Mr.j.stephen v. The Income Tax Officer,Ward V (1),Coimbatore

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 06.03.2018 CORAM THE HON'BLE MS.INDIRA BANERJEE, CHIEF JUSTICE andTHE HON'BLE MR. JUSTICE ABDUL QUDDHOSE T.C.A.No.9 of 2018 Mr.J.Stephen.. Appellant/Appellant vs The Income Tax Officer,Ward V (1),Coimbatore... Respondent /Respondent Prayer:Appeal filed under 260A of the Income Tax Act, 1961against the order of the Income Tax Appellate Tribunal, 'B'(SMC) Bench, Chennai dated 01.11.2017 in I.T.A.No.3120/MDS/2016against the order dated 29.06.2015 in ITA.NO.247/2011-12(A)-1passed by Commissioner of Income Tax(Appellals)3, Coimbatoreagaint the assessment order dated 29.12.2011 made by Income TaxOfficer, Ward(VI), Coimbatore. For Appellant.. Mr.M.P.Senthil Kumar (Delivered by Ms.Indira Banerjee, Hon'ble Chief Justice)This appeal is against an order dated 01.11.2017 passed bythe Income Tax Appellate Tribunal 'B' (SMC) Bench, Chennai inI.T.A.No.3120/MDS/2016, filed by the appellant assessee inrespect of the assessment year 2009-2010, dismissing on theground that the same was barred by delay of 72 days. 2. Section 260A of the Income Tax Act, 1961 provides asfollows: “260A. Appeal to High Court.- (1) An appeal shalllie to the High Court from every order passed in appealby the Appellate Tribunal before the date ofestablishment of the National Tax Tribunal, if the HighCourt is satisfied that the case involves a substantialquestion of law. (2) The Chief Commissioner or the Commissioner oran assessee aggrieved by any order passed by theAppellate Tribunal may file an appeal to the High Court https://hcservices.ecourts.gov.in/hcservices/ and such appeal under this sub-section shall be—(a) filed within one hundred and twenty days fromthe date on which the order appealed against isreceived by the assessee or the Chief Commissioneror Commissioner;(b) [***];(c) in the form of a memorandum of appeal preciselystating therein the substantial question of lawinvolved. (2A) The High Court may admit an appeal after theexpiry of the period of one hundred and twenty daysreferred to in clause (a) of sub-section (2), if it issatisfied that there was sufficient cause for notfiling the same within that period. (3) Where the High Court is satisfied that asubstantial question of law is involved in any case, itshall formulate that question. (4) The appeal shall be heard only on the questionso formulated, and the respondents shall, at thehearing of the appeal, be allowed to argue that thecase does not involve such question : Provided that nothing in this sub-section shall bedeemed to take away or abridge the power of the courtto hear, for reasons to be recorded, the appeal on anyother substantial question of law not formulated by it,if it is satisfied that the case involves suchquestion. (5) The High Court shall decide the question oflaw so formulated and deliver such judgment thereoncontaining the grounds on which such decision isfounded 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 AppellateTribunal; or (b) has been wrongly determined by the AppellateTribunal, by reason of a decision on such questionof law as is referred to in sub-section (1).(7) Save as otherwise provided in this Act, theprovisions of the Code of Civil Procedure, 1908 (5 of1908), relating to appeals to the High Court shall, asfar as may be, apply in the case of appeals under thissection.” 3. An appeal lies to this Court from an order of theAppellate Tribunal when there is substantial question of lawinvolved. There does not appear to be any question of law https://hcservices.ecourts.gov.in/hcservices/ involved in this appeal, not to speak of substantial question oflaw. (6) The High Court may determine any issue which— (a) has not been determined by the AppellateTribunal; or (b) has been wrongly determined by the AppellateTribunal, by reason of a decision on such questionof law as is referred to in sub-section (1).(7) Save as otherwise provided in this Act, theprovisions of the Code of Civil Procedure, 1908 (5 of1908), relating to appeals to the High Court shall, asfar as may be, apply in the case of appeals under thissection.” 3. An appeal lies to this Court from an order of theAppellate Tribunal when there is substantial question of lawinvolved. There does not appear to be any question of law https://hcservices.ecourts.gov.in/hcservices/ involved in this appeal, not to speak of substantial question oflaw. 4. There can be no doubt that no hard and fast rule can belaid down in the matter of condonation of delay and the Courtsshould adopt a pragmatic approach in exercising their discretionon the facts of each case. The Court should keep in mind theprinciple that in construing the expression “sufficient cause”,substantial justice is of prime importance. Sufficient causeshould just be given a liberal construction. The propositionfinds support in the judgment of the Supreme Court in Vedabaialias Vaijayanatabai Baburao Patil v. Shantaram Baburao Patilreported in (2002) 253 ITR 798 (SC) and various other judgments.However, the Law of Limitation is also a valid law and the Courtcannot give a complete go-by to the Law of Limitation. Theapproach might be pragmatic, but at the same time limitationcannot altogether be ignored. 5. Whether the cause for the delay in filing an appeal is“sufficient cause” to warrant condonation of the delay andadmission of the appeal, is basically an issue of fact. It isdoubtful whether such factual findings can be questioned by wayof an appeal under Section 260A of the Income Tax Act, unlessthe findings are vitiated by perversity, which might give riseto a question of law. 6. Even in a case where an appeal was not entertained onthe ground of limitation, if there was serious issue of lawinvolved in the appeal, the Court might have considered thatissue as an issue of law for entertaining an appeal underSection 260A of the Income Tax Act. However, even the findingsof the Appellate Commissioner impugned before the Tribunal didnot involve any substantial question of law. 7. In the instant case, the appellant assessee had filedhis return of income for the assessment year 2009-2010 on22.05.2009, declaring total income of Rs.4,40,330/-. The casewas selected for scrutiny, after which assessment was completedand an assessment order was passed. The assessment order isextracted herein below. “ The explanation of the cash deposits in IDBIwas sought to which the representative stated that toavoid cash deposit tax in the M/s.Southerland Forex &Services (India) Private Ltd. in which the assesseeis a Managing Director, the assessee had depositedcash into his account and transferred to the company.The sources of the cash deposits were not providedfor were the proofs that these deposits werereflected in the company furnished. Therefore, the https://hcservices.ecourts.gov.in/hcservices/ total cash deposits of Rs.32,17,717/- is added asundisclosed cash investment.The assessment is completed as under:Total income returned : Rs.4,40,330/-Add: As discussed: Rs.33,17,177/-Total income assessed: Rs.37,57,510/-” 8. Being aggrieved by the assessment order, the appellantassessee appealed to the Commissioner of Income Tax (Appeals)-3,Coimbatore and the appeal was numbered as ITA.No.247/2011-12(A)-1. The appeal was dismissed by an order dated 29.06.2015. https://hcservices.ecourts.gov.in/hcservices/ total cash deposits of Rs.32,17,717/- is added asundisclosed cash investment.The assessment is completed as under:Total income returned : Rs.4,40,330/-Add: As discussed: Rs.33,17,177/-Total income assessed: Rs.37,57,510/-” 8. Being aggrieved by the assessment order, the appellantassessee appealed to the Commissioner of Income Tax (Appeals)-3,Coimbatore and the appeal was numbered as ITA.No.247/2011-12(A)-1. The appeal was dismissed by an order dated 29.06.2015. 9. The Appellate Commissioner found that the appellantassessee had, in his written submission, claimed that severalcustomers approached the appellant assessee, the ManagingDirector of M/s.Southerland Forex & Services (India) Pvt. Ltd.for buying travellers' cheques. As per norms M/s.SoutherlandForex & Services (India) Pvt. Ltd. cannot buy travellerscheques. Since the appellant assessee did not want to lose thecustomers, he received cheques and cash in his personal accountand bought travellers cheques and made the same over to hiscustomers. The appellant assessee claimed to have boughttravellers cheques from other money changers. This is how cashdeposits in his personal bank account statements had beenexplained. The appellant assessee also attributed bank depositsto loans allegedly obtained from his sister-in-lawMrs.Gnanagandhi. 10. After considering the submissions of the appellantassessee and on perusal of the assessment order, the AppellateCommissioner observed as under: “7.0.. a) The assessee has deposited a sum ofRs.33,17,177/- in cash with IDBI Bank. b) The assessee was not able to substantiate thesource of this deposit before the Assessing Officer.c) The assessee contended that Rs.21,25,407/-was given by the assessee's relative Mrs.Gnanagandhion different dates in the following manner and thesources of the deposit of by Mrs.Gnanagandhi was saleof property for Rs.43,50,000/-. d) The assessee was not able to produce the copyof the sale deed. Mere production of copy ofagreement for sale is not sufficient to prove thesource of deposit. Further Mrs.Gnanagandhi couldhave advanced these loans by way of cheque toMr.Stephen. The entire amount has been advanced invarious dates by cash which is not backed by anyevidence. 7.1. As evidenced by the remand report theagreement is dated 18/8/2008. There are severaldeposits before the said date. Therefore, the amountreceived prior to 18/8/2008 cannot in any case linkedto the sale of property. Further, even if there wasa sale, the amount does not belong entirely toMrs.Gnanagandhi. It will belong to her and threeothers. 7.2. In view of the above facts andcircumstances, the assessee was not able to give anyevidence in support of cash deposit in his bankaccount to the tune of Rs.33,17,177/- This will betreated as unexplained income of the assessee and theaddition stands confirmed in the hands of theappellant.” 11. The Appellate Commissioner found that the cashdeposits were not explained and substantiated by cogentevidence. The entire loan amount had been advanced by cash andthere were cash deposits even before the date of the allegedsale agreement executed by Mrs.Gnanagandhi. 12. Needless to mention that receipt of money fromcustomers for travellers cheques also could not remainunaccounted for. Moreover cogent evidence was necessary toprove the receipt of cash from customers. That seems to belacking. 13. An appeal lies under Section 260-A of the Income TaxAct, only when there is a substantial question of law. We findthat there is no question of law involved in this appeal, muchless any substantial question of law. 11. The Appellate Commissioner found that the cashdeposits were not explained and substantiated by cogentevidence. The entire loan amount had been advanced by cash andthere were cash deposits even before the date of the allegedsale agreement executed by Mrs.Gnanagandhi. 12. Needless to mention that receipt of money fromcustomers for travellers cheques also could not remainunaccounted for. Moreover cogent evidence was necessary toprove the receipt of cash from customers. That seems to belacking. 13. An appeal lies under Section 260-A of the Income TaxAct, only when there is a substantial question of law. We findthat there is no question of law involved in this appeal, muchless any substantial question of law. 14. In Sir Chunilal V. Mehta & Sons Ltd. vs Century Spg. &Mfg. Co. Ltd., reported in AIR 1962 SC 1314, the Supreme Courtagreed with and approved a Full Bench Judgment of this Court inRimmalapudi Subba Rao vs Noony Veeraju And Ors reported in AIR1951 Mad 969 and laid down the principles for deciding when aquestion of law becomes a substantial question of law. 15. In Hero Vinoth Vs. Seshammal reported in (2006) 5 SCC545, the Supreme Court followed Sir Chunilal V. Mehta & Sons(supra) and other judgments and summarized the tests to find outwhether a given set of questions of law were mere questions oflaw or substantial questions of law. https://hcservices.ecourts.gov.in/hcservices/ 16. The relevant paragraphs of the judgment of the SupremeCourt in Hero Vinoth (supra) are set out herein below : “21...... The word substantial, as qualifying“question of law”, means—of having substance,essential, real, of sound worth, important orconsiderable. It is to be understood assomething in contradistinction with—technical,of no substance or consequence, or academicmerely. However, it is clear that thelegislature has chosen not to qualify the scopeof “substantial question of law” by suffixingthe words “of general importance” as has beendone in many other provisions such as Section109 of the Code or Article 133(1)(a) of theConstitution. The substantial question of law onwhich a second appeal shall be heard need notnecessarily be a substantial question of law ofgeneral importance. 17. In Guran Ditta v. Ram Ditta [(1927-28) 55 IA 235 : AIR1928 PC 172] the phrase “substantial question of law” as used inthe last clause of the then existing Section 100 CPC (sinceomitted by the Amendment Act, 1973) came up for consideration.The Privy Council held that it did not mean a substantialquestion of general importance but a substantial question of lawwhich was involved in the case. 18. In Sir Chunilal Mehta (supra) the Constitution Benchapproved the view taken by a Full Bench of the Madras High Courtin Rimmalapudi Subba Rao v. Noony Veeraju reported in AIR 1951Mad 969 and held: “When a question of law is fairlyarguable, where there is room fordifference of opinion on it or where theCourt thought it necessary to deal withthat question at some length and discussalternative views, then the question wouldbe a substantial question of law. On theother hand if the question was practicallycovered by the decision of the highestcourt or if the general principles to beapplied in determining the question arewell settled and the only question was ofapplyingthoseprinciplestotheparticular fact of the case it would notbe a substantial question of law.” 18. In Sir Chunilal Mehta (supra) the Constitution Benchapproved the view taken by a Full Bench of the Madras High Courtin Rimmalapudi Subba Rao v. Noony Veeraju reported in AIR 1951Mad 969 and held: “When a question of law is fairlyarguable, where there is room fordifference of opinion on it or where theCourt thought it necessary to deal withthat question at some length and discussalternative views, then the question wouldbe a substantial question of law. On theother hand if the question was practicallycovered by the decision of the highestcourt or if the general principles to beapplied in determining the question arewell settled and the only question was ofapplyingthoseprinciplestotheparticular fact of the case it would notbe a substantial question of law.” 19. In Chunilal Mehta (supra), the Supreme Court laid downthe following as proper test, for determining whether a questionof law raised in the case was substantial: “The proper test for determining whether aquestion of law raised in the case issubstantial would, in our opinion, bewhether it is of general public importanceor whether it directly and substantiallyaffects the rights of the parties and if sowhether it is either an open question inthe sense that it is not finally settled bythis Court or by the Privy Council or bythe Federal Court or is not free fromdifficulty or calls for discussion ofalternative views. If the question issettled by the highest court or the generalprinciples to be applied in determining thequestion are well settled and there is amere question of applying those principlesor that the plea raised is palpably absurdthe question would not be a substantialquestion of law.” 20. To be “substantial” a question of law must be debatable,not previously settled by law of the land or a bindingprecedent, and must have a material bearing on the decision ofthe case, if answered either way, insofar as the rights of theparties before it are concerned. To be a question of law“involving in the case” there must be first a foundation for itlaid in the pleadings and the question should emerge from thesustainable findings of fact arrived at by court of facts and itmust be necessary to decide that question of law for a just andproper decision of the case. An entirely new point raised forthe first time before the High Court is not a question involvedin the case unless it goes to the root of the matter. It will,therefore, depend on the facts and circumstance of each casewhether a question of law is a substantial one and involved inthe case or not, the paramount overall consideration being theneed for striking a judicious balance between the indispensableobligation to do justice at all stages and impelling necessityof avoiding prolongation in the life of any lis. Reference maybe made to Santosh Hazari v. Purushottam Tiwari reported in(2001) 3 SCC 179. 21. In M.Janardhana Rao Vs. Joint Commissioner of Income Taxreported in 2005 273 ITR 50 (SC), the Hon'ble Supreme Court heldthat the principles contemplated under Section 100 of the Codeof Civil Procedure would apply to Section 260-A of the IncomeTax Act too. 22. The question is whether the explanation given by theappellant assessee for cash deposits in his personal bankaccount was substantiated by materials and/or evidence onrecord. The Appellate Commissioner, in substance, held thatthere were no materials to explain the deposits. It cannotpossibly be held that is any substantial question of law isinvolved in this appeal. 23. The appeal cannot be entertained and the same isdismissed. No costs. Sd/- Asst.Registrar (CS VII) /true copy/ Jvm Sub Asst. Registrar To1.The Income Tax Officer,Ward V (1),Coimbatore. 2.The Income Tax Appellate Tribunal,B(SMC)Bench, Chennai. 3.The Commissioner of Income Tax(Appeals)-3,Coimbatore. + 1 cc to Mr.M.P.Senthil Kumar Standing Counsel for Income TaxDept. SR.17266 + 1 cc to M/s.G.Baskar, Advocate,SR.17210 23. The appeal cannot be entertained and the same isdismissed. No costs. Sd/- Asst.Registrar (CS VII) /true copy/ Jvm Sub Asst. Registrar To1.The Income Tax Officer,Ward V (1),Coimbatore. 2.The Income Tax Appellate Tribunal,B(SMC)Bench, Chennai. 3.The Commissioner of Income Tax(Appeals)-3,Coimbatore. + 1 cc to Mr.M.P.Senthil Kumar Standing Counsel for Income TaxDept. SR.17266 + 1 cc to M/s.G.Baskar, Advocate,SR.17210 Tax Case Appeal No.9 of 2018 ssv(co)nr 04/05/2018