M/S THE COMMERCIAL CORPORATION OF INDIA LTD. vs. THE DEPUTY COMMISSIONER

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ITA/166/2021HC KarnatakaKAHC01026854202008 October 2026Bench: S.G.PANDIT,CHILLAKUR SUMALATHA6 pages
AI SummaryRemanded

What did the High Court hold?

The High Court observed that the ITAT had answered grounds 3 to 7 and 20, but incorrectly recorded that no other grounds were urged. The Court noted that grounds 8 to 19 were raised in the appeal memorandum and elaborately recorded by the Tribunal in its paragraph 4. Since the Tribunal had the submissions on record, it ought to have answered these grounds. Consequently, the impugned order of the ITAT was set aside specifically concerning the non-consideration of grounds 8 to 19. The matter was remitted back to the ITAT for consideration of these grounds. The substantial questions of law and contentions of both parties were left open for the Tribunal to decide.

What were the facts?

The assessee, M/s. The Commercial Corporation of India Ltd., filed an appeal before the High Court of Karnataka under Section 260A of the Income Tax Act, 1961. The appeal challenged an order dated 28.02.2020 passed by the Income Tax Appellate Tribunal (ITAT), Bengaluru Bench 'A'. The ITAT's order pertained to the block period from 01.04.1987 to 21.01.1997. The assessee contended that the ITAT failed to consider several grounds of appeal (Ground Nos. 8 to 19) on the erroneous premise that no arguments were advanced on these issues, despite the Tribunal itself recording submissions on these grounds. The revenue did not dispute this contention.

What were the issues?

1. Whether the Tribunal was justified in not canceling the income assessed in the block assessment when the entire income was disclosed in regular returns filed prior to the search, thus not constituting undisclosed income under Section 158BB read with Section 158BC of the Act? (Question of law) 2. Whether the Tribunal was right in holding that the appellant did not advance arguments on grounds other than Ground Nos. 3 to 7 and 20, when the Tribunal's own order recorded the appellant's submissions on these grounds, entitling the appellant to findings on merits? (Question of mixed law and fact) 3. Whether the Tribunal was right in implicitly sustaining the disallowance on sales return and commission expenses for AY 1991-92 and capital gains for AY 1996-97 without considering the appellant's submissions and evidence? (Question of mixed law and fact) Assessee's contentions: The Tribunal erred in stating that arguments were not advanced on grounds 8 to 19, as these grounds were urged and elaborated upon, as recorded by the Tribunal itself. Therefore, the Tribunal ought to have adjudicated all grounds raised. Revenue's contentions: The revenue's counsel was not in a position to dispute the assessee's contention regarding the non-consideration of grounds 8 to 19 and submitted that the Tribunal should decide these grounds.

Which sections of the Income-tax Act were involved?

Section 260A,Section 158BB,Section 158BC

AI-generated summary — verify with the full judgment below

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HC-KAR CNR: KAHC010268542020 NC: 2026:KHC:56394-DB ITA No. 166 of 2021 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 8TH DAY OF OCTOBER, 2026 PRESENT THE HON'BLE MR. JUSTICE S.G.PANDIT AND THE HON'BLE DR. JUSTICE CHILLAKUR SUMALATHA INCOME TAX APPEAL NO. 166 OF 2021 BETWEEN: M/S. THE COMMERCIAL CORPORATION OF INDIA LTD., TILE FACTORY ROAD, MANIPAL -576 104 (PAN. CN-0017) REPRESENTED BY ITS DIRECTOR, SRI. K. MADHAVA KINI, AGED 59 YEARS SON OF SRI K. RAGHAVENDRA KINI. …APPELLANT (BY SRI. S PARTHASARATHI, ADVOCATE AND MISS. JINITA CHARTTERJEE, ADVOCATE) AND: THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, CANARA TOWERS, MISSION HOSPITAL ROAD, UDUPI-576 101. …RESPONDENT (BY SRI. E.I. SANMATHI, ADVOCATE)

THIS ITA / INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 28/02/2020 PASSED IN IT(SS)A Digitally signed by AASEEFA PARVEEN Location: HIGH COURT OF KARNATAKA

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HC-KAR CNR: KAHC010268542020 NC: 2026:KHC:56394-DB ITA No. 166 of 2021 NO.7/BANG/2011, FOR THE BLOCK PERIOD FROM 01/04/1987 TO 21/01/1997, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE AND ALLOW THE APPEAL AND TO SET-ASIDE THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU BENCH A DATED 28/02/2020 BEARING IT(SS)A NO.7/BANG/2011 FOR THE BLOCK PERIOD FROM 01/04/1987 TO 21/01/1997 WITH RESPECT TO GROUND NOS. 1, 2 AND 8 TO 19 RAISED ON ISSUES OTHER THAN DEPRECIATION ALLOWANCE AND SURCHARGE.

THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE S.G.PANDIT and HON'BLE DR. JUSTICE CHILLAKUR SUMALATHA ORAL JUDGMENT (PER: HON'BLE MR. JUSTICE S.G.PANDIT) Assessee is before this Court under Section 260A of the Income Tax Act, 1961 questioning the order dated 28.02.2020 bearing No.IT(SS)A.No.7/Bang/2011 passed by the Income Tax Appellate Tribunal, Bengaluru Bench 'A' for the block period from 01.04.1987 to 21.01.1997.

2.

Heard learned Senior counsel Sri.Parthasarathi for learned counsel Smt.Jinita Chartterjee for the appellant

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HC-KAR CNR: KAHC010268542020 NC: 2026:KHC:56394-DB ITA No. 166 of 2021 and learned counsel Sri.E.I.Sanmathi for respondent- revenue.

3.

The appellant has raised the following three substantial questions of law: (i) Whether the Tribunal was justified in not canceling the income assessed in the block assessment when the entire income stood disclosed in the regular returns filed by the appellant much anterior to the date of search and thus did not constitute undisclosed income for the purposes of Section 158BB read with Section 158BC of the Act? (ii) Whether the Tribunal was right in holding that the appellant did not advance arguments about the grounds raised other than Ground Nos.3 to 7 and 20 when the Tribunal itself recorded the submission of the appellant in para 4 of its order and to that extent was the appellant not entitled to the findings of the Tribunal on those issues raised in the grounds on merits? (iii) Whether the Tribunal was right in impliedly sustaining the disallowance on sales return and commission expenses claimed by the appellant for the assessment year 1991-92 and capital gains for the assessment year 1996-97 without considering the submissions of the appellant and evidence and explanations submitted?

4.

However, learned Senior Counsel Sri.Parthasarathi who appeared through video conference, before entering in to the merits of the appeal pointed out

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HC-KAR CNR: KAHC010268542020 NC: 2026:KHC:56394-DB ITA No. 166 of 2021 that the Tribunal failed to consider grounds except the ground Nos.3 to 7 and 20 relating to disallowance/addition in respect of depreciation and levy of surcharge, on the ground that no arguments was advanced. Learned Senior Counsel would invite our attention to paragraph Nos.3 and 4 of the impugned order passed by the Income Tax Appellate Tribunal to point out that the ground Nos.8 to 19 were urged and it was elaborated at paragraph No.4.

5.

Learned Senior Counsel would submit that the appellant had urged the grounds at paragraph Nos.8 to 19 and the Tribunal is not correct in recording that no arguments other than ground Nos.3 to 7 and 20 were urged. When the appellant had urged all the grounds, the Tribunal ought to have answered all the grounds urged by the appellant.

6.

Learned counsel Sri.E.I.Sanmathi is not in a position to dispute the same. However, he submits that let

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HC-KAR CNR: KAHC010268542020 NC: 2026:KHC:56394-DB ITA No. 166 of 2021 the Tribunal decide on the grounds raised at paragraph Nos.8 to 19 of the appeal memorandum.

7.

A perusal of the impugned order under challenge would indicate that the Tribunal has answered the grounds raised at ground Nos.3 to 7 and 20 at paragraph Nos.12 and 13 of the impugned order. However, the Tribunal is not proper in recording that no other ground except ground Nos.3 to 7 and 20 were urged. When the grounds are raised in the appeal memorandum and which are elaborately recorded by the Tribunal in its paragraph No.4 of the order, it ought to have answered the other grounds also.

8.

In the above circumstances impugned order dated 28.02.2020 bearing No.IT(SS)A.No.7/Bang/2011 passed by the Income Tax Appellate Tribunal, Bengaluru Bench 'A' for the block period from 01.04.1987 to 21.01.1997 is set aside only insofar as non-consideration of ground Nos.8 to 19 raised in the appeal memorandum

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HC-KAR CNR: KAHC010268542020 NC: 2026:KHC:56394-DB ITA No. 166 of 2021 and the matter is remitted back to the Tribunal to consider the ground Nos.8 to 19 raised in the appeal memorandum. Questions of law raised herein are left open. All contentions of the parties are also left open. Sd/- (S.G.PANDIT) JUDGE Sd/- (DR.CHILLAKUR SUMALATHA) JUDGE NS CT:TSM List No.: 1 Sl No.: 15

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