Delhi High Court
Commissioner Of Income-Tax vs Gagan Auto General Finance And ... on 12 December, 1997
Equivalent citations: [1999]235ITR781(DELHI)
Author: R.C. Lahoti
Bench: J.B. Goel, R.C. Lahoti
JUDGMENT
R.C. Lahoti J.
1. This is a petition under section 256(2) of the Income-tax Act, 1961, filed by the Revenue seeking a direction to the Income-tax Appellate Tribunal, Delhi, for drawing up a statement of case and referring the following question for the opinion of the High Court :
"Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that the onus on the assessee within the meaning of section 69A had shifted on to the Department merely by owning up the seized cash in the hands of the director and paying taxes on it ?"
2. Learned senior standing counsel for the Revenue has contended that the above said question arises as a question of law from the order of the Tribunal and, therefore, the Tribunal was not justified in declining the reference under section 256(1) of the Act. Learned counsel for the respondent-assessee has submitted that the findings recorded by the Tribunal are mainly on facts and hence no question of law arises therefrom.
3. The assessee-company is carrying on the business of lending and borrowing money on interest. A search was conducted by the Enforcement Directorate at the business premises of the company on July 21, 1985. A sum of Rs. 7,52,980 was recovered and seized. Out of this, a sum of Rs. 6,35,000 was seized from the company's premises while a sum of Rs. 1,17,980 was recovered from a brief-case lying in the company's premises. The amount was requisitioned from the Directorate of Enforcement. The assessee was called upon to prove the nature and source of possession of the amount so seized. The assessee submitted a written explanation that the amount belongs to Shri O. P. Lamba who is carrying on some commission business and the assessee-company has nothing to do with this amount. Shri O. P. Lamba is the managing director of the company. Shri O. P. Lamba moved a petition before the Settlement Commission, owning the above said amount and offering to pay tax thereon.
4. The Assessing Officer was not satisfied with the explanation given by the assessee and, therefore, he added the disputed amount as unexplained in the hands of the company under section 69A of the Act. The Commissioner of Income-tax (Appeals) maintained the order of the Assessing Officer.
5. The assessee preferred a further appeal to the Tribunal. The Tribunal has accepted the appeal of the assessee and directed the finding to be deleted. A perusal of the order of the Tribunal (para. 7) shows the Tribunal having assigned very many reasons for reversing the finding of the authorities below. To sum up, the Tribunal has, vide its appellate order, found :
"(i) Shri O. P. Lamba (a) admitted the possession of this money; (b) moved an application before the Settlement Commission offering the amount for taxation in his hands; (c) the application of Shri O. P. Lamba has been admitted by the Settlement Commission.
(ii) Shri O. P. Lamba (a) was the managing director of the assessee-company, (b) was also carrying on some business in his individual capacity utilising the premises of the assessee-company for this purpose, and (c) was having his own telephone number (in the company premises).
(iii) The premises (from which recovery and seizure had taken place) was jointly used by the company for its business and by O. P. Lamba for his individual business and there is nothing to show that the amount was in fact in the possession and control of the assessee-company."
6. On the above said findings, the Tribunal has concluded by holding that the cash recovered by the Enforcement Directorate during the search had been satisfactorily explained as per the requirement of the provisions of section 69A of the Act, which provides as under :
"69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation, offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year."
7. A bare reading of the above said provision shows that it permits a presumption being drawn if the explanation offered is not found to be satisfactory. It is a permissible presumption of law. It may be raised or may not be raised. If raised, it may be found to have been rebutted.
8. Learned counsel for the assessee has forcefully submitted that, the question as framed and suggested by the Revenue does not lay challenge to any of the findings recorded by the Tribunal and so long as the findings remain binding on the High Court, the question as suggested would not arise as a question of law. He has placed reliance on a few decisions which are referred to in the succeeding paragraphs.
9. In Patnaik and Co. Ltd. v. CIT , it has been held (headnote) :
"It is now well-settled that the Appellate Tribunal is the final fact-finding authority under the Income-tax Act and that the court has no jurisdiction to go behind the statements of fact made by the Tribunal in its appellate order. The court may do so only if there is no evidence to support the findings or the Appellate Tribunal has misdirected itself in law in arriving at the findings of fact. But even there, the court cannot disturb the findings of fact given by the Appellate Tribunal unless a challenge is directed specifically by a question framed in a reference against the validity of the impugned findings of fact on the ground that there is no evidence to support them or they are the result of a misdirection in law."
10. In Karnani Properties Ltd. v. CIT [1971] 82 ITR 547 (SC), it has been held (headnote) :
"When the question referred to the High Court speaks of 'on the facts and in the circumstances of the case', it means on the facts and circumstances found by the Tribunal and not facts and circumstances that may be found by the High Court on a reappraisal of the evidence. In the absence of a question whether the findings were vitiated for any reason being before the High Court, the High Court has no jurisdiction to go behind or question the statements of fact made by the Tribunal."
11. In Gouri Prasad Bagaria v. CIT , the Income-tax Officer found a sum of Rs. 72,523 credited in the assessee's account books in the name of his father. The Income-tax Officer called upon the assessee to explain why the amount be not treated as income from some unknown source. The explanation offered by the assessee was not accepted by the Income-tax Officer and the amount was added to the income of the assessee. However, on appeal, the Appellate Tribunal accepted the explanation of the assessee and ordered the amount to be excluded from assessment. In an appeal arising out of a reference, their Lordships have held (page 115) :
"When the assessee's statement was believed, there was obviously material on which the finding of the Tribunal was based; and to seek for other material was tantamount to saying that a statement made by an assessee was not material on which a finding can be given. The Tribunal having believed the assessee's statement, there was an end of the matter in so far as that fact was concerned, and if the finding was based upon a statement which was good material on which it could be based, no question of law really arose."
12. In the case at hand we find the statement of the assessee having been believed by the Tribunal. Facts and circumstances have been set out in the order of the Tribunal considered relevant by it so as to record a finding in favour of the assessee and holding that the explanation offered by the assessee was satisfactory and hence acceptable. The question suggested by the Revenue does not lay specific challenge to the correctness of the findings so arrived at by the Tribunal. The question as framed does not therefore arise as a question of law from the order of the Tribunal to be more specific, "on the facts and circumstances" found by the Tribunal.
13. The petition under section 256(2) of the Income-tax Act, 1961, is therefore, rejected.