THE PR COMMISSIONER OF INCOME TAX vs. M/S SPR SPIRITS PVT LTD

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ITA/91/2024HC KarnatakaKAHC01008130202430 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 made by both parties. The learned counsel for the assessee argued that the tax effect was below ₹2 Crores, making the appeal not maintainable under CBDT Circular No. 09/2024. The learned counsel for the Revenue sought liberty to revive the appeal if the matter fell within the exceptions of the circulars. The Court granted the liberty as prayed for by the Revenue. The substantial questions of law were kept open to be adjudicated in an appropriate proceeding. No decision was made on the merits of the substantial questions of law raised by the Revenue.

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, against an order dated July 24, 2023, passed by the Income Tax Appellate Tribunal (ITAT), Bengaluru. The appeal pertains to Assessment Year 2009-2010 and challenges the ITAT's decision to delete an addition of ₹27 Crores made on account of bogus purchases. The assessee is M/s SPR Spirits Pvt Ltd. The ITAT's order was passed in ITA No. 132/Bang/2023. The Revenue sought to set aside the ITAT's order and confirm the orders of the lower appellate authorities.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in deleting the addition of ₹27 Crores in respect of bogus purchases, without considering the evidence found during search and seizure proceedings that revealed three concerns were controlled by the assessee, indicating a scheme of tax evasion? 2. Whether, on the facts and circumstances of the case, the Tribunal was right in not considering the outcome of verification inquiries conducted by the CIT(A) during remand proceedings, which revealed the non-existence of the three concerns, thereby casting doubt on the genuineness of the transactions? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that only the profit element embedded in the bogus purchases at a rate of 10% should be considered, discarding material evidence and surrounding circumstances like the maintenance of books of accounts of supplying entities by the assessee and filing of their VAT returns? Assessee's contention: The tax effect in this appeal is less than ₹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:41210-DB ITA No. 91 of 2024

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. 91 OF 2024 BETWEEN:

1.

THE PR COMMISSIONER OF INCOME TAX CENTRAL, 3RD FLOOR, C.R. BUILDING, QUEENS ROAD, BENGALURU - 560 001.

2.

THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1(3), 3RD FLOOR, C.R.BUILDING, QUEENS ROAD, BENGALURU - 560 001. …APPELLANTS (BY SRI. DILIP M .,ADVOCATE A/W SRI. RAVIRAJ Y V, ADVOCATE)

AND:

M/S SPR SPIRITS PVT LTD (FORMERLY KNOWN AS SPR GROUP HOLDINGS PVT LTD) F 113, 2CD, CENTRAL CHAMBERS, 2ND FLOOR, 2ND MAIN, GANDHINAGAR, BENGALURU - 560 009 PAN NO. AAECS 2377M …RESPONDENT (BY SRI. NARENDRA KUMAR J JAIN.,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 THEREIN, ALLOW THE

Digitally signed by NIRMALA DEVI Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:41210-DB ITA No. 91 of 2024

APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.132/BANG/2023 DATED 24.07.2023 FOR ASSESSMENT YEAR 2009-2010 ANNEXURE A AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(3), BENGALURU 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 Sri. Raviraj Y.V., for appellants/Revenue and learned counsel Sri. Narendra Kumar. J. Jain., 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 24.07.2023 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA No.*132/Bang/2023 for the assessment year *2009- 10, raising the following substantial questions of law: * Corrected vide Court order dt. 21.11.2025

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NC: 2024:KHC:41210-DB ITA No. 91 of 2024

“1. Whether on the facts and in the circumstances of the case, the Tribunal is right in deleting the addition of `27 Crores in respect of bogus purchases, without considering the fact of evidences found during search and seizure proceedings at the business premises of the assessee company revealing that three concerns were completely controlled by the assessee as their bank account statements and VAT return were kept and maintained by the assessee, which clearly reflects a well crafted scheme of tax evasion being resorted by the assessee? 2. Whether on the facts and circumstances of the case, the Tribunal is right in not considering the outcome of filed verification inquiries conducted by the CIT(A) during the remand proceedings which clearly revealed the non-existence of the said 3 bogus concerns at the so called business addresses, thus crafting a serious doubts on the genuineness and authenticity of the transaction? 3. Whether on the facts and in the circumstances of case, the Tribunal is right in holding that only profit element embedded in the transaction of bogus purchases at rate of 10% be considered, discarding the material

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NC: 2024:KHC:41210-DB ITA No. 91 of 2024

evidence and incriminating material unearthed during search and overlooking all other surrounding circumstances like maintenance of books of accounts of supplying entitles by the assessee and filing of their VAT returns, along with cheque book leafs of the 3 entities, which shows that the transactions were carried out to book bogus purchases and thereby reduce the incidence of tax?”

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.

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NC: 2024:KHC:41210-DB ITA No. 91 of 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.: 41

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