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HC-KAR NC: 2025:KHC:48993-DB ITA No. 588 of 2023
IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 26TH DAY OF NOVEMBER, 2025 PRESENT THE HON'BLE MR. JUSTICE B M SHYAM PRASAD AND THE HON'BLE MR. JUSTICE T.M.NADAF INCOME TAX APPEAL NO. 588 OF 2023
BETWEEN:
THE PR. COMMISSIONER OF INCOME TAX 5TH FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU.
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. Y.V. RAVIRAJ., ADVOCATE) AND:
M/S IND SING DEVELOPERS PVT LTD NO 208, WEST MINISTER COMPLEX 13,
Digitally signed by VANAMALA N Location: HIGH COURT OF KARNATAKA
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HC-KAR NC: 2025:KHC:48993-DB ITA No. 588 of 2023
CUNNINGHAM ROAD, BENGALURU 560052
…RESPONDENT (BY SRI. A. SHANKAR., SENIOR ADVCOATE FOR SRI. MADHUSUDHAN U A.,ADVOCATE)
THIS INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, PRAYING TO I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN; II. ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGLAURU IN ITA NO. 203/BANG/2012 DATED 18/07/2022 FOR ASSESSMENT YEAR 2007-2008 ANNEXURE-A CONFIMRING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3(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
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HC-KAR NC: 2025:KHC:48993-DB ITA No. 588 of 2023
ORAL JUDGMENT
(PER: HON'BLE MR. JUSTICE B M SHYAM PRASAD)
The Revenue is in appeal as against the order dated 18.07.2022 in ITA Nos.203 & 204/Bang/2012 on the file of the Income Tax Appellate Tribunal 'C' Bench, Bengaluru [for short, 'the Tribunal']. The Tribunal has confirmed the order dated 30.11.2011 by the Commissioner of Income Tax [Appeals]-VI, Bengaluru [for short, 'the Commissioner of Appeals']. The Commissioner of Appeals was examining the respondent - assessee's grievance with the Assessment Order dated 31.12.2010 under Section 153A read with Section 143 ( 3 ) of the Income Tax Act, 1961 [for short, 'the IT Act'].
The Assessing Officer, in terms of this order, had made the following additions:
1 Unsecured loans as discussed in para-6 6,25,000 2 Unexplained investment in JDA as discussed in para-7
23,45,000 3 Nomination fee received as
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HC-KAR NC: 2025:KHC:48993-DB ITA No. 588 of 2023
discussed in para-8 7,00,00,000 4 Additional consideration received as discussed in para-9
70,00,000 5 Suppression of sale as discussed in para-10
30,00,000 6 Income from other sources as discussed in para-11
1,05,00,000
There is no dispute about the first addition, and the dispute that is carried in appeal with the Commissioner of Appeals and to the Tribunal relates to additions in Item No. 2 to 6. The Assessing Officer has made the first of these additions on the ground that the documents, receipts, agreements recovered during the search show that Rs.15,00,000/- and Rs.8,45,000/- were paid but are not reflected in the books of accounts observing that though the respondent in the response has stated that these transactions are reflected in the Books of Accounts and a copy of the ledger account is produced, a copy is not produced.
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HC-KAR NC: 2025:KHC:48993-DB ITA No. 588 of 2023
The Assessing Officer, insofar as the next addition, has relied upon the undisputed facts that the respondent has concluded a certain transaction with a Developer undertaking the responsibilities of an intermediary in facilitating purchase of lands and that as of the relevant assessment year, the respondent has received the concerned amount and had ensured completion of the transaction for a parcel of land in favour of the Developer with the execution of the sale deed and he has joined such sale deed as a 'Confirming Party'. The next additions are also related to the same transaction with the Developer and based on certain factual findings but are with different parties.
The Commissioner of Appeals, at the respondent’s instance, has found that the first addition must be because these receipts are reflected in Schedule VI-A under the subheading 'Advances' but the Assessing Officer has not considered the
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HC-KAR NC: 2025:KHC:48993-DB ITA No. 588 of 2023
same. On the second addition, viz., identified as receipt of the nomination fee, the Commissioner of Appeals, after recording the different performances that the respondent had agreed with the Developer and observing that there were disputes about many of such performances, has opined that the transaction was not complete and assessing the receipt on Completed Contract Method will not arise while also concluding that the entire amount cannot be taxed as an income without giving credence to the expenditure if incurred. The further additions are also deleted because these transactions, though with different persons, are within the umbrella of the transaction with the Developer, and that there are pending disputes over such performances.
The Tribunal, on the first addition, has observed that the respondent had established that receipt of Rs.23,45,000/- was shown as part of the total advances in a sum of Rs.76,45,000/- in
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HC-KAR NC: 2025:KHC:48993-DB ITA No. 588 of 2023
Schedule-VI under the subheading 'Advances' but the Assessing Officer has ignored this. The Tribunal, on receipt of the nomination fee, has opined that the respondent has received this amount only as an advance and treated it as a liability in its Books of Accounts with no right to receive the said amount.
The Tribunal, on examination of the facts and circumstances borne out by the records placed, has also opined thus.
• The respondent's right to receive this amount would only accrue if the Developer [the other party to the Memorandum of Understanding [MOU]], agreed that this amount would be in terms of the MOU or there was a verdict in the competent Forum on the due performance and compliance with the performances entitling the respondent to the amount that is received, and
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HC-KAR NC: 2025:KHC:48993-DB ITA No. 588 of 2023
• Insofar as the further additions, these receipts are also part and parcel of the consideration received from the Developer under the MOU and these receipts cannot be treated as income with the dispute on whether the performance was pending.
This Court must record that the Tribunal has confirmed the deletion of the additions in the light of the pending dispute between the respondent and the Developer. Both Sri Y V Raviraj, the learned Senior Standing Counsel for the Revenue and Sri A. Shankar, the learned Senior Counsel for the respondent, are heard in the facts and circumstances to examine whether the questions proposed as substantial questions must be admitted for hearing with Sri A Shankar emphasizing that the dispute with the Developer is resolved only recently.
If the Commissioner of Appeals has interfered with the Assessing Officer's decision to
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HC-KAR NC: 2025:KHC:48993-DB ITA No. 588 of 2023
make additions as aforesaid because there is a factual error in observing that Books of Accounts have not been produced and that the nature of the transaction and the pending litigation are not examined, the Tribunal has confirmed such finding on facts. This Court, in the light of the undisputed facts and circumstances as regards the transactions with different persons and receipts being under the umbrella of an MOU with the Developer, opines that there is no perversity in the Tribunal's order to justify the questions proposed, and hence the appeal, is rejected.
Sd/- (B M SHYAM PRASAD) JUDGE
Sd/- (T.M.NADAF) JUDGE
AN/-