Gujarat High Court
The Principal Commissioner Of Income ... vs Prabodhchandra Jayantilal Patel on 3 July, 2023
Author: Vipul M. Pancholi
Bench: Vipul M. Pancholi
C/TAXAP/9/2023 ORDER DATED: 03/07/2023
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 9 of 2023
With
R/TAX APPEAL NO. 10 of 2023
With
R/TAX APPEAL NO. 680 of 2022
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THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL),
SURAT
Versus
PRABODHCHANDRA JAYANTILAL PATEL
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Appearance:
MR.VARUN K.PATEL(3802) for the Appellant(s) No. 1
for the Opponent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE VIPUL M. PANCHOLI
and
HONOURABLE MR. JUSTICE DEVAN M. DESAI
Date : 03/07/2023
COMMON ORAL ORDER
(PER : HONOURABLE MR. JUSTICE VIPUL M. PANCHOLI)
1. As the substantial questions of law in all these appeals are similar and as the Tribunal has passed common order, learned Standing Counsel for the appellant - revenue has requested to hear all these appeal together and, hence, all these appeals are being heard together and are being disposed of by this common order.
2. All these appeals, which are filed under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as "IT Act" for short), are arising out of the common order dated 10.05.2022 passed by the Income Tax Appellate Tribunal (hereinafter referred to as "Tribunal" for short) in IT Appeal Page 1 of 13 Downloaded on : Mon Jul 03 20:42:51 IST 2023 C/TAXAP/9/2023 ORDER DATED: 03/07/2023 No.137/SRT/2021 and allied appeals.
3. Heard learned Standing Counsel, Mr. Varun K. Patel assisted by learned advocate, Mr. Dev Patel for the appellant - revenue.
4. Learned Standing Counsel submitted that the Assessing Officer passed assessment order dated 29.12.2018 for the assessment year 2017-18 and thereby held that an amount of Rs.13,86,85,279/- being sale consideration of one-third share in the land is treated as being undisclosed capital gain in the hands of assessee and is, therefore, added to the total income of the assessee. It is further submitted that against the order passed by the Assessing Officer, the assessee preferred appeal before the first appellate authority i.e. CIT Appeals and the CIT Appeals allowed the appeals filed by the assessee, against which, revenue preferred appeals before the Tribunal and the Tribunal, by impugned common order, dismissed the appeals filed by the revenue and, therefore, present appeals have been filed.
5. In Tax Appeal No.9/2023, following substantial questions of law are proposed, "(a) Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT is justified in deleting the addition of Rs.13,86,85,279/- without appreciating the fact that the addition was made on the basis of incriminating documents, showing unaccounted land transactions carried out Page 2 of 13 Downloaded on : Mon Jul 03 20:42:51 IST 2023 C/TAXAP/9/2023 ORDER DATED: 03/07/2023 by the assessee, found and seized during the course of search proceedings?
(b) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is justified in treating the incriminating documents in the form of duly written and signed "Sauda Chithi' found and seized during the search action u/s. 132 of the Act carried out by the Department as dumb documents without appreciating the fact that the same carries a solid and complete evidentiary value and the person from whom the same was found and seized has admitted that it was found from his possession in the statement recorded on oath and the contents therein were also clearly explained as to be pertaining to the unaccounted transactions of land in question as also there was no denial of the fact that the assessee was one of the co- owners of the property in question?
(c) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is justified in not appreciating the fact that the Valuation Report of the DVO was mere estimate based on sale instances of the locality as per their Jantri Value without taking into consideration the incriminating and corroborative evidences in respect of the Page 3 of 13 Downloaded on : Mon Jul 03 20:42:51 IST 2023 C/TAXAP/9/2023 ORDER DATED: 03/07/2023 very land in question, found and seized during the course of search proceedings and the overall development of the area in which the land in question was situated which includes the Dream City project?
(d) Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT is justified in not appreciating that the assessee has not been able to bring on record any cogent explanation in respect of 'Sauda Chithi' being not a live evidence and therefore, the admission of Shri Majoj C Patel regarding the entirety of the transaction and involvement of 'on money' in the land transaction in question has to be given full credence?
(e) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is justified in not appreciating that the subsequent retraction of statement was only for the purpose of convenience of the parties involved in the whole land transaction and should not be guiding the appellate authority leading the ignoring of the clinching evidence brought on record?
(f) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is justified in observing and laying emphasis that an opportunity for Page 4 of 13 Downloaded on : Mon Jul 03 20:42:51 IST 2023 C/TAXAP/9/2023 ORDER DATED: 03/07/2023 cross examination was not granted to the assessee, which is baseless as the assessee was granted ample opportunity by the Investigating Officer before preparation of appraisal report as also by the Assessing Officer during the course of assessment proceeding and the assessee, however, choose not to avail them for the reason best known to him and, therefore, demand of cross examination which would at best be 'self-serving' should have been rejected/ ignored?"
6. In Tax Appeal No.10/2023 as well as Tax Appeal No.680/2022, similar substantial questions of law are proposed by the revenue.
7. Learned Standing Counsel for the appellant has referred to the observations made by the Tribunal in the impugned order and, thereafter, mainly contended that the Tribunal has committed an error while treating incriminating documents in the form of duly written and signed "Sauda Chithhi" found and seized during the search action taken under Section 132 of the IT Act carried out by the department as dumb documents without appreciating the fact that same carries a solid and complete evidentiary value and the person from whom the same was found and seized, has specifically admitted that it was found from his possession in the statement recorded on oath and the contents therein were also clearly explained as to be Page 5 of 13 Downloaded on : Mon Jul 03 20:42:51 IST 2023 C/TAXAP/9/2023 ORDER DATED: 03/07/2023 pertaining to unaccounted transactions of land in question. It is also submitted that the Tribunal has not properly appreciated the fact that the valuation report of DVO was mere estimate based on sale instances of the locality as per their jantri value without taking into consideration the incriminating and corroborative evidences in respect of the very land in question, found and seized during the course of search proceedings. Learned Standing Counsel appearing for the appellant - revenue, therefore, urged that as the substantial questions of law as suggested by the revenue, are involved in the present appeals, same to be admitted and, thereafter, same to be allowed.
8. We have heard learned Standing Counsel appearing for the appellant - revenue and also considered the submissions canvassed by learned advocate for the appellant - revenue.
9. It is pertinent to note at this stage that this Court in Tax Appeal No.162/2021 has passed an order on 15.07.2021 and after considering various decisions rendered by the Hon'ble Supreme Court, this Court has discussed what is the meaning of substantial questions of law. This Court in the said order in Paragraph Nos.11 and 12 has observed as under, "11. It may be noted that the Appeal under Section 260A could be admitted only on the High Court being satisfied that the case involves a Page 6 of 13 Downloaded on : Mon Jul 03 20:42:51 IST 2023 C/TAXAP/9/2023 ORDER DATED: 03/07/2023 substantial question of law. The Supreme Court in the case of M. Janardhana Rao versus Joint Commissioner of Income Tax reported in (2005) 2 SCC 324, while dealing with the scope of Section 260A of the Income Tax Act, 1961, observed as under : -
"14. Without insisting on the statement of substantial question of law in the memorandum of appeal and formulating the same at the time of admission, the High Court is not empowered to generally decide the appeal under Section 260A without adhering to the procedure prescribed under Section 260A. Further, the High Court must make every effort to distinguish between a question of law and a substantial question of law. In exercise of powers under Section 260A, the findings of fact of the Tribunal cannot be disturbed. It has to be kept in mind that the right of appeal is neither a natural nor an inherent right attached to the litigation. Being a substantive statutory right, it has to be regulated in accordance with law in force at the relevant time. The conditions mentioned in Section 260A must be strictly fulfilled before an appeal can be maintained under Section 260A. Such appeal cannot be decided on Page 7 of 13 Downloaded on : Mon Jul 03 20:42:51 IST 2023 C/TAXAP/9/2023 ORDER DATED: 03/07/2023 merely equitable grounds.
15. An appeal under Section 260A can be only in respect of a 'substantial question of law'. The expression 'substantial question of law' has not been defined anywhere in the statute. But it has acquired a definite connotation through various judicial pronouncements. In Sir Chunilal V. Mehta & Sons Ltd. v. Century Spinning & Mfg. Co. Ltd., AIR (1962) SC 1314, this court laid down the following tests to determine whether a substantial question of law is involved. The tests are: (1) whether directly or indirectly it affects substantial rights of the parties, or (2) the question is of general public importance, or (3) whether it is an open question in the sense that issue is not settled by pronouncement of this Court or Privy Council or by the Federal Court, or (4) the issue is not free from difficulty, and (5) it calls for a discussion for alternative view. There is no scope for interference by the High Court with a finding recorded when such finding could be treated to be a finding of fact.
12. Again the Supreme Court in case of Vijay Kumar Talwar versus Commissioner of Income Tax in (2011) 330 ITR 1 considered the issue Page 8 of 13 Downloaded on : Mon Jul 03 20:42:51 IST 2023 C/TAXAP/9/2023 ORDER DATED: 03/07/2023 of substantial question in context of Section 260A of the IT Act and observed as under:
"18. It is manifest from a bare reading of the Section that an appeal to the High Court from a decision of the Tribunal lies only when a substantial question of law is involved, and where the High Court comes to the conclusion that a substantial question of law arises from the said order, it is mandatory that such question(s) must be formulated. The expression "substantial question of law"
is not defined in the Act. Nevertheless, it has acquired a definite connotation through various judicial pronouncements. In Sir Chunilal V. Mehta & Sons, Ltd.
Vs. Century Spinning and Manufacturing
Co. Ltd., AIR 1962 SC 1314 a
Constitution Bench of this Court, while explaining the import of the said expression, observed that:
"The proper test for determining whether a question of law raised in the case is substantial would, in our opinion, be whether it is of general public importance or whether it directly and substantially affects the rights of the parties and if so whether it is either an open question in the sense that it Page 9 of 13 Downloaded on : Mon Jul 03 20:42:51 IST 2023 C/TAXAP/9/2023 ORDER DATED: 03/07/2023 is not finally settled by this Court or by the Privy Council or by the Federal Court or is not free from difficulty or calls for discussion of alternative views. If the question is settled by the highest Court or the general principles to be applied in determining the question are well settled and there is a mere question of applying those principles or that the plea raised is palpably absurd the question would not be a substantial question of law."
19. Similarly, in Santosh Hazari Vs. Purushottam Tiwari (2001)3 SCC 179 a three judge Bench of this Court observed that:
"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,AIR 1962 SC 1314 (2001) 3 SCC 179 and must have a material bearing on the decision of the case, if answered either way, insofar as the rights of the parties before it are concerned.
Page 10 of 13 Downloaded on : Mon Jul 03 20:42:51 IST 2023C/TAXAP/9/2023 ORDER DATED: 03/07/2023 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. An entirely new point raised for the first time before the High Court is not a question involved in the case unless it goes to the root of the matter. It will, therefore, depend on the facts and circumstance of each case whether a question of law is a substantial one and involved in the case, or not; the paramount overall consideration being the need for striking a judicious balance between the indispensable obligation to do justice at all stages and impelling necessity of avoiding prolongation in the life of any lis."
20. In Hero Vinoth (Minor) Vs. Seshammal (2006) 5 SCC 545, 556, this Court has observed that:
"The general rule is that High Court will not interfere with the Page 11 of 13 Downloaded on : Mon Jul 03 20:42:51 IST 2023 C/TAXAP/9/2023 ORDER DATED: 03/07/2023 concurrent findings of the courts below. But it is not an absolute rule. Some of the well-recognised exceptions are where (i) the courts below have ignored material evidence or acted on no evidence; (ii) the courts have drawn wrong inferences from proved facts by applying the law erroneously; or (iii) the courts have wrongly cast the burden of proof. When we refer to "decision based on no evidence", it not only refers to cases where there is a total dearth of evidence, but also refers to any case, where the evidence, taken as a whole, is not reasonably capable of supporting the finding."
21. A finding of fact may give rise to a substantial question of law, inter alia, in the event the findings are based on no evidence and/or while arriving at the said finding, relevant admissible evidence has not been (2006) 5 SCC 545 taken into consideration or inadmissible evidence has been taken into consideration or legal principles have not been applied in appreciating the evidence, or when the evidence has been misread. (See: Madan Lal Vs. Mst. Gopi & Page 12 of 13 Downloaded on : Mon Jul 03 20:42:51 IST 2023 C/TAXAP/9/2023 ORDER DATED: 03/07/2023 Anr. (1980) 4 SCC 855; Narendra Gopal Vidyarthi Vs. Rajat Vidyarthi (2009) 3 SCC 287; Commissioner of Customs (Preventive) Vs. Vijay Dasharath Patel (2007) 4 SCC 118; Metroark Ltd. Vs. Commissioner of Central Excise, Calcutta (2004) 12 SCC 505; West Bengal Electricity Regulatory Commission Vs. CESC Ltd. (2002) 8 SCC 715)."
10. We have gone through the observations made by the Tribunal while passing impugned common order. We have also considered the submissions canvassed by learned Standing Counsel for the revenue. If the facts of the present case are examined on touch stone of the decisions rendered by the Hon'ble Supreme Court as observed hereinabove, we are of the opinion that the present appeals do not involve any substantial question of law.
11. Hence, all these appeal deserve to be dismissed and accordingly stand dismissed.
Sd/-
(VIPUL M. PANCHOLI, J.) Sd/-
(D. M. DESAI, J.) Gautam Page 13 of 13 Downloaded on : Mon Jul 03 20:42:51 IST 2023