Commissioner of Income Tax vs Dr. Raj Dhariwal

A.M. Sapre, J.—This is an appeal filed by the CIT under s. 260A of the IT Act against an order dt. 26th March, 2010 passed by income tax Appellate Tribunal, Jodhpur Bench, Jodhpur (for short called "Tribunal") in ITA No. 661/Ju/2008 for the period asst. yr. 2006-07 [reported as Asstt. CIT vs. Raj Dhariwal (2011) 63 DTR (Jd)(Trib) 113--Ed.]

By impugned order, the Tribunal allowed the assessee''s appeal and partly allowed the appeal of the Revenue and in consequence reversed the order of CIT(A) on the issue raised in this appeal.

So the question that arises for consideration in this intra Court appeal is whether it involves any substantial question of law within the meaning of s. 260A ibid?

Having heard the learned counsel for the appellant and on perusal of record of the case, we are inclined to dismiss the appeal in limine as in our opinion the appeal docs not involve any substantial question of law as is required to be made out within the meaning of s. 260A ibid.

The issue relates to additions of Rs. 24.50 lacs made by the AO in the course of assessment proceedings. The CIT(A) upheld the deletion so also the Tribunal. In other words, the CIT(A) and Tribunal accepted the factual explanation coupled with the evidence tendered by assessee in relation to the impugned additions made by AO and held that since the same has been properly explained and hence, it cannot be included while computing the total income of the assessee. This is how full benefit was granted to assessee by CIT(A) and Tribunal so far as deletion was concerned.

Learned counsel for the appellant contended that firstly AO was right in adding the impugned amount. His second submission was that there was no factual basis offered by assessee for its deletion and in last, he contended that finding recorded by Tribunal is perverse. We do not agree to any of these submissions for more than one reason.

This is how the Tribunal dealt with the issue in question and answered it against the appellant (Revenue) and in assessee''s favour :

On merits, however, we find that the seized documents placed at Annex. A-1/40, 50 and 35A reveal three different figures, admittedly not in the handwriting of the assessee, but statedly to be in the hands of the representative of the promoters of the scheme show calculations for the payment of schedule and price of structure etc. In Annex. A-1/140, total price is quoted @ Rs. 6500 per sq. yard In Annex. Al/50 containing payment schedule, price of plot has been shown at Rs. 3150 per sq. yard and in Annex. A-1/35A, the rate of plot is shown at R. 4500 per sq. yard. The AO has, however, acted on the basis of price @ Rs. 6,500 per sq. yd. The payment schedule, however, contained at Annex. A-1/50 reveals that an amount of Rs. 24.50 lacs is on ''others'' account. As per scheme, the purchaser is also required to make payment for construction of Rs. 2.50,000 in advance. The letter dt. 30th July, 2000 from Ummaid Heritage found seized at Annexure A-1/51 reveals that 10 per cent of advance is to be paid at the time of registry. This annexure also gives telephone number of Ajai Kumar Mathur as 0291-3091591 and Mr. C.V. Arora as 0291-3092342 but no enquiry has been made from these two persons. The department also relies on another paper placed at paper book page No. 79 which is a copy of seized Annex. A-3/16. This does not reveal the rate of plot of a size which the assessee has purchased. The perusal of all these documents does not reveal that the assessee has actually paid amount of Rs. 24.50 lacs nor any documentary evidence thereto has been found or brought to our notice by the Revenue in appeal. The assessee, therefore, for valid reasons did not act in accordance with the admission made under s. 132(4) of the Act. The assessee, in fact also laid copy of sale deed on record of the AO and the sale consideration therein is found in conformity with the actual payment declared by the assessee. The rate of plot claimed to have been declared and paid by the assessee is consistent with the circle rate at which the stamp duty has been paid. The Department did not make any enquiry from the promoters or developers of the scheme nor from the market to show that the assessee has made payment more than that is found recorded in his accounts or the value of the property was more than that stated in the sale deed. The statement made under s. 132(4) making surrender which gives rebuttable presumption, could not have been taken as basis for making addition as unexplained investment in plot by the assessee, particularly when no evidence of payment, in fact has been found even at the time of search. Under these circumstance, the statement alone cannot be made a sole basis for making addition as unaccounted investment as held by Hon''ble Andhra Pradesh High Court in the case of Commissioner of Income Tax Vs. Shri Ramdas Motor Transport, It however, remains, if the department''s case is that the promoters of the scheme can be said to have received the amount towards construction or for any reasons more than that disclosed in his accounts by the assessee, a suitable action may be taken in the hands of the vendors in accordance with law. The learned CIT(A) therefore, is found justified in deleting the addition of Rs. 24,50,000 as unaccounted investment which under the present facts and circumstances of the case, needs no interference. Ground in appeal raised by Revenue, therefore, stands rejected.

In the first place, what is involved in the case is a pure question of 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 issue nor can draw factual inferences on the basis of explanation offered by assessee. Thirdly, once the explanation is accepted by two appellate Courts on facts, then in such event, a finding recorded on such explanation is binding on the High Court.

Perusal of the impugned finding would go to show that Tribunal did examine the issue in detail and then recorded a finding. Such finding when challenged does not constitute a substantial question of law within the meaning of s. 260A ibid in an appeal arising out of such order.

In our opinion, therefore, once the CIT(A) and Tribunal accepted the explanation of assessee and accordingly, deleted the additions in question made by AO then it would not involve any substantial issue of law as such. In other words, this Court in its appellate jurisdiction under s. 260A ibid, would not again de novo hold yet another factual inquiry with a view to find out as to whether explanation offered by assessee and which found 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 that 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 a finding can be said to have been made out, such is not the case here.

We thus, do not find any merit in the appeal. It fails and is dismissed in limine by holding that it does not involve any substantial question of law.