Genuineness of transaction as a factual issue: High Court upheld income addition for lack of supporting evidence.

The Madras High Court noted that an appeal under section 260A of the Income-tax Act could not succeed because the dispute centred on whether the impugned sum was a genuine transaction or a bogus entry, a pure question of fact. As the assessee failed to produce the material and confirmatory evidence earlier directed, the finding that the amount constituted income in the assessee's hands was not disturbed. The Court further stated that rule 6DD(j) had no application in the absence of supporting evidence. No substantial question of law was found to arise, and the addition was upheld.

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Issues: Whether the appeal under section 260A of the Income-tax Act, 1961 disclosed any substantial question of law, and whether the addition sustained on the basis of the assessee's failure to establish the genuineness of the transactions could be interfered with.

Analysis: The controversy turned on whether the disputed sum represented a genuine transaction or a bogus entry, which was treated as a pure question of fact. The assessee had failed to comply with earlier directions to produce material and confirmatory evidence to verify the transaction, and therefore the finding that the amount was income in the assessee's hands could not be faulted. The Court also held that rule 6DD(j) did not arise for application in the absence of supporting evidence.

Conclusion: No substantial question of law arose, and the addition based on the unexplained and unproved transaction was upheld.

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