2012 (7) TMI 554 - HC - Income Tax

Substantial question of law - Block assessment - Undisclosed income - unexplained cash - Block period u/s 158BC/143(3)by AO - Held that - Tribunal were fully justified in coming to this conclusion by rightly placing reliance or the decision of the Bombay High Court CIT vs Shamlal Balram 2000 (2) TMI 37 - BOMBAY HIGH COURT that the question proposed is not a substantial question of law.

Summary

Issues Involved:
1. Whether the Tribunal was justified in upholding the order of the Commissioner of Income Tax (Appeals) and confirming the deletion of the addition made by the Assessing Officer (A.O.) despite excess cash found during the search.
2. Whether the Tribunal was justified in confirming the order of the Commissioner of Income Tax (Appeals) despite the respondent not disclosing Rs. 3,64,830 in the block period return.
3. Whether the Tribunal was justified in confirming the deletion of the addition of Rs. 2,36,000 on account of unexplained cash, Rs. 50,000 on account of unexplained investment in household goods, and Rs. 3,37,192 on account of unexplained marriage expenses.

Issue-wise Detailed Analysis:

Issue 1: Justification of Tribunal in Deleting Addition Despite Excess Cash Found
The Court observed that question 1 was general in nature and did not challenge any particular finding related to the deletion of cash seized. It was noted that the question was vague, incapable of being answered on its merits, and did not involve any legal issue. The Court held that question 1 did not arise out of the case and was not a substantial question of law but a pure question of fact. Therefore, the Tribunal's decision to uphold the order of the Commissioner of Income Tax (Appeals) was justified as it did not involve a substantial question of law.

Issue 2: Non-disclosure of Rs. 3,64,830 in Block Period Return
The Court examined whether the addition of Rs. 3,64,830 as undisclosed income was valid. The assessee argued that the amount fell within the assessment year 2001-2002, for which advance tax and TDS were paid before the raid, and the return was filed under Section 139 of the Act. The CIT (Appeals) and Tribunal accepted this argument, relying on a Bombay High Court decision (249 ITR 501), which held that such an amount could not be treated as undisclosed income if advance tax and TDS were paid, and no incriminating documents were found during the search. The Court agreed with this reasoning, concluding that the question did not involve a substantial question of law within the meaning of Section 260-A of the Act and upheld the Tribunal's decision.

Issue 3: Deletion of Additions for Unexplained Cash, Investments, and Marriage Expenses
The Court found that question 3 also involved questions of fact rather than substantial questions of law. It was noted that once the explanation offered by the assessee was accepted and a finding of fact was returned, such a finding was binding on the High Court under Section 260-A of the Act. The appellant failed to show that the finding of fact was perverse or against the evidence on record. Therefore, the Tribunal's decision to delete the additions of Rs. 2,36,000 for unexplained cash, Rs. 50,000 for unexplained investments in household goods, and Rs. 3,37,192 for unexplained marriage expenses was justified.

Conclusion:
The Court held that all three questions framed at the time of admission of the appeal did not satisfy the attributes of substantial questions of law but were essentially questions of fact. Consequently, the appeal was dismissed as it involved no substantial question of law.