THE PR. COMMISSIONER OF INCOME TAX vs. M/S SREE SHIVALINGESHWARA ARECANUT TRADERS

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ITA/261/2022HC KarnatakaKAHC01022293202202 September 2024Bench: S.G.PANDIT,C.M. POONACHA5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the appeal was not maintainable in view of Circular No. 5/2024 dated 15.03.2024, which prescribes monetary limits for preferring appeals before the High Court. Since the monetary value involved in this appeal (Rs. 64,67,618/-) is less than the prescribed limit of one crore rupees, the appeal would not survive for consideration and was dismissed on this procedural ground. The substantial questions of law raised in the appeal were expressly kept open to be considered in an appropriate case. No decision was made on the merits of the substantial questions of law.

What were the facts?

The appeal was filed by the Principal Commissioner of Income Tax and the Deputy Commissioner of Income Tax (appellants) against an order dated 07.12.2021 passed by the Income Tax Appellate Tribunal (ITAT), Bengaluru in ITA No. 142/Bang/2021. The assessment year in question is 2015-16. The ITAT's order had set aside an order passed under Section 263 of the Income Tax Act, 1961. The amount in dispute is Rs. 64,67,618/-. The appeal was admitted by the High Court on 06.09.2022 to examine the substantial questions of law raised by the revenue. Subsequently, Circular No. 5/2024 dated 15.03.2024 was issued, prescribing monetary limits for appeals to the High Court.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal's order can be considered perverse for holding that the conditions for passing an order under Section 263 of the Income Tax Act, 1961 were not satisfied, despite the Commissioner of Income Tax (CIT) providing elaborate findings that the assessing authority's order was prejudicial and erroneous? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in allowing the assessee's appeal by setting aside the order passed under Section 263, ignoring that the assessing authority had not derived gross profits from unaccounted sales and purchases recorded in seized documents and had failed to conduct a proper inquiry before making additions? 3. Whether, on the facts and in the circumstances of the case, the Tribunal's order setting aside the order passed under Section 263, holding that the assessing authority was correct in determining unaccepted income based on the GP rate of disclosed transactions as per regular books of accounts, was in disregard of the CIT's findings? Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The Tribunal's order was perverse and erroneous in law. The assessing authority had not derived gross profits from unaccounted transactions and failed to conduct proper inquiry. The Tribunal ignored the CIT's findings regarding unaccepted income determination.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 263,Section 265(A)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BENGALURU IN ITA

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NC: 2024:KHC:35616-DB ITA No. 261 of 2022

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 2ND 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.261 OF 2022

BETWEEN:

1.

THE PR. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, C R BUILDING QUEENS ROAD, BENGALURU - 560 001.

2.

THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE NO.55/1, SHILPASHREE VIDHYARANYA COMPLEX VISHVESHWARANGAR MYSURU - 570 008. …APPELLANTS (BY SRI. RAVI RAJ Y.V., ADVOCATE) AND:

M/S SREE SHIVALINGESHWARA ARECANUT TRADERS 21, L BLOCK, APMC YARD SHIVAMOGGA - 577 204 PAN. AALFS 3372E …RESPONDENT (BY SRI. G S NAGHARISH, ADVOCATE)

Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:35616-DB ITA No. 261 of 2022

THE INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 07/12/2021 PASSED IN ITA NO. 142/BANG/2021, FOR THE ASSESSMENT YEAR 2015-2016 PRAYING TO I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN II. ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO. 142/BANG/2021 DATED 07/12/2021 FOR ASSESSMENT YEAR 2015-2016 ANNEXURE-C AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, MYSURU.III. TO PASS SUCH OTHER SUITABLE ORDERS AS THIS HON'BLE COURT DEEMS FIT TO GRANT IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE INTEREST OF JUSTICE AND EQUITY AND ETC.

THIS APPEAL, COMING ON FOR ORDERS, 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:35616-DB ITA No. 261 of 2022

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

This appeal is filed under Section 260-A of the Income Tax Act, 1961 (for short 'the Ac t') questioning the correctness or otherwise of order passed by the Income Tax Appellate Tribunal, Bengaluru in ITA No.142/Bang/2021 dated 07.12.2021 for the Assessment Year 2015-16 (Annexure-C).

2.

The appeal was admitted on 06.09.2022 to examine the questions of law raised by the appellants which are extracted below:

1.

"Whether on the facts and in the circumstances of the case, the Tribunal order can be said as perverse in nature in holding that the conditions prescribed for passing order under section 263 of the Act are not satisfied when the CIT has given elaborate findings to demonstrate that the order passed by assessing authority was prejudicial as well as erroneous order"?

2.

"Whether on the facts and in the circumstances of the case, the Tribunal is right in law in allowing appeal preferred by assessee by setting aside order passed under section 263 of the Act ignoring that assessing authority had not derived gross profits from unaccounted sales and purchases recorded in seized documents and

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NC: 2024:KHC:35616-DB ITA No. 261 of 2022

assessing authority further failed to make proper enquiry before making additions"?

3.

"Whether on the facts and in the circumstances of the case, the Tribunal's order setting aside order passed under section 263 of the Act holding that the assessing authority was correct in determining the unaccented income on the basis of GP rate in disclosed transactions as per regular books of accounts ignoring findings of Commissioner of Income Tax"?.

3.

This appeal was filed on 23.05.2022 and Monetary value involved is Rs.64,67,618/-. Subsequent to filing of the appeal, Circular bearing No.5/2024 [F.No.279/Misc.142/2007- ITJ(PT.)] dated 15.3.2024 is issued under Section 265(A) of the Income Tax Act, 1961 prescribing monetary limit and the exceptions to prefer an appeal before the High Court.

4.

In view of the above Circular, the above appeal would not be maintainable since monetary value involved in this appeal is less than rupees one crore. Therefore, the above appeal would not survive for consideration and the same is dismissed.

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NC: 2024:KHC:35616-DB ITA No. 261 of 2022

5.

In view of the above, the substantial questions of law raised in the appeal are kept open to be considered in an appropriate case.

Sd/- (S.G.PANDIT) JUDGE

Sd/- (C.M. POONACHA) JUDGE

SMJ List No.: 1 Sl No.: 5

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