explanation offered by the assessee as also appreciated the evidence tendered by the assessee to prove the source of two additions made by the Assessing Officer i.e. Rs.1,69,000/— and Rs3,20,000/—. The Tribunal was iof the View that the explanation offered by the assessee and ‘evidence tendered by her fully justify the source in so far as‘it relates to the two impugned additions and hence these tiwo additions cannot be made treating it to be the income of the assessee. The appeal of the Revenue was accordingly dismissed. It is against this order, the Revenue has filed this appeal under Section 260-A of the Act. Wg l fiev

7.

In substance, the issue involved in the appeal is in relation to addition/deletion of certain amount in the hands of assessee made in the assessment years 1989—90 and 1990—91. The A.O. did not flnd explanation offered by the assessee to be plausible and accordingly added the amount treating it to be an income from unexplained source which as stated supra, was deleted by CIT (Appeals) and upheld by the Tribunal. 8. Learned counsel for the appellant (Revenue) contended that the Tribunal erred in accepting the explanation offered by the assessee in relation to her source of income. It was contended that the assessee had failed to offer plausible and good explanation With regard to her source of income. Learned counsel for the appellant (Revenue) made sincere attempt on his part after taking us through factual scenario of the explanation and contended that it cannot be taken as satisfactory explanation and hence, if the Assessing Officer was right in adding the money in the hands of the assessee, the CIT (Appeals) and the Tribunal were not right in deleting it by accepting the explanation offered by the assessee. We do not agree to the above submissions made by the Revenue. 9. In substance the question was What is the source of Rs.l,69,000/— and Rs.3,20,000/— found with the assessee in raid proceedings. The case of the assessee was that she was living in a joint family and this amounlt really belongs to her family members living with her in the same house (one Mr. S.K. Murthy). In support of this explanation, the A.O. examined witness, who gave explanation and disclosed the source of money. Though the A.O£ did not accept the explanation and evidence, the CIT (Appleals) and the Tribunal found substance in it and hence, iwhile accepting the explanation, deleted the addition mad;e by the A.O. It was held on the basis of appreciation done by the two appellate authorities that Mr. Murthy was a man of means, that he had the capacity to earn, that he actually earned. It was on this basis, the amount in question was deleted. l

1‘ O 10. In the first place, what is involved in this case is a W pure question 0f fact and not any question of law much less substantial question of law. Secondly, this Court cannot again in this appeal undertake the examination of factual issues nor can draw factual inferences on the basis of explanation offered by the assessee. Thirdly, once the explanation is found to be worthy of acceptance by two appellate authorities namely CIT (Appeals) and the Tribunal, then in such event, a finding recorded on such explanation being concurrent in nature is binding on the High Court. 11. Perusal of the impugned finding would go to show that the CIT (Appeals) and the Tribunal did examine the explanation offered by assessee coupled with the evidence in detail and then recorded a finding for its acceptance. Such finding when challenged does not constitute a substantial question of law within the meaning of Section 260A ibid in an appeal arising out of such order. 12. In our opinion, therefore, once the CIT (Appeals) and the Tribunal did not accept the explanation of the appellant (Revenue) and accordingly, deleted the impugned additions made by A.O.,'then it would not involve any substantial issue of law as such. In other words, this Court in its appellate jurisdiction under Section 260—A ibid, would not again denovo hold yet another factual; inquiry with a View to find out as to whether explanation offered by Revenue and which did not find acceptance to the Tribunal is good or bad, or whether it was rightly accepted, or not. It is only when the factual finding recorded had been entirely de hors the subject; or that it had been based on no reasoning, or based on absurd reasoning to the extent thiat no prudent man of average judicial capacity could ever reach to such conclusion, or that it had been found against any‘ provision of law, then a case for formulation of substantial question of law on such finding can be said to have been made out. 13. Section 260A(5) empowers this Court to examine at the time of final hearing as to whether question of law

framed satisfies the definition of substantial question of law at the instance of the respondent. It is pursuant to such power, we have examined the issue despite framing of question of law and find that it is essentially a question of fact involving no question of law much less substantial question of law. 14. Now so far as applicability of Section 132(4A) to the facts of this case is concerned, true it is that there lies a presumption that whatever material is found in possession and control of person in raid belongs to him yet such .éV r presumption is rebuttable and if in inquiry , the assessee is 7 able to offer satisfactory explanation by tendering evidence proving the legal source of such income then such presumption cannot be used against the assessee. Such is the case here. 15. We thus, do not find any merit in the appeal. It fails and is dismissed by holding that it does not involve any substantial question 0f law and even if it is held to involve, the same is answered against .the appellant and in respondent’s favour. rt ww 16. No .cost. 7 ,lt. Sdl- Sdl- G. MINHAJUDDIN Abhay Manohar Sapre Judge Judge Bini

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