THE PR. COMMISSIONER OF INCOME TAX vs. SHRI SANJAY SHENOY

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ITA/255/2022HC KarnatakaKAHC01022271202223 September 2024Bench: S.G.PANDIT,C.M. POONACHA4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court disposed of the appeal based on the submissions made by both parties. The Revenue was granted liberty to revive the appeal if the matter fell within the exceptions provided in CBDT Circular No. 09/2024 and Circular No. 5/2024. The Court explicitly stated that the substantial questions of law framed in the appeal were kept open to be adjudicated in an appropriate proceeding. No decision was made on the merits of the ITAT's order regarding the deletion of penalties under Sections 271D and 271E, nor on the alleged contraventions of Sections 269SS and 269T. The operative direction was to dispose of the appeal with the liberty granted to the Revenue.

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, before the High Court of Karnataka. The appeal challenges an order dated 27.10.2021 passed by the Income Tax Appellate Tribunal (ITAT), Bengaluru. The ITAT's order, in ITA No. 1222/Bang/2016 for Assessment Year 2008-09, had confirmed an order of the Appellate Commissioner and set aside penalties levied by the Deputy Commissioner. The dispute pertains to penalties under Sections 271D and 271E, related to alleged contraventions of Sections 269SS and 269T of the Act concerning cash loans and repayments.

What were the issues?

1. Whether on the facts and in the circumstances of the case, the Tribunal order can be said as perverse in nature in deleting penalty levied under section 271D and 271E when the evidences gathered during search and post search enquiries clubbed with materials gathered in assessment proceedings clearly proved that the assessee had received loans from Shri.P.Dayanand Pai and has repaid the said loan in cash in contravention to provisions of Section 269SS and 269T of the Act? (Question of mixed law and fact, turning on Sections 271D, 271E, 269SS, and 269T). 2. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in setting aside penalty order passed in case of assessee when all the conditions prescribed in section 271D and 271E of the Act are satisfied? (Question of law, turning on Sections 271D and 271E). Assessee's Contention: The tax effect in this appeal is less than Rs. 2 Crores, and therefore, the appeal should not be entertained by the Revenue in view of CBDT Circular No. 09/2024 dated 17.09.2024, which binds the Revenue. Revenue's Contention: The Revenue sought liberty to revive the appeal if the matter falls within the exceptions under Circular No. 09/2024 and Circular No. 5/2024 dated 15.03.2024.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 271D,Section 271E,Section 269SS,Section 269T

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:39423-DB ITA No. 255 of 2022

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. 255 OF 2022 BETWEEN:

1.

THE PR. COMMISSIONER OF INCOME TAX 5TH FLOOR, BMTC BUILDING 80 FEET ROAD, KORMANGALA BENGALURU - 560 095

2.

THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE - 6(3)(1) 2ND FLOOR, BMTC BUILDING 80 FEET ROAD, KORAMANGALA BENGALURU - 560 095 …APPELLANTS (BY SRI. RAVI RAJ Y V.,ADVOCATE A/W SRI. DILIP M, ADVOCATE)

AND:

SHRI SANJAY SHENOY NO.333, NOVA MILLER T.THIMMAIAH ROAD BENGALURU - 560 051 PAN. AWOPS 3523J …RESPONDENT (BY SMT JYOTHI RATNA ANUMOLU ., ADVOCATE)

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 THEREIN, ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.

Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:39423-DB ITA No. 255 of 2022

1222/BANG/2016 DATED 27/10/2021 FOR ASSESSMENT YEAR 2008- 2009 ANNEXURE-E CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-6(3)(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 Raviraj Y.V, along with learned counsel Sri Dilip M, for appellants/Revenue and learned counsel Smt Jyothi Ratna Anumolu, for the respondent/assessee.

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 27.10.2021 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.1222/Bang/2016 for the assessment year 2008-09, raising the following substantial questions of law: “1. Whether on the facts and in the circumstances of the case, the Tribunal order can be said as perverse in

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NC: 2024:KHC:39423-DB ITA No. 255 of 2022

nature in deleting penalty levied under section 271D and 271E when the evidences gathered during search and post search enquiries clubbed with materials gather in assessment proceedings clearly proved that the assessee had received loans from Shri.P.Dayanand Pai and has repaid the said loan in cash in contravention to provisions of Section 269SS and 269T of the Act?.

2.

Whether on the facts and in the circumstances of the case, the Tribunal is right in law in setting aside penalty order passed in case of assessee when all the conditions prescribed in section 271D and 271E of the Act are satisfied?”

3.

Learned counsel for the assessee submits that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal should not be entertained 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 the aforesaid Circular dated 17.09.2024 and Circular No.5/2024 dated 15.03.2024.

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NC: 2024:KHC:39423-DB ITA No. 255 of 2022

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 questions of law are 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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