THE PR COMMISSIONER OF INCOME TAX, vs. M/S BHAKTA MARKANDESHWARA MINERALS

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ITA/144/2021HC KarnatakaKAHC01008871202123 September 2024Bench: S.G.PANDIT,C.M. POONACHA4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court noted that the tax effect in the appeal was less than Rs. 2 Crores, making the appeal not maintainable at the instance of the Revenue in view of CBDT Circular No. 09/2024 dated September 17, 2024. The Revenue's counsel acknowledged this and sought liberty to revive the appeal if the matter fell within the exceptions under Circular No. 09/2024 and Circular No. 5/2024 dated March 15, 2024. The Court disposed of the appeal with the liberty as prayed for by the Revenue's counsel. The substantial questions of law were kept open to be adjudicated in an appropriate proceeding. No specific finding was given on the merits of the disallowance or the ITAT's order.

What were the facts?

The Revenue, comprising the Principal Commissioner of Income Tax and the Assistant Commissioner of Income Tax, filed an appeal before the High Court of Karnataka against an order of the Income Tax Appellate Tribunal (ITAT). The ITAT's order, dated July 31, 2020, pertained to Assessment Year 2010-11 and confirmed an order of the Appellate Commissioner. The appeal challenges the ITAT's deletion of a disallowance of expenses amounting to Rs. 3,36,52,141/-. The ITAT had held that these expenses were covered by a surrender of Rs. 4 Crores made by the assessee vide a letter dated March 28, 2011. The Revenue contended that the assessee-firm had not made any such admission of undisclosed income, and the surrender was in the hands of an individual, K. Mahesh Kumar, which was also subject to appeal.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal's order is perverse in deleting the disallowance of expenses amounting to Rs. 3,36,52,141/- by holding that it was covered by a Rs. 4 Crores surrender made by the assessee via a letter dated March 28, 2011, when the assessee had not made any admission of undisclosed income in the hands of K. Mahesh Kumar, and that surrender was subject to appeal? 2. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in directing the deletion of the disallowance of expenses, holding it to be covered by the 'surrender of Rs. 4 crores made in the hands of the assessee, the letter dated 28/3/2011', ignoring that no such surrender or admission of income was made by the assessee-firm in any Assessment Year, and that the said letter represented a surrender of income in the case of Shri Mahesh Kumar (a key person in the firm), which was also subject to appeal? Assessee's Contentions: Not recorded in the judgment. Revenue's Contentions: The Tribunal's order was perverse. The assessee-firm did not make any admission of undisclosed income. The surrender of Rs. 4 Crores was made by Shri Mahesh Kumar, a key person in the firm, and was subject to appeal. The ITAT's direction to delete the disallowance based on this surrender was incorrect.

Which sections of the Income-tax Act were involved?

Section 260-A

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:39400-DB ITA No. 144 of 2021

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 23RD DAY OF SEPTEMBER, 2024 PRESENT THE HON'BLE MR JUSTICE S.G.PANDIT AND THE HON'BLE MR JUSTICE C.M. POONACHA INCOME TAX APPEAL NO. 144 OF 2021 BETWEEN:

1.

THE PR COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, C R BUILDING, QUEENS ROAD, BENGALURU 560001

2.

THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 2 (1), C R BUILDING, QUEENS ROAD, BENGALURU 560001 …APPELLANTS (BY SRI. SUSHAL TIWARI N.,ADVOCATE)

AND:

M/S BHAKTA MARKANDESHWARA MINERALS DOOR NO 93, 3RD CROSS, WEAVERS CO OPERATIVE COLONY, HOSPET, KARNATAKA 583201 …RESPONDENT

THIS ITA / INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE, ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO. 1786/BANG/2017 DATED 31/07/2020 FOR ASSESSMENT YEAR 2010- 2011 ANNEXURE-C CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED THE ASSISTANT

Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:39400-DB ITA No. 144 of 2021

COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(1), BENGALURU AND ETC.

THIS APPEAL, COMING ON FOR FINAL HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

CORAM: HON'BLE MR JUSTICE S.G.PANDIT and HON'BLE MR JUSTICE C.M. POONACHA

ORAL JUDGMENT (PER: HON'BLE MR JUSTICE S.G.PANDIT)

Heard the learned counsel Sri Sushal Tiwari, for appellants/Revenue.

2.

The Revenue is in appeal under Section 260-A of the Income Tax Act, 1961 (for short, ‘the Act’) questioning the correctness and legality of order dated 31.7.2020 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.1786/Bang/2017 for the assessment year 2010-11, raising the following substantial questions of law: “1. "Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in deleting the disallowance of expenses claimed to the tune of Rs.3,36,52,141/- by holding that same is covered in Rs.4 Crores surrendered by assessee vide

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NC: 2024:KHC:39400-DB ITA No. 144 of 2021

letter dated 28.03.2011 when the assessee has not made any admission of undisclosed income in the hands of K.Mahesh Kumar and that is subject to appeal"?

2.

"Whether on the facts and in the circumstances of the case, the Tribunal is right in law in directing the assessing authority to delete the disallowance of expenses holding that the disallowance is under the 'surrender of Rs.4 crores made in the hands of the assessee, the letter dated 28/3/2011', ignoring that no such surrender or admission of income has been made by the assessee-firm in any of the Assessment Year and the said letter of the assessee is the surrender of income in the case of Shri.Mahesh Kumar (who is a key person in the firm) and that is also subject of appeal"?”

3.

It is noticed that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal would not be maintainable at the instance of the revenue in view of the Circular No.09/2024 dated 17.09.2024 issued by the Central Board of Direct Taxes. It is also submitted that the aforesaid Circular binds the revenue.

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NC: 2024:KHC:39400-DB ITA No. 144 of 2021

4.

On the other hand, learned counsel for the revenue submits that he be granted liberty to revive the appeal in case the matter falls within the exceptions under the aforesaid Circular dated 17.09.2024 and Circular No.5/2024 dated 15.03.2024.

5.

In view of the aforesaid submissions, the appeal is disposed of with liberty as prayed for by the learned counsel for the revenue. However, the question of law is kept open to be adjudicated in an appropriate proceeding.

Sd/- (S.G.PANDIT) JUDGE

Sd/- (C.M. POONACHA) JUDGE

ND List No.: 3 Sl No.: 0

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