Vinod Prakash Saxena vs Union of India

S.K. Seth, J.—This appeal by the assessee is directed against the order dated 26.9.2000 passed by the Income Tax appellate Tribunal, Indore in Appeal No. IT (SS) A No. 12/Ind/96 for the block period 86-87 to 5.9.1995. Relevant facts, which are no longer in dispute, are as under on 29-3.1995 assessee was working as District Excise officer, Ujjain. His residential house was raided and a search was carried out by D.S.P. Lokayukta and huge unaccounted investments were unearthed. Certain documents and assets were seized. On 5.9.1995 ADIT (Inv.) made a requisition u/s. 132A of the Income Tax Act, 1961 and seized from the possession of the Lokayukta Police the following valuables:-

In response to Notice, initially assessee did not file any return of income and after prolonged correspondence ultimately he filed the return in Form No. 2B for the first time on 18.7.1996. Before A.O. as regards various unaccounted investments and assets the stand of the assessee was that they do not belong to him but his parents, sister, nephews, wife, daughters and Sons. The assessment was completed on 26.9.1996 and the ACITO on detailed discussion of evidence found no substance in the contentions put forth by the assessee and held that that various investments were made by the assessee out of his own unaccounted, income, therefore he computed the net undisclosed income of the assessee for the block period at Rs. 95,00,222/- and raised/issued demand notice in the prescribed form.

Assessee challenged the order in appeal and by the order impugned, the Income Tax Appellate Tribunal, Bench Indore in Income Tax appeal No. 1863/24/1 of 2001 partly allowed the appeal and deleted certain additions. Still dissatisfied with, the order, now this appeal was preferred before us u/s 260A of the Income Tax Act, 1961.

Appeal was admitted for final hearing on the following substantial question of law -

Whether the income and acquisition of assets which were declared in the income tax returns filed by various relatives could be treated as undisclosed income in view of the provisions of S. 158B(b) read with S. 158BB of the Income Tax Act. Whether the returns filled could be treated as null?

Before we take up this question for considerations let us first deal with a point raised during the course of argument. Learned Counsel for appellant referring to Section 260A(4) sought oral permission to address us on proposed question No. 2 set out in appeal memo. According to him it also involved substantial question of law. He submitted such a course is permissible in view of amplitude of powers conferred on this Court.

Bare perusal of provision shows that the sine qua non for resorting to Section 260A is the satisfaction of the Court that the appeal involves more/additional substantial question of law other than the one on which appeal was admitted for hearing. The scheme of the Act is quite clear Decisions on factual issues are within the domain of authorities and should be sorted out before the matter reaches the High Court in appeal. This section is analogous to Section 100 of the Civil Procedure Code, 1908 both these sections do not define the expression ''substantial question of law''. A right of appeal stems from a statute, and is not inherent in every defeated suitor. The legal provisions dealing with the right of appeal to the higher forum have to be read with due regard to the qualifications, limitations and restrictions contained therein. If the words are sufficiently clear, either, for or against an appeal, there can he no issue regarding the right. Recently this legal received the attention of their Lordships of the Supreme Court in Santosh Hazari Vs. Purushottam Tiwai (Dead) by Lrs., and it was held as under:-

The word ''substantial'' as qualifying ''question of law'', means--of having substance, essential, real, of sound worth important or considerable. It is to be understood as something in contradistinction with technical, of no substance or consequence, or academic merely.

It is further observed

A point of law which: admits of no two opinions may be a proposition of law but cannot be a substantial question of law. To be substantial, 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, in so far 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.

When we look at the proposed question No. 2, we find that does not fall within the parameters of ''substantial question of law'' as explained by their Lordships in Santosh Hazari''s supra. Even otherwise in the facts and circumstances of the case in hand, we are satisfied that the proposed question does not involve a Substantial question of law.

Now coming to the question of law which was formulated at the time of admission, we may state that Income Tax Act is self contained code. It has the charging section as well machinery provisions. It, provides for levy of tax on income Broadly speaking, every person is bound furnish voluntary return of his total income, if such income during the previous year, exceeds the maximum amount which is not chargeable to income tax. Failure to file proper return in time with self assessed tax may entail consequences envisaged under the Act. Filing of return of income, therefore, is the first step for the finalization assessment of the tax liability. The facts of the case show that appellant was a salaried employee of the, State Government. He had filed no return previous to date of search except for the year 1994-95 in which the income was declared at Rs. 69,300/-. We find from orders that authorities below after careful consideration and detailed analysis of, the material arrived at the conclusion that defense put up by the appellant was not genuine but it was as well thought of attempt to cover-up investments made from the undisclosed income to avoid the incidence of taxation and other consequences. It is well established that a transaction is genuine or bogus is pure finding of fact and does not give rise to any substantial question of law. Income Tax is direct tax on income. When charging section speaks of levy of income tax on the total income of every person, it necessarily means the person who is liable to pay income tax in respect of that total income according to law. Merely because a wrong person is taxed with respect to a particular income, the Assessing Officer is not precluded from taxing the right person with respect to that income. See ITO V. Ch. Atchaiah (1996) 84 Taxman 630 (SC). In view of the foregoing discussion we find no merit and substance in this appeal. Consequently appeal is dismissed and we answer the question against the assessee and in favor of the revenue. There shall be no order as to costs.