THE PR. COMMISSIONER OF INCOME TAX, CIT (A) vs. SMT. AMBIKA GHORPADE

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ITA/721/2018HC KarnatakaKAHC01048369201801 October 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 made by both parties. The assessee argued that the tax effect was below the threshold stipulated in CBDT Circular No. 09/2024, making the appeal non-maintainable for the Revenue. The Revenue, in turn, sought liberty to revive the appeal if the case fell under the exceptions provided in the aforementioned circulars and Circular No. 5/2024. The Court granted this liberty to the Revenue. Consequently, the appeal was disposed of without a decision on the substantial questions of law. The Court explicitly kept the questions of law open to be adjudicated in an appropriate proceeding. No specific findings were made on the merits of the ITAT's order regarding the reliance on seized material or statements.

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, against an order dated April 10, 2018, passed by the Income Tax Appellate Tribunal (ITAT), Bengaluru. The ITAT's order was in relation to ITA No. 831/Bang/2015 for the assessment year 2011-12. The appeal was admitted by the High Court of Karnataka on September 21, 2020, to consider specific substantial questions of law. The dispute centers on the ITAT's decision to not rely on statements and seized materials from Sri. Bharat S. Ghorpade and Mr. Karthikeya Ghorpade in the assessee's case.

What were the issues?

1. Whether, on the facts and in the circumstances, the Tribunal erred in holding that statements recorded and materials seized from Sri. Bharat S. Ghorpade and Mr. Karthikeya Ghorpade cannot be relied upon in the assessee's case, solely because the premises did not belong to the assessee, despite Sri. Bharat S. Ghorpade being key to the assessee's business, the seized material having a nexus with the business, and cheque transactions being corroborated with the assessee's books of accounts, thus recording a perverse finding? (Question of mixed law and fact, concerning reliance on seized material and statements). 2. Whether, on the facts and in the circumstances, the Tribunal erred in holding that seized material from Sri. Bharat S. Ghorpade and Mr. Karthikeya Ghorpade cannot be relied upon in the assessee's case, when the seized material is relatable to the assessee's business and has a nexus with its books of accounts? (Question of mixed law and fact, concerning nexus of seized material with business and accounts). 3. Whether, on the facts and in the circumstances, the Tribunal erred in holding that statements recorded and seized material from Sri. Bharat S. Ghorpade and Mr. Karthikeya Ghorpade cannot be relied upon in the assessee's case, when the assessee was provided with the statements and seized material for response, and failed to disprove their contents or the statements made, thus recording a perverse finding? (Question of mixed law and fact, concerning the assessee's opportunity to disprove evidence). Assessee's Contention: The tax effect 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 September 17, 2024, which binds the revenue. Revenue's Contention: The revenue sought liberty to revive the appeal if the matter falls within the exceptions under Circular No. 09/2024 and Circular No. 5/2024 dated March 15, 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:41180-DB ITA No. 721 of 2018

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.721 OF 2018

BETWEEN:

1.

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

2.

THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE -2(2) PRESENT ADDRESS ITO WARD -6(3)(4) 2ND FLOOR, BMTC BUILDING, 80 FEET ROAD KORAMANGALA BENGALURU-560 095 …APPELLANTS

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

Digitally signed by B LAVANYA Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:41180-DB ITA No. 721 of 2018

AND:

SMT. AMBIKA GHORPADE NO.3, LEGACY CASERO JAKKUR PLANTATION BENGLAURU-560 064 PAN: AAVPG 1908N …RESPONDENT

(BY SRI. K.R.PRADEEP, 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. 831/BANG/2015 DATED 10/04/2018 FOR ASSESSMENT YEAR 2011-2012 (ANNEXURE-C) AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE INCOME TAX OFFICER, WARD-6(3)(4), 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:41180-DB ITA No. 721 of 2018

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. K.R.Pradeep 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 10.04.2018 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.831/Bang/2015 for the assessment year 2011-12.

3.

This

Court,

admitted the appeal on 21.09.2020 to consider the following substantial questions of law: 1. Whether on the facts and in the circumstances of the case, the Tribunal is right in holding that the statement recorded and materials seized from Sri. Bharat S. Ghorpade and Mr. Karthikeya Ghorpade cannot be relied on in the case of the assessee on the ground that the premises does not belong to the assessee, when Sri. Bharat S. Ghorpade was the key person looking after the business of the assessee and

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NC: 2024:KHC:41180-DB ITA No. 721 of 2018

the seized material has a nexus with the business carried on and transactions reflected in cheque have been corroborated with the books of accounts maintained by the assessee and recorded perverse finding?

2.

Whether on the facts and in the circumstances of the case, the Tribunal is right in holding that the seized material found in the premises of Sri. Bharat S. Ghorpade and Mr. Karthikeya Ghropade cannot be relied on in the case of the assessee, when the seized material is relatable to the business carried on by the assessee and has nexus with the books of accounts maintained by the assessee?.

3.

Whether on the facts and in the circumstances of the case, the Tribunal is right in holding that statements recorded and seized material found from Sri. Bharat S. Ghorpade and Mr. Karthikeya Ghorpade cannot be relied on in the case of the assessee, when assessee was provided with the statements recorded and the seized material for its response, which the assessee could not disprove the contents of the seized material nor the statements made by the above referred persons were disproved and recorded perverse finding?

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

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NC: 2024:KHC:41180-DB ITA No. 721 of 2018

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 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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