THE PR. COMMISSIONER OF INCOME TAX vs. SHRI YUNUS ZIA

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ITA/257/2020HC KarnatakaKAHC01033536202001 October 2024Bench: S.G.PANDIT,C.M. POONACHA5 pages
AI SummaryRemanded

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 stipulated in CBDT Circular No. 09/2024 and Circular No. 5/2024. The Court explicitly stated that 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 raised by the Revenue. The operative direction was to dispose of the appeal with liberty to revive, and the questions of law were left undecided.

What were the facts?

The Revenue, represented by 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 20.03.2020 passed by the Income-Tax Appellate Tribunal (ITAT), Bengaluru. The appeal pertains to Assessment Year 2006-07 and challenges the ITAT's decision to set aside the assessment order passed under Section 153A of the Act. The ITAT's order was in favour of the assessee, Shri Yunus Zia. The High Court admitted the appeal on 19.03.2021 to consider substantial questions of law.

What were the issues?

1. Whether, on the facts and circumstances, the Tribunal was justified in holding that an assessment order under Section 153A of the Act cannot be passed for the six assessment years preceding the financial year of the search, if no incriminating material was found during the search and seizure operation? (Question of law) 2. Whether, on the facts and circumstances, the Tribunal was right in law in not appreciating that proceedings under Section 153A are mandatory for the assessing authority upon conducting a search under Section 132 or 132A? (Question of law) 3. Whether, on the facts and circumstances, the Tribunal was right in law in not appreciating that the assessing authority is duty-bound to pass an order under Section 153A for the six preceding years from the search year, even if no incriminating material relating to the assessee is available in the seized material? (Question of law) 4. Whether, on the facts and circumstances, the Tribunal's order can be considered perverse for not acknowledging the spirit and intent of Section 153A? (Question of law) 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 provided in 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 153A,Section 132,Section 132A

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:41182-DB ITA No. 257 of 2020

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 1ST DAY OF OCTOBER, 2024 PRESENT THE HON'BLE MR JUSTICE S.G.PANDIT AND THE HON'BLE MR JUSTICE C.M. POONACHA INCOME TAX APPEAL NO.257 OF 2020 BETWEEN:

1.

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

2.

THE DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-1(3), PRESENT ADDRESS: DCIT, CIRCLE 1 (1)(1), 2ND FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU-560 095 …APPELLANTS

(BY SRI. DILIP M., ADVOCATE ALONG WITH SRI. RAVI RAJ Y V., ADVOCATE)

Digitally signed by B LAVANYA Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:41182-DB ITA No. 257 of 2020

AND:

SHRI YUNUS ZIA NO 73/1, SHERIFF CENTRE, ST MARKS ROAD, BENGALURU-560 001 PAN AAAPZ3852F …RESPONDENT

(BY SRI. V.CHANDRASHEKAR, ADVOCATE)

THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT, 1961, PRAYING TO ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.129/BANG/2013 DATED 20.03.2020 FOR ASSESSMENT YEAR 2006-2007 (ANNEXURE-C) AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(1)(1), BENGALURU AND ETC., THIS APPEAL IS COMING ON FOR 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

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NC: 2024:KHC:41182-DB ITA No. 257 of 2020

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

Heard the learned counsel Sri.Dilip.M., along with Sri. Raviraj.Y.V., learned counsel for appellants/Revenue and learned counsel Sri.V.Chandrashekar, for 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 20.03.2020 passed by the Income Tax Appellate Tribunal, "B" Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.129/Bang/2013 for the assessment year 2006-07.

3.

This Court, admitted the appeal on 19.03.2021 to consider the following substantial questions of law:

"(i) Whether on the facts and circumstances of the case, the Tribunal is justified in holding that assessment order passed under Section 153A of the Act cannot be passed in 6 assessment years previous to Financial Years in which search was conducted, if there is no incriminating materials found in the course of search and seizure operation? (ii) Whether on the facts and in the circumstances of the case, the Tribunal is right in law in not appreciating that proceedings under Section 153A is mandatory for the

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NC: 2024:KHC:41182-DB ITA No. 257 of 2020

assessing authority as soon as the search operation under Section 132 or under Section 132A is conducted by Revenue? (iii) Whether on the facts and in the circumstances of the case, the Tribunal is right in law in not appreciating that the assessing authority is duty bound to pass order under Section 153A of the Act in the previous 6 years from the year in which search operation is conducted under Section 132/132A of the Act even if there is no incriminating materials available relating to that particular assessee in the seized material? (iv) Whether on the facts and in the circumstances of the case, the Tribunal’s order can be said as perverse in nature as Tribunal has not acknowledged spirit and intent of Law given in section 153A of the Act?"

4.

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.

5.

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

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NC: 2024:KHC:41182-DB ITA No. 257 of 2020

Circular dated 17.09.2024 and Circular No.5/2024 dated 15.03.2024.

6.

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

SMJ List No.: 2

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