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HC-KAR NC: 2025:KHC:51963-DB ITA No. 30 of 2025
IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 9TH DAY OF DECEMBER, 2025 PRESENT THE HON'BLE MR. JUSTICE B M SHYAM PRASAD AND THE HON'BLE MR. JUSTICE T.M.NADAF INCOME TAX APPEAL NO. 30 OF 2025
BETWEEN:
THE PR. COMMISSIONER OF INCOME TAX CENTRAL, 3RD FLOOR, C.R. BUILDING, QUEENS ROAD, BENGALURU-560 001.
THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1(1), 3RD FLOOR, C.R BUILDING, QUEENS ROAD, BENGALURU-560 001.
…APPELLANTS (BY SRI. Y.V RAVIRAJ., ADVOCATE) AND:
M/S. KHODAY EHSHWARSA AND SONS (PRESENTLY KHODAY ESHWARSA AND SONS PVT. LTD.,) NO.9, KHODAY HOUSE, SESHADRI ROAD, GANDHI NAGAR, BENGALURU-560 009. REP BY ITS MANAGING DIRECTOR.
…RESPONDENT (BY SRI. A. SHANKAR., SENIOR ADVOCATE FOR SRI. KUMARA H S., ADVOCATE)
Digitally Signed by REKHA R Location : High Court of Karnataka
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HC-KAR NC: 2025:KHC:51963-DB ITA No. 30 of 2025
THIS INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, PRAYING TO a) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE; b) ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE, INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO. 1079/BANG/2024 DATED 20.09.2024 FOR ASSESSMENT YEAR 2020-2021 ANNEXURE A AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(1) BENGALURU.
THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD and HON'BLE MR. JUSTICE T.M.NADAF
ORAL JUDGMENT
(PER: HON'BLE MR. JUSTICE T.M.NADAF)
This appeal by Revenue under Section 260A of the Income Tax Act [‘the Act’ for short], for the following reliefs:
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HC-KAR NC: 2025:KHC:51963-DB ITA No. 30 of 2025
"i. Formulate the substantial questions of law stated above.
ii. Allow the appeal and set aside the orders passed by the Income-Tax Appellate Tribunal, Bengaluru in ITA No.1079/Bang/2024 dated 20.09.2024 for Assessment Year 2020-2021 Annexure-A and confirm the order of the Appellate Commissioner confirming the order passed by the Deputy Commissioner of Income Tax, Central Circle-1(1), Bengaluru.
iii. To pass such other suitable orders as this Hon'ble Court deems fit to grant in the facts and circumstances of the case in the interest of justice and equity."
The brief facts leading to filing of this appeal are as under. The assessee is a partnership firm manufacturing IFFL under the brand name Khoday. The firm is holding substantial lands which are given under JDA to a real estate developer. A search was conducted under Section 132 of the Act and upon search, an assessment order comes to be passed under Section 153A, making total addition of Rs.2.12 crores 4,249/- under various heads, demanding the assessee to pay sum of Rs.90,17,45,089/-. The assessee aggrieved by the order passed by the
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HC-KAR NC: 2025:KHC:51963-DB ITA No. 30 of 2025
original authority, preferred an appeal before the Commissioner of Income Tax (Appeals)-11, Bengaluru against the assessment order and demand raised. The commissioner rejected the appeal by order dated 27.03.2024. The Assessee preferred an appeal before Income Tax Appellate Tribunal [‘ITAT’ for short] challenging order supra. The ITAT upon consideration of rival submissions allowed the appeal holding that the assessment order passed is invalid, on the premise that the approval granted under Section 153 by the Additional Commissioner Income Tax is without application of mind. It is this order passed by the ITAT, allowing the appeal filed by the assessee is called in this appeal by the Revenue on the following substantial question of law: "1. Whether on the facts and in the circumstances of the case, the tribunal was correct in holding that the assessment order was passed by not following the mandate of Section 153D of the act, when assessment order was validly passed after taking approval of the Range
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HC-KAR NC: 2025:KHC:51963-DB ITA No. 30 of 2025
Head, who in turn had applied his mind and given the approval?
Whether on the facts and in the circumstances of the case, the tribunal was correct in ignoring the scheme of search and seizure assessments as contemplated under chapter XIV-B of the act and not adjudicating on the merits of issues discussed in the assessment order?"
Heard Sri.Y.V.Raviraj, learned counsel appearing for the Revenue and Sri.A.Shankar, learned Senior counsel for Sri.Kumara H.S, learned counsel for the respondent. 4. Sri. Y.V. Raviraj submits that the Tribunal has committed serious error in holding that the assessment order was passed not following the mandate of Section 153D of the Act, as the approval granted was without applying the mind by the concerned Range Head. He further states that, the Tribunal has committed serious error in ignoring the scheme of search and seizure as contemplated in Chapter XIV-B of the Act. He further submits that, the Tribunal committed error in holding that the
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HC-KAR NC: 2025:KHC:51963-DB ITA No. 30 of 2025
approval letter of the Additional Commissioner, Income Tax did not bear any reference to the seized material, written statement filed by the assessee etc. On this he submits to be admitted on substantial question of law raised in the appeal and allow the appeal. 5. In contrast Sri.A.Shankar, learned Senior counsel invites our attention to paragraph Nos.6.13 and 6.14 of the Tribunal's order and submits that the Tribunal having considered the fatal errors on facts and held that the approval obtained by the Assessing Officer at the fag end of the Assessment year from the Authorities which was granted in a mechanical manner in a day without application of mind. In the factual background of the case, no substantial question of law is involved in the appeal for consideration and accordingly, sought for dismissal of the appeal. 6. Having considered the rival submissions, we have gone through the order passed by ITAT,
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HC-KAR NC: 2025:KHC:51963-DB ITA No. 30 of 2025
especially paragraph Nos.6.13 and 6.14 which reads as under: "6.13 Besides the above, we note that the checklist enclosed along with the letter of the AO suffers from graving errors as highlighted below: i. The assessee filed original return of income dated 15 February 2021 whereas the checklist says the original return was filed under section 139(1)/139(4) of the Act dated 9th of January 2021. ii. As per the checklist, the assessee has declared return income of Rs.7,00,24,760.00 whereas the assessee has declared business loss of Rs.3,52,59,770.00 only. iii. In the checklist, the reference was made to the provisions of section 153C of the Act regarding the warrant of the search person and recording of satisfaction by the AO of the search person and satisfaction recorded by the AO of the other person, satisfaction was recorded with reference to the seized material. Likewise, whether the return of income was filed for the year under consideration in response to the notice issued under section 153C of the Act. 6.14 Upon cumulative analysis of the facts stated above, it is transpired that the checklist was prepared considering the assessee on hand as the person other than search person and the proceedings were initiated under the provisions of section 153C of the Act. However, all these information containing in the checklist are far from the reality for the reasons as discussed above. All these facts clearly establish that the approval was obtained by the AO at the fag end of the assessment from the higher authorities which was subsequently granted in the mechanical manner in a day and without application of mind."
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HC-KAR NC: 2025:KHC:51963-DB ITA No. 30 of 2025
In view of the factual finding by the Appellate Tribunal, on the materials placed before it, both the substantial questions of law raised in the appeal does not survive. In the absence of substantial questions of law, appeal fails and is accordingly dismissed.
RR ct-vn Sd/- (B M SHYAM PRASAD) JUDGE
Sd/- (T.M.NADAF) JUDGE