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2009 DIGILAW 55 (JK)

Qazi Shabir Ahmed v. Income Tax Officer

2009-02-11

HAKIM IMTIYAZ HUSSAIN, MUZAFFAR HUSSAIN ATTAR

body2009
Muzaffar Hussain Attar(J) 1. Through this appeal the appellant calls into question orders passed by Income Tax Appellate Tribunal (Amritsar Bench) dated 30th Oct. 2008; order passed by Income Tax Commissioner (Appeals) dt. 17.01.2008 and order of assessment passed by respondent No.1. 2. This appeal is filed in terms of Sec. 260-A of Income Tax Act of 1961 for short (the Act of 1961). It would be appropriate to mention here, that though, appeal is filed against the judgment/order of Income Tax Appellate Tribunal (Amritsar) but the said authority has not been impleaded as party respondent in this statutory appeal. The basic order of assessment has been passed by respondent No.1, whereby and where under, net taxable income of the appellant for the assessment year 2004-05 has been found to be Rs. 16,13,800/-, and the Income tax leviable on and recoverable from the appellant has been found to be Rs.6,45,436/-. The assessment order passed by the respondent No.1 also intimates the appellant about initiation of penalty proceedings u/s 271(1) (c) of the Act of 1961. The appellant being aggrieved of the said assessment order filed first Statutory Appeal before the Commissioner of Income tax (Appeals). The Commissioner of Income tax (Appeals) vide its order dated 17.01.08 accepted the appeal to the extent of deleting an addition of Rs.80,000/- on account of income under the head salary, which was assessed by respondent No.1 in his assessment order. The appeal in respect of income as assessed to tax from un-disclosed sources in the amount of Rs.14, 67,137/- was dismissed. The appellant being still aggrieved of the order of Commissioner of Income tax (Appeals) challenged the same by filing an appeal before the Income tax Tribunal (Amritsar) Bench, which appeal was dismissed by the said Appellate Tribunal on 30th Oct. 2008. 3. The appeal is creature of the Statute and appeals can be filed only when Statute permits same and can be filed on the terms and conditions mentioned in Statute, Appeals are being heard in terms of the Act of 1961 by superior authorities/forums. The order of the Income tax Officer has merged into the order of Commissioner of Income tax (Appeals) and the order of the said appellate authority further got merged into the order of Income tax Appellate Tribunal. The said Tribunal having not been impleaded as party respondent, maintainability of appeal is thus under cloud. 4. The order of the Income tax Officer has merged into the order of Commissioner of Income tax (Appeals) and the order of the said appellate authority further got merged into the order of Income tax Appellate Tribunal. The said Tribunal having not been impleaded as party respondent, maintainability of appeal is thus under cloud. 4. We have, however, heard the learned counsel for the appellant on merits of the case and accordingly accord consideration to the same on its merits. 5. The facts as revealed by the record of the appeal are that the respondent No.1 issued office letter dated 7.12.06 which was accompanied with notice u/s 142 (1) of the Act of 1961, to the appellant and he was required to file return of income as also to explain the deposits made in SB 3741 maintained by the appellant in J&K Bank Zainakote main branch to the tune of Rs. 1,10,053/- and in account No. 11125B 3279913 at J&K Bank Ltd. Poloview branch to the tune of Rs.3058250/-. The appellant responded by attending the office of respondent No.1 along with his counsel Sh. Neeraj Karwal and furnished photostat copy of return of income bearing receipt No. 3328 filed by appellant assessee before income tax officer 24(4) New Delhi. Along with the said return the appellant assessee had also submitted statement of total income and same was declared to be at Rs. Nill. The appellant assessee volunteered to get his assessment completed at Srinagar as was already done for the assessment year 2003-04. The appellant vide reply dated 15.12.06 tendered explanation in respect of the amounts deposited in the above referred SB accounts. The explanation of the appellant was accepted by respondent No.1 to the extent of deposits made in account No. 3741. The respondent No.1 also accepted the stand of the appellant that the deposits in the other S.B account are at Rs. 14,67,137/- only. The appellant gave an explanation that the deposits made in the SB account are the sale proceeds of land and some cash in the account is re-deposited in the account out of the cash withdrawals from the same account during the assessment year. The respondent No.1 in his assessment order has recorded a finding that the appellant gave same facts and reasons for the assessment year 2003-04. The respondent No.1 in his assessment order has recorded a finding that the appellant gave same facts and reasons for the assessment year 2003-04. The appellant failed to produce any documentary evidence in support of his above stated contention that the deposits in the account are the sale proceeds of the land allegedly sold by him at Narbal. The respondent No.1 accordingly was not satisfied about the explanation tendered as it was based on no evidence and accordingly ordered that the deposits to the extent of Rs.14,67,137/- are assessed to tax as income from undisclosed sources, unexplained credits in the Bank account. The income from the salary was estimated at Rs.80,000/- and appellant was ordered to pay tax accordingly. The respondent No.1 also ordered for initiation of penalty proceedings u/s 271(1) (c) for providing inaccurate particulars of income. 6. This order of the respondent No.1 was challenged by filing an appeal before the Commissioner of Income tax (Appeals) Jammu (head quartered at Amritsar). The appellant submitted photo copy of agreement to sell before Commissioner of Income tax (appeals) to substantiate his claim that the amount found in the SB account at J&K Bank branch Polo view was in fact the consideration amount received by him in lieu of the sale of the land at Narbal. The Commissioner of Income tax (Appeals) accepted the plea of the appellant so far as it related to the assessment year to the extent of declaring the appellant to have received salary to the tune of Rs.80,000/- net and ordered for deleting same from the assessment order. In respect of the other part of assessment order, the Commissioner of Income tax (Appeals) recorded his finding at para 3.3 which is reproduced as under:- "I have considered the submission of the learned counsel for the appellant, which have been filed during the course of appellate proceedings, by Shri Robin Singh, Accountant of M/s SSM Polytechnic & Engineering College, Baramullah carried on by the appellant to his capacity as "Chairman" of the College. A copy of an agreement to sell has been filed by the appellant, in which the date and mode of receipt of the total amount of Rs.28 lacs has not been mentioned and so the amount received of sale of land cannot be co-related with the dates of deposits in the bank account. A copy of an agreement to sell has been filed by the appellant, in which the date and mode of receipt of the total amount of Rs.28 lacs has not been mentioned and so the amount received of sale of land cannot be co-related with the dates of deposits in the bank account. Moreover, this document is not too legible and is not even attested or certified by any authority and so it cannot be taken as a genuine document. Further, this "agreement to sell" is an additional evidence, which cannot be admitted in view of the judgment of Honble Kerala High Court in the case of C. Unnikrishnan v. Commissioner of Income Tax (233 ITR 485), since the appellants case is not covered by any of the four exceptions mentioned in Rule 46A(1) of the income Tax Rules 1962. Hence, the addition made by the Assessing Officer by treating the amount of deposit of Rs.14,6,137/- as "Income from undisclosed sources", is confirmed. This ground of appeal is dismissed." 7. The appeal of the appellant filed before the Income tax Appellate Tribunal Amritsar bench was also dismissed. The appellant is aggrieved of the said order and has filed this appeal under section 260-A of the Income Tax Act. The said provision of the Act of 1961 is reproduced as under:- "260-A Appeal to High Court- (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. (2) [The Chief Commissioner or the Commissioner or an assessee aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such] appeal under this sub-section shall be- (a) filed within one hundred and twenty days from the date on which the order appealed against is [received by the assessee or the Chief Commissioner or Commissioner]; (b) [* * *] (c) in the form of a memorandum of appeal precisely stating therein the substantial question of law involved. (3) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question. (3) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question. (4) The appeal shall be heard only on the question so formulated, and the respondents shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question: Provided that nothing in this sub-section shall be deemed to take away or abridge the power of the Court to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question. (5) The High Court shall decide the question of law so formulated and deliver such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit. (6) The High Court may determine any issue which- (a) has not been determined by the Appellate Tribunal; or (b) has been wrongly determined by the Appellate Tribunal, by reason of a decision on such question of law as is referred to in sub-section (1). (7) Save as otherwise provided in this Act, the provisions of the Code of Civil Procedure, 1908, relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section." 8. In terms of Section 260-A of the Act of 1961; an appeal shall lie to High Court, if the High court is satisfied that the case involves a substantial question of law and the appellant is duty bound in terms of the Statute to precisely state the substantial question of law involved. 9. In terms of sub section (3) of Sec. 260-A where the High Court is satisfied that a substantial question of law is involved it has to formulate that question and appeal has to be heard on the question so formulated. The High Court has further power to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question. 10. Sub section (7) of Section 260-A provides the provisions of Code of Civil Procedure, 1908 relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section. 11. 10. Sub section (7) of Section 260-A provides the provisions of Code of Civil Procedure, 1908 relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section. 11. It is settled position of law that appeal is creature of Statute and appeal can be filed only when permitted by Statute and can be filed on the grounds mentioned in the Statute. 12. In terms of section 260-A the High Court gets power to hear and decide an appeal only when a substantial question of law is involved. The section 260-A of the Act of 1961 thus, authorizes the High Court to hear an appeal only when substantial question of law is involved. The appellant has not specifically formulated any substantial question of law in his memorandum of appeal, but at para (6) of the appeal, the appellant has stated that he is aggrieved of the order of Income Tax Appellate Tribunal (Amritsar) Bench and assails the same on the grounds which are taken in alternative and without prejudice to each other and has further stated that substantial questions of law are involved and same need to be adjudicated upon by this court. Appellant however has not clearly delineated in the memo of appeal as to which are the substantial question of law involved. 13. What would constitute substantial question of law has been stated by Supreme Court in case "Kashmir Singh v. Harnam Singh AIR 2008 SC 1749, the paras 15 to 17 are reproduced as under:- "15. 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. 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 circumstances 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. (See Santosh Hazari v. Purushottam Tiwari (deceased) by LO.Rs. [(2001) 3 SCC 179]. 16. The principles relating to Section 100, relevant for this case, may be summarized thus:- (i) An inference of fact from the recitals or contents of a document is a question of fact. But the legal effect of the terms of a document is a question of law. Construction of a document involving the application of any principle of law, is also a question of law. Therefore, when there is misconstruction of a document or wrong application of a principle of law in construing a document, it gives rise to a question of law. (ii) The High Court should be satisfied that the case involves a substantial question of law, and not a mere question of law. A question of law having a material bearing on the decision of the case (that is, a question, answer to which affects the rights of parties to the suit) will be a substantial question of law, if it is not covered by any specific provisions of law or settled legal principle emerging from binding precedents, and, involves a debatable legal issue. A substantial question of law will also arise in a contrary situation, where the legal position is clear, either on account of express provisions of law or binding precedents, but the Court below has decided the matter, either ignoring or acting contrary to such legal principle. In the second type of cases, the substantial question of law arises not because the law is still debatable, but because the decision rendered on a material question, violates the settled position of law. 17. The general rule is that High Court will not interfere with concurrent findings of the Courts below. But it is not an absolute rule. In the second type of cases, the substantial question of law arises not because the law is still debatable, but because the decision rendered on a material question, violates the settled position of law. 17. The general rule is that High Court will not interfere with concurrent findings of the Courts below. But it is not an absolute rule. Some of the well recognized 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." 14. Ld. counsel for the appellant in support of his appeal has submitted that the agreement to sell which was produced before first Appellate Authority has not been considered by the said authority which according to wisdom of the ld. counsel constitutes substantial question of law on which this appeal requires to be heard and decided. The perusal of the order of the Commissioner of Income tax (Appeals) as reproduced in this judgment demonstratively shows that the said authority has considered the agreement to sell but has declined to rely upon the same on the valid reasons; that the date and mode of receipt of total amount of Rs.28,00,000/- has not been mentioned in the said agreement to sell and has accordingly recorded a finding that the amount received allegedly for sale of land cannot be co-related with the dates of deposits in the bank account. The first appellate authority has while further dwelling upon the contention held that the document is not attested or certified by any authority so cannot be taken as genuine document. The contention of ld. counsel for petitioner in view of the finding recorded in para (3.3) of the impugned order pales into in-significance and is rendered un-sustainable in law. The document having been considered but rejected for the reasons recorded would demonstratively show that the affect of the agreement to sell on the proceedings has been considered by the first Appellate Authority. counsel for petitioner in view of the finding recorded in para (3.3) of the impugned order pales into in-significance and is rendered un-sustainable in law. The document having been considered but rejected for the reasons recorded would demonstratively show that the affect of the agreement to sell on the proceedings has been considered by the first Appellate Authority. In these circumstances and in view of the law laid down by Supreme Court no substantial question of law is involved on this issue in this appeal. The ld. counsel for the appellant has further submitted that the first appellate authority has not considered the agreement to sell on the grounds that same is an "additional evidence" and not is covered by four exceptions mentioned in Rule 46 A(1) of Income Tax Rules 1962. The agreement to sell, therefore, has not been considered. This argument requires to be rejected on the ground that the agreement to sell has been considered by first appellate authority and has recorded reasons that the dates and modes of receipt of amount of Rs.28,00,000/- having not been mentioned, so same cannot be co-related with the dates of deposits in the bank account. The first appellate authority has further held that the agreement to sell being an additional evidence is not covered by any of the four exceptions of the Rule 46A(1) of income tax rules 1962. The fact of the matter is that the agreement to sell has been considered and for valid reasons recorded, not given any credence and peripherally also held not to be treated as additional evidence. 15. The ld. counsel for the appellant in support of his contention has referred to judgment of the Supreme Court titled "Trustees of H.E.H. Nizams Supplemental family Trust appellant v. Commissioner of Income Tax respondent" reported in 2000 (2) Supreme 14; to canvass that the law laid down by Supreme Court in the judgment applies to the facts of this case also. The facts of the case in Trustees of H.E.H. Nizams case were that a return of income was filed in which some notes/order were recorded, but were not communicated to the assessee. Subsequent notice u/s 148 was issued for filing of return for same assessment year. Return was filed and Assessment officer (Income tax Officer) accepted the return and completed assessment. Subsequent notice u/s 148 was issued for filing of return for same assessment year. Return was filed and Assessment officer (Income tax Officer) accepted the return and completed assessment. The Supreme Court in the facts of the case held that note of assessment officer was mere information of the assessment, first return was not closed final order having not been passed in the earlier return, re-assessment proceedings were in valid. The fact of this case are explicitly different from facts of the case of Trustees of H.E.H Nizams. In this case after issuance of notice for filing of return, the appellant projected before the Income tax officer and requested that the return filed by him at Delhi , photo copy whereof was produced before income tax officer with request to proceed in the matter and complete the assessment proceedings. The income tax officer has passed orders on one single return filed by the appellant. On facts the law laid down by Supreme court is not applicable to this case. 16. For what has been stated above, no substantial question of law is involved in this case which would enable this court to adjudicate upon the same. This appeal is accordingly dismissed.