THE PR COMMISSIONER OF INCOME TAX CIT (A) vs. SHRI M N RAJENDRA KUMAR

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ITA/266/2021HC KarnatakaKAHC01014525202123 September 2024Bench: S.G.PANDIT,C.M. POONACHA4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court disposed of the appeal with liberty to the Revenue to revive it if the matter falls 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 are kept open to be adjudicated in an appropriate proceeding. Therefore, no specific finding was given on the merits of the additions or the ITAT's order. The operative direction was to dispose of the appeal with the granted liberty, effectively deferring a decision on the substance of the appeal.

What were the facts?

The Revenue has filed an appeal under Section 260-A of the Income Tax Act, 1961, against the order dated 24.08.2020 passed by the Income Tax Appellate Tribunal (ITAT), Bengaluru. The appeal pertains to Assessment Year 2015-16 and challenges the ITAT's deletion of additions made by the assessing authority. The additions in dispute relate to cash investment in M/s. Sai Riddi Developers (Rs. 18,75,000/-), unexplained cash payments from various projects (Rs. 5,27,96,670/-), and unexplained money received over and above agreement value for various years (Rs. 10.99 crores). The assessee is Shri M.N. Rajendra Kumar.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the Tribunal was right in deleting the addition of Rs. 18,75,000/- made in respect of cash investment in M/s. Sai Riddi Developers, by holding that the owner of lands was the firm M/s. Om Siddi Developers and that there was no finding that the cash component was paid to partners from their own funds, ignoring seized materials supporting the additions. 2. Whether the Tribunal was right in deleting the addition of Rs. 5,27,96,670/- made as unexplained cash payments from various projects, by holding that money received in respect of projects cannot be considered income of an individual and would be taxable in the hands of companies, ignoring the assessing authority's findings supported by materials. 3. Whether the Tribunal's order was perverse in law for not considering material evidence detected during search/survey, indicating unexplained money of Rs. 10.99 crores received over and above agreement value for various years, and for ignoring admissions of bank employees. Assessee's contention: The appeal should not be entertained as the tax effect is less than Rs. 2 Crores, citing CBDT Circular No. 09/2024 dated 17.09.2024, which binds the Revenue. Revenue's contention: 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

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:39396-DB ITA No. 266 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. 266 OF 2021 BETWEEN:

1.

THE PR. COMMISSIONER OF INCOME – TAX, CIT (A), CENTRAL CIRCLE, C.R.BUILDING, QUEENS ROAD, BENGALURU-560001.

2.

THE DEPUTY COMMISSIONER OF INCOME – TAX, CENTRAL CIRCLE-1, C.R.BUILDING, ATTAVARA, MANGALURU 575001.

…APPELLANTS

(BY SRI. RAVIRAJ Y.V. ADVOCATE A/W SRI. DILIP. M, ADVOCATE)

AND:

SHRI. M.N. RAJENDRA KUMAR, 1-276, P0 721, PULKERI, UDUPI DISTRICT, KARKALA - 574104, PAN. AFOPK5638K.

…RESPONDENT (BY SRI. K.R. VASUDEVAN.,ADVOCATE)

THIS ITA / INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, PRAYING TO

Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:39396-DB ITA No. 266 of 2021

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. 2262/BANG/2019 DATED 24/08/2020 FOR ASSESSMENT YEAR 2015- 2016 ANNEXURE-C AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, MANGALURU 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 Sri K.R.Vasudevan, 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 24.8.2020 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.2262/Bang/2019 for the assessment year 2015-16, raising the following substantial questions of law:

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NC: 2024:KHC:39396-DB ITA No. 266 of 2021

“(i) Whether on the facts and circumstances of the case, the Tribunal is right in deleting the additions made by assessing authority in respect of cash investment M/s. Sai Riddi Developers of Rs.18,75,000/- by holding that the owner of lands is the firm namely M/s. Om Siddi Developers and that there is no finding of the assessing authority that cash component is paid to partners out of their own funds ignoring record/seized materials during course of search and survey action in the assessee group which supported the additions and as such order passed by Tribunal is perverse in nature and as such order passed by Tribunal is perverse in nature?

(ii) Whether on the facts and in the circumstances of the case, the Tribunal is right in law deleting addition made as unexplained deleting addition of Rs.5,27,96,670/- made as unexplained cash payments from various projects by holding that on money received in respect of projects cannot be considered as income of individual and even if some money is received, income will be taxable in the hands of two companies in their agreed share ignoring findings of assessing authority which is well supported by materials and therefore order of Tribunal is perverse in nature?

(iii) Whether on the facts and in the circumstances of the case, the Tribunal’s order can be said as perverse in law in not considering material evidences detected during course of search/survey wherein is noticed that assessee has received unexplained money to the extent of Rs.10.99 crores over and above the agreement value for various years and admissions of employees of the Bank are also ignored by Tribunal?”

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NC: 2024:KHC:39396-DB ITA No. 266 of 2021

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.

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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