2003 (9) TMI 41 - HC - Income Tax

Additions on account of unexplained cash credit - substantial question of law - The Commissioner of Income-tax (Appeals) 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. - no question of law, much less a substantial question of law, arises from the impugned order whereby tribunal has sustained the additions

Summary

Issues:
Assessment of unexplained cash credit in books of account for the assessment year 1998-99.

Analysis:
The judgment pertains to an appeal by the assessee under section 260A of the Income-tax Act, 1961 against an order passed by the Income-tax Appellate Tribunal regarding the assessment year 1998-99. The Assessing Officer had noted a loan of Rs. 1 lakh from a creditor in the assessee's books of account and required evidence to prove the genuineness of the loan. Despite producing some documents, the Assessing Officer concluded that the source of the cash deposits by the creditor remained unexplained and added the amount to the total income as unexplained cash credit.

The Commissioner of Income-tax (Appeals) examined the evidence in detail and found deficiencies, including a lack of information in the bill of the jewellers related to the sale of jewellery by the creditor. Consequently, the Commissioner upheld the addition of the amount as unexplained cash credit. The assessee then appealed to the Tribunal, which dismissed the appeal, leading to the current appeal before the High Court.

The counsel for the assessee argued that the identity of the creditor was proven, and the onus to prove the genuineness and creditworthiness of the creditor was discharged by producing evidence. However, the High Court disagreed, emphasizing that the appeal under section 260A is limited to adjudication on a "substantial question of law." The court clarified the definition of a substantial question of law based on judicial precedents, highlighting that it must directly or indirectly affect the parties' rights or involve doubt or difference of opinion.

In this case, the creditor attempted to explain the source of the funds deposited, but upon re-appraisal of the evidence, the Commissioner found inconsistencies, including doubts about the documents related to the sale of jewellery. The High Court concluded that the Tribunal's finding was based on cogent material and not perverse, as argued by the counsel for the assessee. Therefore, the High Court declined to entertain the appeal, ultimately dismissing it as no question of law, let alone a substantial question of law, arose from the impugned order.