1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR J U D G M E N T INCOME TAX APPEAL NO.158/2010 COMMISSIONER OF INCOME TAX, BIKANER Vs. SH. LAXMAN RAM DHATTARWAL Date of Judgment : 22.12.2010 HON'BLE MR. JUSTICE A.M. SAPRE HON'BLE MR. JUSTICE C.M. TOTLA Mr. K.K. Bissa, for the appellant. BY THE COURT : (PER HON'BLE SAPRE,J.) This is an appeal filed by the Commissioner of Income Tax under Section 260-A of the Income Tax Act against an order dated 31.5.2010 passed by I.T.A.T., Jodhpur Bench, Jodhpur (for short called Tribunal) in I.T.A. No.508/JU/2008 for the period AY 2005-2006. 2. By the impugned order, the Tribunal allowed the assessee's appeal in part and reversed the order of Commissioner of Appeals on the issue raised in this appeal. 3. So the question that arises for consideration in this intra court appeal is whether it involves any substantial question of law within the meaning of Section 260-A ibid? 4. Having heard the learned counsel for the appellant and on perusal of record of the case, we are inclined to dismiss the appeal in limine as in our opinion the appeal does not involve any substantial question of law as is required to be made out within the meaning of Section 260-A ibid. 2 5. The issue relates to certain additions made by the A.O. in the course of assessment proceedings initiated against the assessee under the Act. The A.O. did not accept the explanation offered by assessee and treating the said amount to be that of assessee added in his total income. The CIT (Appeal) and the Tribunal set aside the order of A.O. in so far as it related to additions made by him (AO). In other words, CIT (Appeal) and the Tribunal accepted the factual explanation coupled with the evidence tendered by assessee in relation to the impugned additions made by A.O. and held that since the same have been properly explained and hence, they can not be included while computing the total income of the assessee. 6. In substance, the issue involved in the appeal was in relation to addition/deletion of Rs.40,69,633/- added by AO under Section 68 of the Act in the hands of assessee in the assessment year under consideration. According to AO, this amount was shown by assessee as loan from 12 persons was not explained and hence it was liable to be added in the total income of assessee. The AO did not find explanation offered by the assessee to be plausible and accordingly added the amount treating it to be his income from unexplained source under Section 68 ibid. It was, however, reversed by CIT (Appeal) in an appeal filed by assessee when CIT (Appeal) allowed the appeal and upheld by Tribunal in an appeal filed by the Revenue when appeal of Revenue was dismissed in so far as the impugned additions was concerned. This is what Tribunal held by upholding the order of CIT (Appeal) and accepting the explanation of assessee:- “Now coming to theother issue raised by the department in appeal is the addition in cash credit u/s 68 of IT Act, it is found that during the period under consideration the assessee has taken loan from 12 3 persons amounting to Rs.40,69,633. The Assessing Officer has made addition on the ground that the assessee has failed to discharge his onus i.e. Establishing the genuineness and creditworthiness of the creditors. The rule of law is that the initial burden lies on the assessee. In this case the assessee has established the identity of the creditors and capacity of the creditors and genuineness of the transaction. Hon'ble Calcutta High Court in Shankar Inds V CIT, 114 ITR 689 (Cal) and Jurisdiction High Court of Rajasthan reiterated the same view in CIT V First Point Finance Ltd, 286 ITR 477 (Raj) and held that once the initial burden has been discharged in respect of the identity of investors, about their existence and the confirmation from such investors has been obtained, the burden shifts to the Revenue toprove otherwise, not only that the invested amount did not belong to the creditors but further it has to prove the said amount belonging to the assessee. Under these facts, it is seen that the assessee has filed confirmations of all the balances and proved credit worthiness and the department has found that the traders not changed, hence in this view, the action of the Ld. CIT(A) in deleting the addition made by the Assessing Officer u/s Sec 68 of IT Act, is well reasoned one and hence not suffering from any infirmity requiring any interference. Therefore, we are of the considered view that the grounds raised in the appeal of the department are devoid of merit. Hence the same is hereby dismissed. ” 4 7. Learned counsel for the appellant (Revenue) contended that firstly Tribunal erred in accepting the explanation offered by Assessee in relation to source of income. His second submission was that what was offered by the Assessee was no explanation at all and hence it should not have been accepted. His third submission was to persuade us through factual scenario of the explanation to contend that it can never be taken as satisfactory explanation for deleting the addition made by Assessing Officer. We do not agree to any of these submissions for more than one reason. 8. In the first place, what is involved in the case is a pure question of fact and not any question of law much less substantial question of law. Secondly, this Court cannot again in this appeal undertake the examination of factual issues nor can draw factual inferences on the basis of explanation offered by assessee. Thirdly, once the explanation is accepted by an appellate court, then in such event, a finding recorded on such explanation is binding on the High Court. 9. Perusal of the impugned finding quoted supra would go to show that Tribunal did examine the explanation offered by assessee in detail and then upheld the finding of CIT(Appeal) for its acceptance. 10. In our opinion, therefore, once the CIT(Appeal) and the Tribunal accepted the explanation of assessee and accordingly, deleted certain additions made by A.O. then it would not involve any substantial issue of law as such. In other words, this Court in its appellate jurisdiction under Section 260-A ibid, would not again denovo hold yet another factual inquiry with a view to find out as to whether explanation offered by assessee and which found acceptance to the Tribunal is good or bad, or whether it was rightly accepted, or not. It is only when the factual finding recorded 5 had been entirely dehors the subject, or that it had been based on no reasoning, or based on absurd reasoning to the extent that no prudent man of average judicial capacity could ever reach to such conclusion, or that it had been found against any provision of law, then a case for formulation of substantial question of law on such finding can be said to have been made out. 11. We thus, do not find any merit in the appeal. It fails and is dismissed in limine by holding that it does not involve any substantial question of law. No costs. [C.M. TOTLA ], J. [A .M. SAPRE],J. /Anil/