Delhi H.C : The scope of an appeal under the newly inserted s. 260A of the Act is restricted to adjudication on a “substantial question of law” and not on a question of law, as it used to be under s. 256 of the Act.

High Court Of Delhi

Krishan Kumar Aggarwal vs. Assessing Officer

Section 68, 260A

Asst. Year 1998-99

D.K. Jain & Madan B. Lokur, JJ.

IT Appeal No. 331 of 2003

12th September, 2003

Counsel Appeared :

K.R. Manjani, for the Appellant : R.C. Pandey with Ajay Jha, for the Respondent

JUDGMENT

D.K. JAIN, J. :

This appeal by the assessee under s. 260A of the IT Act, 1961 (for short “the Act”), is directed against order dt. 14th May, 2003, passed by the Income-tax Appellate Tribunal, New Delhi (for short “the Tribunal”), in ITA No.1001/Del/2002, pertaining to the asst. yr. 1998-99.

2. Briefly stated, the material facts giving rise to the appeal are as follows : During the course of assessment proceedings for the aforenoted assessment year, the AO noticed that in the assessee’s books of account, a sum of Rs. 1 lakh was reflected as loan from one Mr. Vipin Kumar Alagh. The AO required the assessee to furnish evidence to prove the genuineness of the said loan. Pursuant thereto, a copy of the bank account of the said Vipin Kumar, from where the cheque in favour of the assessee had been drawn, was filed. Upon recording the statement of the said creditor, the AO came to the conclusion that the said Alagh had failed to explain the source of the cash amounts deposited by him in his account before issuing a cheque in favour of the assessee and, therefore, the loan remained unexplained. He, accordingly, added the said amount to the total income of the assessee as unexplained cash credit.

3. Aggrieved, the assessee preferred an appeal to the CIT(A). The CIT examined the documentary evidence adduced by the assessee minutely. Apart from other deficiencies therein, he also noticed that the bill of the jewellers dt. 13th Jan., 1994, produced by the assessee, showing the sale of jewellery by the said Vipin Kumar did not contain even the name and address of the purchaser. Rejecting the evidence produced, the CIT(A) sustained the addition.

4. Being aggrieved with the said order, the assessee carried the matter in further appeal to the Tribunal. By the impugned order, the Tribunal has dismissed the appeal. Hence, the present appeal.

5. Assailing the order of the Tribunal as perverse, Mr. Manjani, learned counsel for the assessee, has submitted that since the assessee had proved the identity of the creditor by producing him before the AO and had also filed his confirmatory certificate, showing the mode and manner in which the said amount had been received by the assessee, the onus on him to prove the genuineness and the creditworthiness of the creditor stood discharged and, therefore, the authorities below were not justified in confirming the addition made by the AO. Learned counsel submits that the order of the Tribunal involves a substantial question of law and, therefore, the appeal deserves to be admitted.

6. We do not agree. The scope of an appeal under the newly inserted s. 260A of the Act is restricted to adjudication on a “substantial question of law” and not on a question of law, as it used to be under s. 256 of the Act. The expression “substantial question of law” is not defined in the Act. Though a similar expression appears in s. 100 of the CPC, it is not defined in the said Act either. However, its connotation is well-settled by judicial pronouncements. It was observed by the Supreme Court in Sir Chunilal vs. Mehta & Sons Ltd. vs. Century Spinning & Manufacturing Co. Ltd. AIR 1962 SC 1314, that a question of law would be a substantial question of law if it directly or indirectly affects the rights of the parties and/or there is some doubt or difference of opinion on the issue. But, if the question is settled by the apex Court or the general principles to be applied in determining the question are well-settled, mere application of it to a particular set of facts would not constitute a substantial question of law.

7. In the instant case, the said Vipin Kumar tried to explain the source of a sum of Rs. 74,000 as follows : (i) a sum of Rs. 19,000 from his wife out of her savings in cash as she was a working lady; (ii) Rs. 30,000 out of refunds of small advances by his friends given in earlier years, including refund of Rs. 9,000 given by him to someone upto 31st March, 1955, and shown in the balance sheet; and (iii) a sum of Rs. 25,000 out of cash in hand drawn from various savings bank accounts.

8. The CIT(A), on re-appraisal of the entire documentary evidence adduced by the said Vipin Kumar has come to the conclusion that even the documents showing the sale of jewellery were doubtful. The finding of the Tribunal being based on cogent material cannot be said to be perverse, as is sought to be pleaded by learned counsel for the petitioner.

9. Applying the aforenoted tests, in our opinion, no question of law, much less a substantial question of law, arises from the impugned order. We accordingly decline to entertain the appeal. Dismissed.

[Citation : 266 ITR 380]

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