THE PR. COMMISSIONER OF INCOME TAX vs. SHRI. B. RAVI KUMAR REDDY

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ITA/411/2022HC KarnatakaKAHC01038497202230 September 2024Bench: S.G.PANDIT,C.M. POONACHA4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court of Karnataka disposed of the appeal with liberty granted to the revenue to revive it as prayed for by its counsel. The court noted the submissions regarding the tax effect and the binding nature of the CBDT circulars. Consequently, the substantial questions of law were kept open to be adjudicated in an appropriate proceeding. No specific finding was made on the merits of the alleged perversity of the Tribunal's order or the evidentiary value of the loose sheets seized during the search, nor was there a decision on the applicability of Section 132(4A) of the Act. The operative direction was to dispose of the appeal with liberty to revive.

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, before the High Court of Karnataka. The appeal challenges an order dated April 4, 2022, passed by the Income Tax Appellate Tribunal, Bengaluru Bench. The assessment year in question is 2008-09. The Tribunal's order confirmed the order of the Appellate Commissioner, which in turn confirmed the order of the Deputy Commissioner of Income Tax. The dispute pertains to an addition of ₹3.20 crores made by the assessing officer.

What were the issues?

1. Whether the Tribunal's order is perverse in holding that an addition of ₹3.20 crores, pertaining to unexplained expenditure, was based solely on loose sheets, ignoring that such loose sheets, seized during a search, fall under the definition of 'document' under Section 132(4) and possess evidentiary value. 2. Whether the Tribunal was legally correct in holding that the addition of ₹3.20 crores by the assessing authority was unsustainable as it was based only on loose sheets, disregarding the presumption that can be drawn under Section 132(4A) of the Act in such circumstances. Assessee's Contention: The learned counsel for the assessee submitted that the tax effect in this appeal is less than ₹2 Crores, and therefore, the appeal should not be entertained by the revenue, citing Circular No. 09/2024 dated 17.09.2024 issued by the Central Board of Direct Taxes, which binds the revenue. Revenue's Contention: The learned counsel for the revenue requested 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 132(4),Section 132(4A)

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:41927-DB ITA No. 411 of 2022

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 30TH 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. 411 OF 2022 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-3 HYDERABAD PRESENT ADDRESS DCIT, CENTRAL CIRCLE-1(2) C R BUILDING, QUEENS ROAD BENGALURU-560001 …APPELLANTS (BY SRI. DILIP M., ADVOCATE A/W SRI. RAVIRAJ Y V.,ADVOCATE)

AND:

SHRI. B. RAVI KUMAR REDDY NO.48/1, C M MOHAN BUILDING TUMKUR ROAD YESHWANTHPUR BENGALURU-560022 PAN ADLPR6631A …RESPONDENT (BY SRI. ANNAMALAI S.,ADVOCATE)

Digitally signed by B LAVANYA Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:41927-DB ITA No. 411 of 2022

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.1147/HYD/2013 DATED 04/04/2022 FOR ASSESSMENT YEAR 2008-2009 ANNEXURE-C CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE- 1(2), BENGLAURU AND ETC.

THIS APPEAL, 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

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

Heard the learned counsel Sri Dilip M along with learned counsel Sri Raviraj Y.V, for appellants/Revenue and learned counsel Sri Annamalai S., 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 04.04.2022 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bengaluru (for short, ‘Appellate Authority’) in

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NC: 2024:KHC:41927-DB ITA No. 411 of 2022

ITA.No.1147/Hyd/2013 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 nature as Tribunal has held that order is perverse in nature with regard to issue pertaining to unexplained expenditure of `3,20 crores which was upheld by CIT(A) by holding that said addition is only on basis of loos sheet ignoring that loose sheets picked up during search falls under definition of ‘document’ mentioned in Section 132(4) and therefore, it has got evidentiary value?

2.

Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that addition made by assessing authority to an extent of `3,20 Crores is only on basis of losse sheets and as such same is not sustainable ignoring Presumption to be drawn under Section 132(4A) of the Act in such circumstances of the case?”

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

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NC: 2024:KHC:41927-DB ITA No. 411 of 2022

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 question of law is kept open to be adjudicated in an appropriate proceeding.

Sd/- (S.G.PANDIT) JUDGE

Sd/- (C.M. POONACHA) JUDGE

BS List No.: 4 Sl No.: 0

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