THE PR COMMISSIONER OF INCOME TAX, vs. M/S IND SING DEVELOPERS PVT LTD,

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ITA/589/2023HC KarnatakaKAHC01049037202330 September 2024Bench: S.G.PANDIT,C.M. POONACHA5 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court disposed of the appeal based on the submissions of both parties. The assessee contended that the tax effect was less than Rs. 2 Crores, invoking CBDT Circular No. 09/2024, which binds the Revenue. The Revenue, in response, sought liberty to revive the appeal if the matter fell within the exceptions provided by Circular No. 09/2024 and Circular No. 5/2024. The Court granted this liberty. Consequently, the appeal was disposed of without a decision on the merits of the substantial questions of law. The Court explicitly stated that the questions of law were kept open to be adjudicated in an appropriate proceeding. No specific findings were made on any of the five issues raised by the Revenue, nor was any relief granted or denied on the substantive grounds of appeal.

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 July 18, 2022, passed by the Income Tax Appellate Tribunal (ITAT), Bengaluru. The ITAT's order pertains to the assessment year 2008-09 and concerns the deletion of several additions made by the Assessing Officer. The assessee is M/s. Ind Sing Developers Pvt Ltd. The appeal seeks to set aside the ITAT's order and confirm the orders of the Appellate Commissioner and the Assessing Officer.

What were the issues?

The Tribunal had to decide five substantial questions of law, framed by the Revenue as to whether the ITAT's order was perverse in deleting certain additions. These questions relate to: 1. The deletion of an addition of Rs. 58,55,245/- towards the sale of land by Nanda Kumar, questioning if it was wrongly isolated from a larger transaction with M/s. Shobha Developers, despite the assessee receiving the amount in the year under consideration. 2. The deletion of an addition of Rs. 40 lakhs per acre, based on additional evidence submitted by the assessee without providing the Assessing Officer an opportunity to file a remand report as per Rule 46A of the IT Rules. 3. The deletion of an addition of Rs. 78,12,333/- towards the sale of land by Narasimha Murthy, questioning if it was wrongly deferred to a future year when the entire transaction amount is received and sale deed executed, despite a GPA being executed and part performance of sale. 4. The deletion of Rs. 3,09,40,750/- made on a protective basis, questioning if it was wrongly deleted as it was based on an oral statement without cross-examination, despite substantive additions being made for AY 2006-07 on available material. 5. The deletion of additions made by the Assessing Authority, questioning if it was done by ignoring materials on record, findings of the Assessing Authority, and the assessee's failure to disclose the amounts in its books of accounts. The Revenue argued that the ITAT's orders were perverse. The Assessee argued that the tax effect was less than Rs. 2 Crores, making the appeal not maintainable under CBDT Circular No. 09/2024. The Revenue sought liberty to revive the appeal if exceptions under Circulars 09/2024 and 05/2024 applied.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 2(47)

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:41509-DB ITA No. 589 of 2023

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. 589 OF 2023 BETWEEN:

1.

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

2.

THE DEPUTY COMMISSIOJNER OF INCOME TAX CENTRAL CIRCLE 2(3), PRESENT ADDRESS DCIT, CIRCLE 3(1)(1) 2ND FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU 560095 …APPELLANTS (BY SRI. DILIP M.,ADVOCATE A/W SRI. RAVIRAJ Y V, ADVOCATE)

AND:

M/S IND SING DEVELOPERS PVT LTD, NO 208, WEST MINISTER COMPLEX 13, CUNNINGHAM ROAD, BENGALURU 560052 PAN NO AABCI2107G …RESPONDENT (BY SRI. MADHUSUDHAN U A.,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 ABOVE, ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO. 109/BANG/2012 DATED 18.07.2022 FOR ASSESSMENT YEAR 2008-2009 ANNEXURE

Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:41509-DB ITA No. 589 of 2023

A AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 3(1)(1), BENGALURU AND ETC.

THIS APPEAL, COMING ON FOR FURTHER 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

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

Heard the learned counsel Sri.Dilip M., along with Sri.Raviraj Y.V., for appellants/Revenue and learned counsel Sri. Madushan U.A., learned counsel 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 18.07.2022 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA No.109/Bang/2012 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's can be said as perverse in nature in deleting addition of Rs.58,55,245/- towards sale of land by Nanda Kumar by holding that since

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NC: 2024:KHC:41509-DB ITA No. 589 of 2023

this transaction is part of the total transaction with M/s.Shobha Developers, this cannot be taxed in the hands of assesse and isolated as the transaction is under litigation by ignoring that completion of terms of MOU could not be basis of for not treating as income since assesse has received said amount in year under consideration and assesse also failed to give break"?

2.

Whether on the facts and in the circumstances of the case the Tribunal's order can be said as perverse in nature in deleting addition of Rs.40 lakhs per acre by holding that the same is part of sale consideration on basis of additional evidence brought in by assesse without providing opportunity to assessing officer to file remand report as required under Rule 46A of I.T.Rules? 3. Whether on the facts and in the circumstances of the case the Tribunal's order can be said as perverse in nature in deleting addition of Rs.78,12,333/- towards sale of land by Narasimha Murthy by holding that this amount cannot be taxed in present year as same is liable to be taxed in the year when entire transaction amount is received and sale deed is executed by ignoring that no sale proceeds were offered in respect of the transaction and moreover as GPA is already executed, the transaction is completed during year under consideration and part performance of sale is performed as required under section 2(47) of the Act? 4. Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in nature in deletion of Rs.3,09,40,750/- made on protective basis by holding that addition is not based on seized material and it is only on basis of oral statement given by Kuppendra Reddy for which opportunity of cross

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NC: 2024:KHC:41509-DB ITA No. 589 of 2023

examination has not been given to the assesse ignoring that for A.Y.2006-07, substantive addition has been made on basis of materials available on record? 5. Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in nature in deleting additions made by assessing authority by ignoring the materials on record, findings of assessing authority and failure on part of assesee that the amounts in question were disclosed in books of accounts of assesee? 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

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NC: 2024:KHC:41509-DB ITA No. 589 of 2023

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

BS List No.: 4 Sl No.: 15

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