Commissioner Of Income Tax, Bikaner v. Sh. Laxman Ram Dhattarwal

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN ATJODHPUR J U D G M E N T INCOME TAX APPEAL NO.158/2010 COMMISSIONER OF INCOME TAX, BIKANER Vs. SH. LAXMAN RAM DHATTARWAL Date of Judgment : 22.12.2010 HON'BLE MR. JUSTICE A.M. SAPREHON'BLE MR. JUSTICE C.M. TOTLA Mr. K.K. Bissa, for the appellant. BY THE COURT : (PER HON'BLE SAPRE,J.) This is an appeal filed by the Commissioner ofIncome Tax under Section 260-A of the Income Tax Actagainst an order dated 31.5.2010 passed by I.T.A.T., JodhpurBench, Jodhpur (for short called Tribunal) in I.T.A.No.508/JU/2008 for the period AY 2005-2006. 2.By the impugned order, the Tribunal allowed theassessee's appeal in part and reversed the order ofCommissioner of Appeals on the issue raised in this appeal. 3.So the question that arises for consideration in this intracourt appeal is whether it involves any substantial question oflaw within the meaning of Section 260-A ibid? 4.Having heard the learned counsel for the appellantand on perusal of record of the case, we are inclined todismiss the appeal in limine as in our opinion the appeal doesnot involve any substantial question of law as is required to bemade out within the meaning of Section 260-A ibid. 5.The issue relates to certain additions made by theA.O. in the course of assessment proceedings initiated againstthe assessee under the Act. The A.O. did not accept theexplanation offered by assessee and treating the said amountto be that of assessee added in his total income. The CIT(Appeal) and the Tribunal set aside the order of A.O. in so faras it related to additions made by him (AO). In other words,CIT (Appeal) and the Tribunal accepted the factual explanationcoupled with the evidence tendered by assessee in relation tothe impugned additions made by A.O. and held that since thesame have been properly explained and hence, they can notbe included while computing the total income of the assessee. 6.In substance, the issue involved in the appeal wasin relation to addition/deletion of Rs.40,69,633/- added byAO under Section 68 of the Act in the hands of assessee in theassessment year under consideration. According to AO, thisamount was shown by assessee as loan from 12 persons wasnot explained and hence it was liable to be added in the totalincome of assessee. The AO did not find explanation offeredby the assessee to be plausible and accordingly added theamount treating it to be his income from unexplained sourceunder Section 68 ibid. It was, however, reversed by CIT(Appeal) in an appeal filed by assessee when CIT (Appeal)allowed the appeal and upheld by Tribunal in an appeal filedby the Revenue when appeal of Revenue was dismissed in sofar as the impugned additions was concerned. This is whatTribunal held by upholding the order of CIT (Appeal) andaccepting the explanation of assessee:- “Now coming to theother issueraised by the department in appealis the addition in cash credit u/s 68of IT Act, it is found that during theperiod under consideration theassessee has taken loan from 12 persons amounting to “Now coming to theother issueraised by the department in appealis the addition in cash credit u/s 68of IT Act, it is found that during theperiod under consideration theassessee has taken loan from 12 persons amounting to Rs.40,69,633. The AssessingOfficer has made addition on theground that the assessee has failedto discharge his onus i.e.Establishing the genuineness andcreditworthiness of the creditors.The rule of law is that the initialburden lies on the assessee. In thiscase the assessee has establishedthe identity of the creditors andcapacity of the creditors andgenuineness of the transaction.Hon'ble Calcutta High Court inShankar Inds V CIT, 114 ITR 689(Cal) and Jurisdiction High Court ofRajasthan reiterated the same viewin CIT V First Point Finance Ltd, 286ITR 477 (Raj) and held that once theinitial burden has been dischargedin respect of the identity ofinvestors, about their existence andthe confirmation from suchinvestors has been obtained, theburden shifts to the Revenuetoprove otherwise, not only that theinvested amount did not belong tothe creditors but further it has toprove the said amount belonging tothe assessee. Under these facts, itis seen that the assessee has filedconfirmations of all the balancesand proved credit worthiness andthe department has found that thetraders not changed, hence in thisview, the action of the Ld. CIT(A) indeleting the addition made by theAssessing Officer u/s Sec 68 of ITAct, is well reasoned one and hencenot suffering from any infirmityrequiringanyinterference.Therefore, we are of the consideredview that the grounds raised in theappeal of the department are devoidof merit. Hence the same is herebydismissed. ” 7.Learned counsel for the appellant (Revenue)contended that firstly Tribunal erred in accepting theexplanation offered by Assessee in relation to source ofincome. His second submission was that what was offered bythe Assessee was no explanation at all and hence it should nothave been accepted. His third submission was to persuade usthrough factual scenario of the explanation to contend that itcan never be taken as satisfactory explanation for deleting theaddition made by Assessing Officer. We do not agree to anyof these submissions for more than one reason. 8.In the first place, what is involved in the case is apure question of fact and not any question of law much lesssubstantial question of law. Secondly, this Court cannot againin this appeal undertake the examination of factual issues norcan draw factual inferences on the basis of explanationoffered by assessee. Thirdly, once the explanation is acceptedby an appellate court, then in such event, a finding recordedon such explanation is binding on the High Court. 9.Perusal of the impugned finding quoted suprawould go to show that Tribunal did examine the explanationoffered by assessee in detail and then upheld the finding ofCIT(Appeal) for its acceptance. 10.In our opinion, therefore, once the CIT(Appeal) andthe Tribunal accepted the explanation of assessee andaccordingly, deleted certain additions made by A.O. then itwould not involve any substantial issue of law as such. Inother words, this Court in its appellate jurisdiction underSection 260-A ibid, would not again denovo hold yet anotherfactual inquiry with a view to find out as to whetherexplanation offered by assessee and which found acceptanceto the Tribunal is good or bad, or whether it was rightlyaccepted, or not. It is only when the factual finding recorded had been entirely dehors the subject, or that it had beenbased on no reasoning, or based on absurd reasoning to theextent that no prudent man of average judicial capacity couldever reach to such conclusion, or that it had been foundagainst any provision of law, then a case for formulation ofsubstantial question of law on such finding can be said tohave been made out. had been entirely dehors the subject, or that it had beenbased on no reasoning, or based on absurd reasoning to theextent that no prudent man of average judicial capacity couldever reach to such conclusion, or that it had been foundagainst any provision of law, then a case for formulation ofsubstantial question of law on such finding can be said tohave been made out. 11.We thus, do not find any merit in the appeal. It failsand is dismissed in limineby holding that it does not involveany substantial question of law. No costs. [C.M. TOTLA ], J. [A .M. SAPRE],J. /Anil/