Tca/472/2017 Of Commissioner Of Income Tax v. Latha Rajee Mathew

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 12.09.2017 CORAM : The Hon'ble Ms.INDIRA BANERJEE, CHIEF JUSTICEAND The Hon'ble MR.JUSTICE M.SUNDAR T.C. (A) No.472 of 2017 Commissioner of Income Tax,Puducherry. Latha Rajee Mathew .. Appellant-vs-.. Respondent Appeal filed under Section 260A of the Income Tax Act, 1961,againsttheorderdated18.03.2016passedinI.T.A.No.1540/Mds/2015 on the file of the Income Tax AppellateTribunal, “D” Bench, Chennai, in respect of Assessment Year2011-12 against the order of the Commissioner of Income Tax(Appeal) Puducherry dated 30.3.2015 in ITA.No.585/CIT(A)-Pdy/13-14 against the order under section 143(3) of the Income tax Actdated 21.10.2013 passed by the Income Tax Officer, Ward-I(1),Puducherry for PAN.No.BGJP M3083K for the Assessment year 2011-2012. For Appellant :Mr.S.Rajeshfor Mr.T.R.Senthil KumarJ U D G M E N T (Judgment of the Court was delivered by The Hon'ble ChiefJustice) This appeal of the Revenue is directed against an orderdated 18.03.2016 passed by the Income Tax Appellate Tribunal,'D' Bench, Chennai, dismissing I.T.A.No.1540/Mds/2015 filed bythe Revenue against an order of the Commissioner of Income-Tax(Appeals) dated 30.03.2015 setting aside the addition ofRs.93,11,000/-, as undisclosed income of the respondent-assessee, during the Assessment Year 2011-12. 2.In the course of assessment, the Assessing Officer foundthat there had been cash deposit of Rs.30,61,000/- in thePondicherry State Co-operative Bank Ltd., in the name of therespondent-assessee and another cash deposit of Rs.62,50,000/-in the Indian Overseas Bank account of the respondent-assesseeduring the Assessment Year 2011-12 corresponding to the PreviousYear 2010-11. https://hcservices.ecourts.gov.in/hcservices/ 3.It was the case of the respondent-assessee that she hadreceived a sum of Rs.60,00,000/- from her mother as gift. Themoney was given by the respondent-assessee's mother to therespondent-assessee for admission of her son, Rufus Mathew Rajeein a private medical college. The assessee also claimed that shehas received a sum of Rs.30,61,000/- from her husband,Shri.Khalur Rajeev. 4.It appears that the Assessing Officer proceeded to treatthe aforesaid gift amounts received by the respondent-assesseefrom her mother and her husband respectively as undisclosedincome of the respondent-assessee. The reasoning for theaddition was that the respondent-assessee had not been able toexplain the source from which the respondent-assessee's husbandand the respondent-assessee's mother gave the money to therespondent-assessee. 5.Aggrieved by the addition, the respondent-assessee filedan appeal, being I.T.A.No.585/CIT(A)-Pdy/13-14 before theCommissioner of Income Tax (Appeals), Puducherry. By an orderdated 30.03.2015, the learned Commissioner of Income Tax(Appeals) allowed the appeal of the respondent-assessee holdingthat the entire cash deposit of Rs.93,11,000/- had properly beenexplained and directed the Assessing Officer to delete theentire addition. As stated above, the appeal of the Revenuebefore the Income Tax Appellate Tribunal has been dismissed bythe order under appeal before us. 6.It appears that both the Commissioner of Income Tax(Appeals) and the learned Tribunal, in effect and substance,arrived at the factual finding that the respondent-assessee'shusband and the respondent-assessee's mother both had sufficientfunds for giving money to the respondent-assessee. 7.So far as the respondent-assessee's mother, Smt.S.OmanaNair, is concerned, there is a clear factual finding that shehad sold her land and had enough fund to deposit into her bankaccount. This is evident from the remand report relied upon bythe Commissioner of Income Tax (Appeals). 6.It appears that both the Commissioner of Income Tax(Appeals) and the learned Tribunal, in effect and substance,arrived at the factual finding that the respondent-assessee'shusband and the respondent-assessee's mother both had sufficientfunds for giving money to the respondent-assessee. 7.So far as the respondent-assessee's mother, Smt.S.OmanaNair, is concerned, there is a clear factual finding that shehad sold her land and had enough fund to deposit into her bankaccount. This is evident from the remand report relied upon bythe Commissioner of Income Tax (Appeals). 8.Even, so far as the husband of the respondent-assessee isconcerned, there is a factual finding that he had money in hisaccounts. May be the source was unexplained. It is, however,doubtful whether the gift could have been deemed to have beenincome of the respondent-assessee only because the respondent-assessee could not establish the source of income of the donors. 9.The learned Tribunal has concurred with the factualfinding of the learned Commissioner of Income Tax (Appeals) that https://hcservices.ecourts.gov.in/hcservices/ the donors in question had the funds to make a gift to therespondent-assessee for the purpose of admission of her son in amedical college. 10.Section 260A of the Income Tax Act, 1961, provides asfollows: “Section 260A. Appeal to High Court. (1) An appeal shall lie to the High Court fromevery order passed in appeal by the AppellateTribunal before the date of establishment of theNational Tax Tribunal, if the High Court issatisfied that the case involves a substantialquestion of law. (2) The Principal Chief Commissioner or ChiefCommissioner or the Principal Commissioner orCommissioner or an Assessee aggrieved by any orderpassed by the Appellate Tribunal may file an appealto the High Court and such appeal under this sub-section shall be- (a) filed within one hundred and twenty daysfrom the date on which the order appealedagainst is received by the Assessee or thePrincipal Chief Commissioner or ChiefCommissioner or Principal Commissioner orCommissioner. (b) [***]; (c) in the form of a memorandum of appealprecisely stating therein the substantialquestion of law involved.(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 itis satisfied that there was sufficient cause fornot filing the same within that period. (3) Where the High Court is satisfied that asubstantial question of law is involved in anycase, it shall 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 theCourt to hear, for reasons to be recorded, theappeal on any other substantial question of law notformulated by it, if it is satisfied that the caseinvolves such question. (5) The High Court shall decide the question of lawso formulated and deliver such judgment thereon containing 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 (5of 1908) relating to appeals to the High Courtshall, as far as may be, apply in the case ofappeals under this section.” (5) The High Court shall decide the question of lawso formulated and deliver such judgment thereon containing 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 (5of 1908) relating to appeals to the High Courtshall, as far as may be, apply in the case ofappeals under this section.” 11.An appeal lies under Section 260-A of the IT Act, onlywhen there is a substantial question of law. We find that thereis no question of law involved in these appeals much less anysubstantial question of law. 12.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. 13.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.14.The relevant paragraphs of the judgment of the SupremeCourt in Hero Vinoth (supra) are set out herein below : “21. The phrase “substantial question of law”,as occurring in the amended Section 100 CPC isnot defined in the Code. The word substantial,as qualifying “question of law”, means—of havingsubstance, essential, real, of sound worth,important or considerable. It is to beunderstood as something in contradistinctionwith—technical, of no substance or consequence,or academic merely. However, it is clear thatthe legislature has chosen not to qualify thescope of “substantial question of law” bysuffixing the words “of general importance” ashas been done in many other provisions such asSection 109 of the Code or Article 133(1)(a) ofthe Constitution. The substantial question oflaw on which a second appeal shall be heard needas occurring in the amended Section 100 CPC isnot defined in the Code. The word substantial,as qualifying “question of law”, means—of havingsubstance, essential, real, of sound worth,important or considerable. It is to beunderstood as something in contradistinctionwith—technical, of no substance or consequence,or academic merely. However, it is clear thatthe legislature has chosen not to qualify thescope of “substantial question of law” bysuffixing the words “of general importance” ashas been done in many other provisions such asSection 109 of the Code or Article 133(1)(a) ofthe Constitution. The substantial question oflaw on which a second appeal shall be heard need not necessarily be a substantial question of lawof general importance. In Guran Ditta v. RamDitta [(1927-28) 55 IA 235 : AIR 1928 PC 172]the phrase “substantial question of law” as itwas employed in the last clause of the thenexisting Section 100 CPC (since omitted by theAmendment Act, 1973) came up for considerationand their Lordships held that it did not mean asubstantial question of general importance but asubstantial question of law which was involvedin the case. In Sir Chunilal case [1962 Supp (3)SCR 549 : AIR 1962 SC 1314] the ConstitutionBench expressed agreement with the followingview taken by a Full Bench of the Madras HighCourt in Rimmalapudi Subba Rao v. Noony Veeraju[AIR 1951 Mad 969 : (1951) 2 MLJ 222 (FB)] :(Sir Chunilal case [1962 Supp (3) SCR 549 : AIR1962 SC 1314] , SCR p. 557)“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.” This Court laid down the following test asproper test, for determining whether a questionof law raised in the case is substantial: (SirChunilal case [1962 Supp (3) SCR 549 : AIR 1962SC 1314] , SCR pp. 557-58) “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 of alternative 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.” “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 of alternative 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.” 22. In Dy. Commr. v. Rama Krishna Narain [1954SCR 506 : AIR 1953 SC 521] also it was held thata question of law of importance to the partieswas a substantial question of law entitling theappellant to a certificate under (the then)Section 100 CPC. 23. To be “substantial” a question of law mustbe debatable, not previously settled by law ofthe land or a binding precedent, and must have amaterial bearing on the decision of the case, ifanswered either way, insofar as the rights ofthe parties before it are concerned. To be aquestion of law “involving in the case” theremust be first a foundation for it laid in thepleadings and the question should emerge fromthe sustainable findings of fact arrived at bycourt of facts and it must be necessary todecide that question of law for a just andproper decision of the case. An entirely newpoint raised for the first time before the HighCourt is not a question involved in the caseunless it goes to the root of the matter. Itwill, therefore, depend on the facts andcircumstance of each case whether a question oflaw is a substantial one and involved in thecase or not, the paramount overall considerationbeing the need for striking a judicious balancebetween the indispensable obligation to dojustice at all stages and impelling necessity ofavoiding prolongation in the life of any lis.(See Santosh Hazari v. Purushottam Tiwari[(2001) 3 SCC 179] .)24.The principles relating to Section 100 CPCrelevant for this case may be summarised thus :(i) An inference of fact from the recitals orcontents of a document is a question of fact.But the legal effect of the terms of a documentis a question of law. Construction of a documentinvolving the application of any principle oflaw, is also a question of law. Therefore, whenthere is misconstruction of a document or wrong application of a principle of law in construinga document, it gives rise to a question of law.(ii) The High Court should be satisfied that thecase involves a substantial question of law, andnot a mere question of law. A question of lawhaving a material bearing on the decision of thecase (that is, a question, answer to whichaffects the rights of parties to the suit) willbe a substantial question of law, if it is notcovered by any specific provisions of law orsettled legal principle emerging from bindingprecedents, and, involves a debatable legalissue. A substantial question of law will alsoarise in a contrary situation, where the legalposition is clear, either on account of expressprovisions of law or binding precedents, but thecourt below has decided the matter, eitherignoring or acting contrary to such legalprinciple. In the second type of cases, thesubstantial question of law arises not becausethe law is still debatable, but because thedecision rendered on a material question,violates the settled position of law .(iii) The general rule is that High Court willnot interfere with the concurrent findings ofthe courts below. But it is not an absoluterule. Some of the well-recognised exceptions arewhere (i) the courts below have ignored materialevidence or acted on no evidence; (ii) thecourts have drawn wrong inferences from provedfacts by applying the law erroneously; or (iii)the courts have wrongly cast the burden ofproof. When we refer to “decision based on noevidence”, it not only refers to cases wherethere is a total dearth of evidence, but alsorefers to any case, where the evidence, taken asa whole, is not reasonably capable of supportingthe finding.” 15.In M.Janardhana Rao Vs. Joint Commissioner of Income Tax[2005 273 ITR 50 (SC)], the Hon'ble Supreme Court held that theprinciples contemplated under Section 100 of the Code of CivilProcedure would apply to Section 260-A of the IT Act too. 16.Right of appeal is not automatic. Right of appeal isconferred by statute. When statute confers a limited right ofappeal only in a case which involves substantial questions oflaw, it is not open for this Court to sit in appeal over thefactual findings arrived at by the Appellate Tribunal. 17.As observed above, the learned Tribunal has, in thiscase, arrived at the factual finding that the respondent-assessee had sufficiently been able to explain that the sum ofRs.93,11,000/- was received by her by way of gift from hermother and her husband respectively. The materials on recordreveal that the gift from the mother was to fund for admissionof her grand son to a private medical college. 18.In our view, there is no question of law involved. It isalso doubtful whether there is any factual infirmity in theorder under appeal. 19.This Tax Case Appeal is, therefore, not entertained andthe same is dismissed. No costs. Sd/- Assistant Registrar(CCC) //True Copy// Sub Assistant RegistrarsraTo 1.The Registrar, Income Tax Appellate Tribunal, 'D' Bench, Chennai.2.The Commissioner of Income-Tax (Appeals), Puducherry.3.The Income Tax Officer, Ward-I(1), Puducherry. +1cc to M/s.T.R.Senthilkumar, Advocate SR.No.66122 GMI(CO)sm:29.11.2017 T.C.A.No.472 of 2017