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

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ITA/152/2021HC KarnatakaKAHC01008872202123 September 2024Bench: S.G.PANDIT,C.M. POONACHA4 pages
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What did the High Court hold?

The High Court noted that the tax effect in the appeal was less than Rs. 2 Crores, making it not maintainable at the instance of the revenue in view of CBDT Circular No. 09/2024 dated September 17, 2024. The Court acknowledged that this circular binds the revenue. The Revenue's counsel 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. In light of these submissions, the appeal was disposed of with the liberty as prayed for by the revenue. The substantial questions of law were kept open to be adjudicated in an appropriate proceeding. No decision was made on the merits of the substantial questions of law.

What were the facts?

The Revenue, comprising the Principal Commissioner of Income Tax and the Deputy Commissioner of Income Tax, filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order dated July 31, 2020, passed by the Income Tax Appellate Tribunal, Bengaluru. The appeal pertains to Assessment Year 2010-11 and challenges the Tribunal's deletion of a disallowance of expenses amounting to Rs. 3,36,52,141. The Revenue's contention was that this disallowance was erroneously linked by the Tribunal to a surrender of Rs. 4 Crores made by the assessee. The assessee is M/s Bhakta Markandeshwara Minerals.

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 of Rs. 3,36,52,141 by holding it to be covered within the Rs. 4 Crores surrendered by the assessee, when the assessee had not admitted undisclosed income in the hands of K. Mahesh Kumar, which was subject to appeal? (Question of law and fact, concerning Section 260-A of the Income Tax Act, 1961). 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in directing the deletion of the disallowance of expenses, holding it to be 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 was made by the assessee-firm for any Assessment Year, and the said letter pertained to the surrender of income in the case of Shri Mahesh Kumar, which was also subject to appeal? (Question of law and fact, concerning Section 260-A of the Income Tax Act, 1961). Revenue's Contention: The Tribunal's order was perverse and legally incorrect in deleting the disallowance by linking it to a surrender that was not made by the assessee-firm and pertained to an individual, K. Mahesh Kumar, whose matter was under appeal. Assessee's Contention: Not recorded in the judgment.

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:39399-DB ITA No. 152 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. 152 OF 2021 BETWEEN:

1.

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

2.

THE DEPUTY 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. 1891/BANG/2017 DATED 31/07/2020 FOR ASSESSMENT YEAR 2010- 2011 ANNEXURE-C AND CONFIRM THE ORDER OF THE APPELLATE

Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:39399-DB ITA No. 152 of 2021

COMMISSIONER CONFIRMING THE ORDER PASSED BY THE DEPUTY 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.1891/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 letter dated 28.03.2011 when the assessee has not

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NC: 2024:KHC:39399-DB ITA No. 152 of 2021

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.

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

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NC: 2024:KHC:39399-DB ITA No. 152 of 2021

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.: 13

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