Vijay Kumar Talwar Vs
Commissioner of Income Tax, Delhi
Judgment
D.K. JAIN, J.:
1.
Challenge
in these two appeals, by special leave, is to the orders dated21st December,
2001 and 19th February, 2002 whereby the High Court of Delhi dismissed : (i)
the appeal filed by the appellant herein under Section260-A of the Income Tax
Act, 1961 (for short "the Act") in I.T.A. No.202 of2001, holding that
the order of the Income Tax Appellate Tribunal, New Delhi (for short "the
Tribunal") did not give rise to any substantial question of law; and (ii)
the review petition preferred by the appellant against order dated 21st
December, 2001, holding that the petition was not maintainable.
2.
Shorn
of unnecessary details, the facts material for adjudication of the present
appeals may be stated. These are : The appellant (hereinafter referred to as
"the assessee") was a partner in a firm, named and styled as M/s Des
Raj Tilak Raj, having its business at Delhi, with a branch at Calcutta. The
said partnership firm was dissolved w.e.f. 1st April 1982. As per the
dissolution deed, the assessee took over the business of the Calcutta branch of
the erstwhile firm. Thereafter, from 21stOctober, 1982, the assessee started a
proprietary concern by the name of M/s Des Raj Vijay Kumar.
3.
On
27th May, 1983, a search took place at the assessee's premises during which
certain incriminating documents were recovered and seized. During the course of
assessment proceedings for the assessment year 1983-1984, for which the
previous year ended on 31st March 1983, the assessing officer examined the
seized record. One of the registers so examined, revealed cash receipts of
`3,49,991/- in the name of 15 persons, most of which were purportedly received
during the period of April, 1982 to October, 1982. When the assessing officer sought
an explanation from the assessee with regard to the said cash credits in the
register, the assessee merely stated that the cash receipts were in the nature
of realizations from the past debtors of the erstwhile firm. In order to
appreciate the said stand, the assessing officer called for the account books
of the Calcutta branch of the erstwhile firm for the relevant period, but the
assessee failed to produce them. The assessing officer also examined the
assessee's brother, a partner in the erstwhile firm, who also stated that the
account books were not available.
4.
Having
noted that the outstanding realisations of the Calcutta branch in the preceding
years varied from `25,000/- to `30,000/-, the assessing officer held that the
assessee's submission that cash receipts of `3,49,991/- related to earlier
years was untenable. Therefore, vide order dated 20th February, 1986, the
assessing officer added a sum of `3,49,991/- as assessee's income under the
head "unexplained cash receipts."
5.
Aggrieved,
the assessee appealed to the Commissioner of Income Tax, (Appeals)-XV, New
Delhi, who vide his order dated 6th December 1989, dismissed the same and
confirmed the addition made by the assessing officer.
6.
Being
still aggrieved, the assessee carried the matter in appeal before the Tribunal.
Vide order dated 27th September, 1994, the Tribunal, while partly allowing the
appeal, remitted the matter back to the assessing officer for de-novo
adjudication. The Tribunal observed that: "We find that some of the
entries pertained to the period when the erstwhile firm was in existence
whereas the assessee did not conduct business at Calcutta in a proprietary
capacity but was only a partner in the erstwhile firm. The A.O. himself
observed in the assessment order that the cash receipts are from April 1982 to
October, 1982 i.e. prior to the start of the assessee's proprietary business in
the name of M/s Desraj Vijay Kumar. As against this, we find that some of the
entries are dated prior to April, 1982 when the erstwhile firm was in
existence. Then again, it is not known as to what happened to the income between
the period 1.4.1982 to October, 1982 as the erstwhile firm is supposed to have
been dissolved w.e.f 1.4.1982 and as per the assessee's version the proprietary
business was started from October 1982. There is no information made available
to us as to whether the Department initiated any action u/s 148 to subject the
cash receipts aggregating Rs. 3,49,991/- in the hands of the erstwhile
firm................................................... .............................................................................
.................... In view of the aforesaid discussion, we although taking
the view that the onus on the facts and circumstances of the case squarely lies
on the assessee, hold that the material has to be re- considered in light of
the afore-said observations....."
7.
Pursuant
thereto, on 17th May, 1995, the assessing officer asked the assessee to file
confirmations of the 15 parties, in whose names cash credit entries appeared in
the register seized during the search. In his reply dated 22nd May, 1995, the
assessee stated that the said cash receipts were realisations of the sales
effected in the earlier years by the erstwhile firm. Subsequently, the assessee
was given three more opportunities on 2nd June 1995, 16th June, 1995, and 3rd
July, 1995 to produce fresh evidence, which were not availed of by him. Vide
letter dated 28th July, 1995, the assessee was given a final opportunity to
file confirmations of the 15 parties, with their complete addresses. In his reply,
the assessee filed the confirmations of 7 parties, with the address of 6 other
parties. The assessing officer considered the two remaining parties as
non-existent. It is pertinent to note that all the seven confirmations filed by
the assessee were identical, and did not contain either a date or the GIR No.
of the confirming party; and merely stated that the concerned party had
dealings with the erstwhile firm, and it had made purchases from them in the
year ending 31st March, 1982 and had made payments prior to October, 1982; and since
the matter was really old, the books of accounts of the firm were not
available.
8.
When
the assessing officer sent letters to the six parties, whose addresses had been
supplied, three did not respond, while two others denied any relationship with
the firm, and remaining one letter was returned by the post office with remarks
"not known." Similarly, when letters were sent to parties who had
filed confirmations, three of those letters were returned by the post office
marked "not known.", and another one as "no claims." One of
the parties denied any relationship with the firm. In light of these
circumstances, the assessing officer, vide order dated 19th March, 1996,
confirmed the original assessment.
9.
The
assessee preferred an appeal before the Commissioner of Income Tax,
(Appeals)-III, which was dismissed vide order dated 16th December, 1998. The
Commissioner observed that: "The contention of the appellant is apparently
unacceptable. Any business realisations of the partnership would have been shared
by the erstwhile partners. The cash receipts of `3,49,991/- as per the seized
material is, therefore, held to belong to the appellant and assessable as
unexplained receipts in the hands of the appellant. The assessment of
appellant's income including the aforesaid receipt is, therefore, confirmed and
the appeal is dismissed."
10.
Still
not being satisfied, the assessee carried the matter in appeal before the
Tribunal. The Tribunal, vide order dated 23rd October, 2000, while partly
allowing the appeal, held that the addition of `3,49,991/- was correct. It
observed that: "We are also of the opinion that the confirmations filed
by the appellant are of no use because they have not been co-related with the
transactions alleged to have been found entered in the register seized during
the time of search if it represents the realization of outstanding amount on
sales, this could have been 6 proved with the cross reference to the entries in
the register. We cannot ignore the fact that the enquiry letters sent by the
A.O. remained unserved, unanswered and denial."
11.
On
22nd February, 2001, the assessee moved an application under Section 254(2) of
the Act before the Tribunal for rectification of mistakes in the order of the
Tribunal dated 23rd October, 2000. It was pleaded that the Tribunal had erred
in observing that the assessee's premises were raided due to heavy sales, and
that cash amounting to `3,49,991/- was seized; that the assessing officer had
issued ITNS 150, which the assessee had filed before the Commissioner
(Appeals); and that the Tribunal did not take into consideration the arguments and
various judgments relied on by the assessee. Vide order dated 25th September,
2001, the Tribunal rejected the rectification petition on the ground that:- (i)
the Tribunal had relied on the assessing officer's order in relation to the
factual position, and there was no reason to interfere with the same; (ii)
while it was true that cash amounting to `3,49,991/- was not recovered, but the
said amount was entered in the register which was recovered; and therefore,
this would not affect the findings of the Tribunal; (iii) the remarks in
relation to ITNS 150 were not made by the Tribunal, but by the department's
representative and (iv) re-considering the judgments relied on, and the
arguments made, would tantamount to a review, which power the Tribunal is not authorised
to exercise under Section 254(2) of the Act.
12.
The
assessee preferred an appeal before the High Court under Section 260-A of the
Act. As already stated, the High Court, vide judgment dated 21st December 2001,
dismissed the appeal of the assessee, observing that: "To us it appears
that the findings recorded by the Commissioner of Income Tax as also the Income
Tax Appellate Tribunal are pure findings of fact. Appreciation of evidence does
not fall within the realm of this Court's jurisdiction under section 260-A of
the Income Tax Act.............................. ...........................................................................
............................................ Having regard to the fact and
circumstances of this case we are, therefore, of the opinion that no question
of law far less any substantial question of law arises for consideration in
this appeal."
13.
Thereafter,
the assessee filed a review petition before the High Court, which was also
dismissed vide order dated 19th February, 2002.
14.
Hence,
the present appeals.
15.
Mr.
K.R. Manjani, learned counsel appearing on behalf of the assessee, assailed the
impugned orders on the ground that since the Tribunal had taken into
consideration irrelevant materials, its findings were perverse and, therefore,
the High Court has erred in holding that there was no substantial question of
law involved.
16.
Per
contra, Mr. R.P. Bhatt, learned senior counsel appearing on behalf of the
Revenue supported the view taken by the High Court and asserted that the
impugned orders deserve to be affirmed.
17.
Before
adverting to the rival submissions, it would be expedient to refer to Section
260-A of the Act. The provisions, relevant for our purpose, read thus: "(1)
An appeal shall lie to the High Court from every order passed in appeal by the
Appellate Tribunal, if the High Court is satisfied that the case involves a
substantial question of law... ..................................... ................................................................................
(3) Where the High Court is satisfied that a substantial question of law is
involved in any case, it shall formulate that question... ..........................................
............................................................................ ............................................................................
(7) Save as otherwise provided in this Act, the provisions of the Code of Civil
Procedure, 1908 (5 of 1908), relating to appeals to the High Court shall, as
far as may be, apply in the case of appeals under this section."
18.
It
is manifest from a bare reading of the Section that an appeal to the High Court
from a decision of the Tribunal lies only when a substantial question of law is
involved, and where the High Court comes to the conclusion that a substantial
question of law arises from the said order, it is mandatory that such
question(s) must be formulated. The expression "substantial question of
law" is not defined in the Act. Nevertheless, it has acquired a definite connotation
through various judicial pronouncements. In Sir Chunilal V. Mehta & Sons,
Ltd. Vs. Century Spinning and Manufacturing Co. Ltd.1, a Constitution Bench of
this Court, while explaining the import of the said expression, observed that: "The
proper test for determining whether a question of law raised in the case is
substantial would, in our opinion, be whether it is of general public
importance or whether it directly and substantially affects the rights of the
parties and if so whether it is either an open question in the sense that it is
not finally settled by this Court or by the Privy Council or by the Federal
Court or is not free from difficulty or calls for discussion of alternative
views. If the question is settled by the highest Court or the general
principles to be applied in determining the question are well settled and there
is a mere question of applying those principles or that the plea raised is palpably
absurd the question would not be a substantial question of law."
19.
Similarly,
in Santosh Hazari Vs. Purushottam Tiwari a three judge Bench of this Court
observed that: "A point of law which admits of no two opinions may be a proposition
of law but cannot be a substantial question of law. To be
"substantial" a question of law must be debatable, not previously
settled by law of the land or a binding precedent, and must have a material
bearing on the decision of the case, if answered either way, insofar as the
rights of the parties before it are concerned. To be a question of law
"involving in the case" there must be first a foundation for it laid
in the pleadings and the question should emerge from the sustainable findings
of fact arrived at by court of facts and it must be necessary to decide that
question of law for a just and proper decision of the case. An entirely new
point raised for the first time before the High Court is not a question
involved in the case unless it goes to the root of the matter. It will,
therefore, depend on the facts and circumstance of each case whether a question
of law is a substantial one and involved in the case, or not; the paramount overall
consideration being the need for striking a judicious balance between the
indispensable obligation to do justice at all stages and impelling necessity of
avoiding prolongation in the life of any lis."
20.
In
Hero Vinoth (Minor) Vs. Seshammal3, this Court has observed that: "The
general rule is that High Court will not interfere with the concurrent findings
of the courts below. But it is not an absolute rule. Some of the
well-recognised exceptions are where (i) the courts below have ignored material
evidence or acted on no evidence; (ii) the courts have drawn wrong inferences
from proved facts by applying the law erroneously; or (iii) the courts have
wrongly cast the burden of proof. When we refer to "decision based on no
evidence", it not only refers to cases where there is a total dearth of
evidence, but also refers to any case, where the evidence, taken as a whole, is
not reasonably capable of supporting the finding."
21.
A
finding of fact may give rise to a substantial question of law, inter alia, in
the event the findings are based on no evidence and/or while arriving at the
said finding, relevant admissible evidence has not been taken into
consideration or inadmissible evidence has been taken into consideration or
legal principles have not been applied in appreciating the evidence, or when
the evidence has been misread. (See: Madan Lal Vs. Mst. Gopi & Anr.4;
Narendra Gopal Vidyarthi Vs. Rajat Vidyarthi5; Commissioner of Customs
(Preventive) Vs. Vijay Dasharath Patel6; Metroark Ltd. Vs. Commissioner of
Central Excise, Calcutta7; West Bengal Electricity Regulatory Commission Vs.
CESC Ltd.8)
22.
Examined
on the touch-stone of the afore-noted legal principles, we are of the opinion
that in the instant case the High Court has correctly concluded that no
substantial question of law arises from the order of the Tribunal. All the
authorities below, in particular the Tribunal, have observed in unison that the
assessee did not produce any evidence to rebut the presumption drawn against
him under Section 68 of the Act, by producing the parties in whose name the
amounts in question had been credited by the assessee in his books of account.
In the absence of any cogent evidence, a bald explanation furnished by the
assessee about the source of the credits in question viz., realisation4 from
the debtors of the erstwhile firm, in the opinion of the assessing officer, was
not satisfactory. It is well settled that in view of Section 68 of the Act,
where any sum is found credited in the books of the assessee for any previous
year, the same may be charged to income tax as the income of the assessee of
that previous year, if the explanation offered by the assessee about the nature
and source thereof is, in the opinion of the assessing officer, not
satisfactory. (See: Sumati Dayal Vs. Commissioner of Income Tax, Bangalore9 and
Commissioner of Income Tax Vs. P. Mohanakala10). We are of the opinion that on
a conspectus of the factual scenario, noted above, the conclusion of the
Tribunal to the effect that the assessee has failed to prove the source of the
cash credits cannot be said to be perverse, giving rise to a substantial
question of law. The Tribunal being a final fact finding authority, in the
absence of demonstrated perversity in its finding, interference therewith by
this Court is not warranted.
23.
For
the foregoing reasons, we have no hesitation in holding that no question of
law, much less any substantial question of law arises from the order of the
Tribunal requiring consideration of the High Court. There is no merit in the
appeals. Both the appeals are dismissed accordingly with costs, quantified at
`20,000/-.
..........................................J.
(D.K. JAIN, J.)
...........................................J.
(T.S. THAKUR, J.)
NEW
DELHI;
DECEMBER
6, 2010.RS
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