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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 1ST DAY OF AUGUST, 2022
PRESENT
THE HON’BLE MR. JUSTICE P.S. DINESH KUMAR
AND THE HON’BLE MRS. JUSTICE M.G. UMA
I.T.A NO.433/2016
BETWEEN: 1. LATE SRI. M.L. KRUPAL REP. BY HIS L/R'S
1(A). SUVINA KRUPAL WIFE OF LATE SRI. M.L. KRUPAL
1(B). EMANI M.K. DAUGHTER OF LATE SRI. M.L. KRUPAL
BOTH ARE RESIDING AT I.B.ROAD, NEAR ANJANEYA TEMPLE, SOMWARPET, KODAGU DISTRICT - 571 236
…APPELLANTS
(BY SHRI. V. CHANDRASHEKAR, ADVOCATE FOR SHRI. M. LAVA, ADVOCATE)
AND: THE INCOME - TAX OFFICER, WARD-1. SRIVALLI BUILDING, CHIKPET, MADIKERI - 571 201.
…RESPONDENT (BY SHRI. K.V. ARAVIND, ADVOCATE)
THIS ITA IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 06/05/2016 PASSED IN ITA NO.380/BANG/2012 AND ITA NO.382/BANG/2012, FOR THE ASSESSMENT YEAR 2005-2006. PRAYING TO FORMULATE THE SUBSTANTIAL QUESTION OF LAW AS STATED ABOVE AND ANSWER THE SAME IN FAVOUR OF THE APPELLANT AND ETC.,
THIS ITA COMING ON FOR FINAL HEARING, THIS DAY, P.S.DINESH KUMAR, J., DELIVERED THE FOLLOWING:
2 JUDGMENT
This appeal by the assessee, has been admitted to consider following questions of law: 1. Whether the Tribunal was justified in law in upholding the order of the learned Commissioner of Income-tax (Appeals) by giving a perverse finding that difference between the sales tax annual return and the monthly return of Rs 6,34,501/- will become income and represent unaccounted sales on the facts and circumstances of the case?
Whether the Tribunal was justified in law in adding a sum of Rs 15,95,090/- either as Gross profit addition or being difference in closing stock as per books and as given to bank on the facts and circumstance of the case.
Without prejudice, whether the Tribunal was justified in law in confirming the addition of Rs. 15,95,090/- as gross profit addition on account of excess stock given in Bank statements and consequently passed a perverse order on the facts and circumstances of the case?
3 4. Whether in law the Tribunal can change the foundation of addition from 69C of the Act as held by the learned Commissioner of Income-tax (Appeals) to 69 A of the Act and further whether the provisions of Section 69A of the Act are applicable on the facts and circumstances of the case?
Whether the Tribunal was justified in confirming an amount of Rs 7,24,000/- from three creditors on unsustainable grounds and consequently passed a perverse finding on the facts and circumstance of the case.
Whether the Tribunal was justified in confirming an amount of Rs 11,88,000/- on the ground that no further details have been filed which is contrary to record and thus passed a perverse order on the facts and circumstance of the case.
Whether the Tribunal was justified in law in holding that CIT(A) has set aside the assessment to the file of the assessing officer in relation to an addition of Rs 3,50,06,130/- as unexplained credit when the commissioner has only directed the assessing officer to work out the amount involved after giving clear
4 directions in such regard on the facts of the case.
Whether the Tribunal ought to have dismissed the ground of the revenue as the assessing officer has examined the entire matter and has granted deduction to an extent of Rs 3,12,86,069/- and thus remanding the file of the CIT(A) is perverse in law on the facts and circumstance of the case.
Whether the Tribunal was justified in law to have remanded the matter of unexplained credit of Rs 37,20,061/- to the file of CIT(A) on the facts of the case."
Heard Shri. V.Chandrashekar, learned advocate for the assessee and Shri. K.V.Aravind, learned Senior Standing Counsel for the Revenue.
Brief facts of the case are, pursuant to a survey conducted at assessee's premises, re-assessment order was passed for the Assessment Year 2005-06, adding income of Rs.2,01,430/-. The Assessing Officer held income rounded of to Rs.4,44,50,810/-. Feeling aggrieved by the said order,
5 assessee preferred an appeal before the Commissioner of Income Tax (Appeals)1, who by his order dated 29.11.2011, has directed so far as A.Y.2005-06 is concerned, as follows: "It would be more appropriate to work out the peak of the credits to arrive at the unaccounted money deposited for the purpose of these transactions. Further, the AO is directed to work out the result of these purchases and sales and make appropriate addition on this count also. For the A.Y.2004-05 in the appeal order cited supra, it is observed that the opening stock as on 31.3.2003 is available for sale for depositing into OD account. The AO is directed to keep this aspect also and work out the peak credit while giving due credit for the closing stock of earlier year which would naturally be available for deposit. Accordingly, the appeal on this ground is partly allowed."
Both Assessee and Revenue challenged the above order. Revenue's appeal has been dismissed. Assessee's appeal has been allowed in part and the matter has been remitted to CIT(A) for fresh decision. Feeling aggrieved, assessee has filed this appeal.
Shri Chandrashekar for the assessee submitted that the order passed by CIT(A) is unambiguous.
1 CIT(A)
6 While partly allowing the appeal, the CIT(A) has given specific directions to the Assessing Officer. The only act that the Assessing Officer was required to do was to give effect to the order passed by the CIT(A), which the Assessing Officer has done by passing order dated 27.01.20122.
Opposing the appeal, Shri Aravind, in substance, submitted that though the word used is 'partly allowed' by the CIT(A), the CIT(A) has remanded the matter to the Assessing Officer, which power he did not have as per Section 251 of the Income Tax Act, 1961. Though the Assessing Officer has mentioned in his order as per Annexure-K that he was giving effect to the order passed by the CIT(A), he has applied his mind and has deleted certain amounts which amounts to re-assessment. Thus he has exercised the powers which can be exercised only when the matter is remanded to him.
2 Annexure-K
7 7. We have carefully considered the submissions made by the learned advocates on both sides and perused the records.
In his order, the CIT(A) has held that it would be appropriate to work out the peak of the credits to arrive at the unaccounted money. He has also referred to the A.Y.2004-05 in the order to reckon the opening stock as on 31.03.2003. The direction is also specific to work out peak credit while giving credit for the closing stock.
A careful perusal of the consequent order passed by the Assessing Authority shows that he has restricted the order to give effect to the order passed by the CIT(A). The contention urged on behalf of the Revenue that he has deleted certain amount which amounts to fresh assessment is not tenable because he has passed the order within the parameters set by CIT(A). Therefore, the impugned order remitting the matter to the CIT(A) is not sustainable. The ITAT has dismissed Revenue's appeal as the matter was remanded to the CIT(A). The Assessing Officer has
8 passed order as per Annexure-K to give effect to the order passed by the CIT(A).
In our considered view, it would be appropriate for ITAT to re-examine the matter again.
At this stage, it was urged by Shri Aravind, that the ITAT may be directed to consider Revenue's appeal also afresh. It is a fair submission and it is accepted.
In view of the above, the following: ORDER i. Appeal is allowed in part;
ii. The matter is remitted to the ITAT for re-consideration so far as A.Y.2005-06 is concerned, in both appeals ITA.No.380/Bang/2012 and ITA.No.382/Bang/2012 and in Revenue's appeal with regard to grounds No.1 and 2 at Page No.96 of memorandum of appeal filed by the Revenue before the ITAT; and
iii. Questions No.7 and 8 in this appeal are held in favour of the Assessee and
9 against the Revenue. After remand, ITAT shall consider remaining questions Nos.1, 2, 3, 4, 5, 6 and 9.
No costs.
Sd/- JUDGE
Sd/- JUDGE
SMJ