2004 (5) TMI 18 - HC - Income Tax

Question of law - issue involved in this case relates to addition/deletion of certain amount under section 69 - the impugned addition was not sustained in view of the satisfactory explanation offered by the assessee in relation to the source of income. Now, once the explanation offered by the assessee is accepted by the taxing authorities and the same having been upheld up to the Tribunal in second appeal, then, in our opinion, no question of law as such arises in this case which can be said to be a referable question for answer u/s 256(1) - Since, in our opinion, the issue being mostly of facts and no issue of law is involved, there is no case made out for allowing this application and calling for any reference - application is dismissed.

Summary

Issues:
Application for reference under section 256(2) of the Income-tax Act, 1961 regarding questions of law arising from Tribunal's order under section 256(1) of the Act.

Analysis:
The judgment delivered by A.M. Sapre J. pertains to an application made by the Revenue (Income-tax Department) seeking a reference to the High Court on certain questions of law arising from the Tribunal's order. The Tribunal had previously dismissed the Revenue's application under section 256(1) of the Act, leading to this subsequent application under section 256(2) of the Act. The issue primarily revolves around the addition/deletion of a certain amount under section 69 of the Act. The Tribunal had accepted the explanation provided by the assessee, resulting in the deletion of the impugned addition. As a result, the Tribunal held that no referable question of law arose in this case, especially since the explanation offered by the assessee had been accepted by the taxing authorities and upheld up to the Tribunal in the second appeal.

The High Court, after hearing the arguments of both parties and examining the case record, concurred with the Tribunal's decision to reject the Revenue's application under section 256(1) of the Act. The Court opined that since the issue primarily involved factual considerations and the explanation provided by the assessee had been found satisfactory by the authorities, no substantial question of law emerged that warranted a reference under section 256(1) of the Act. Consequently, the Court dismissed the Revenue's application, emphasizing that no issue of law was present, and no grounds existed to call for any reference in this matter.