HC may admit appeal involving new substantial questions of law other than one on which appeal was admitted for hearing

HIGH COURT OF MADHYA PRADESH

Vinod Prakash Saxena

Versus

Union of India

IT APPEAL NO. 8 OF 2001

JANUARY 3, 2012

JUDGMENT

S.K. Seth, J.

This appeal by the assessee is directed against the order date 26th Sept., 2000 passed by the Tribunal, Indore in IT(SS)A No. 12/Ind/1996 for the block period 1986-87 to 5th Sept., 1995.

2. Relevant facts, which are no longer in dispute, are as under. On 29th March, 1995 assessee was working as District Excise Officer, Ujjain. His residential house was raided and a search was carried out by DSP Lokayukta and huge unaccounted investments were unearthed. Certain documents and assets were seized. On 5th Sept., 1995 Addl. Director of IT (Inv.) made a requisition under s. 132A of the IT Act, 1961 and seized from the possession of the Lokayukta Police the following valuables :

3. 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 18th July, 1996. Before AO 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 26th Sept., 1996 and the Asst. CIT on detailed discussion of evidence found no substance in the contention put forth by the assessee and held 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.

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

5. 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 IT returns filed by various relatives could be treated as undisclosed income in view of the provisions of s. 158B(b) r.w s. 158BB of the IT Act ? Whether the returns filed could be treated as null & void ?”

6. Before we take up this question for consideration, let us first deal with a point raised during the course of argument. Learned counsel for appellant referring to s. 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.

7. Bare perusal of provision shows that the sine qua non for resorting to s. 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 s. 100 of the CPC, 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 be no issue regarding the right. Recently this legal (sic) received the attention of their Lordships of the Supreme Court in Santosh Hazari v. Purushottam Tiwari [2001] 251 ITR 84 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, a 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, insofar as the rights of the parties before if 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.”

8. When we look at the proposed question No. 2, we find that it does not fall within the parameters of ‘substantial question of law’ as explained by their Lordships in Santosh Hazari’s case (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.

9. Now coming to the question of law which was formulated at the time of admission, we may state that IT Act is self-contained code. It has the charging section as well as machinery provisions. It provides for levy of tax on income. Broadly speaking, every person is bound to 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 of 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 defence put up by the appellant was not genuine but it was a 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 AO is not precluded from taxing the right person with respect to that income. See ITO v. Ch. Atchaiah [1996] 84 Taxman 630 (SC).

10. 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 favour of the Revenue. There shall be no order as to costs.

NF