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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 14TH DAY OF SEPTEMBER, 2021
PRESENT
THE HON’BLE MRS.JUSTICE S.SUJATHA
AND
THE HON’BLE MR. JUSTICE RAVI V. HOSMANI
I.T.A.No.10/2014
BETWEEN :
H.N.SUBBA RAMA GUPTA (HUF) REP BY ITS KARTA SHRI H.N.SUBBA RAMA GUPTA PROP: GUPTA ENTERPRISES APMC YARD, B.M.ROAD, HASSAN-573201
...APPELLANT
(BY SRI V.CHANDRASHEKAR, ADV. A/W SRI BHAIRAV KUTTAIAH, ADV.)
AND :
THE INCOME TAX OFFICER WARD-2, VIJAYANAGAR ROAD, BELUR ROAD, HASSAN-573201
…RESPONDENT
(BY SRI JEEVAN J. NEERALGI, ADV.)
THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 05.07.2013 PASSED IN ITA NO.1611/BANG/2012, FOR THE ASSESSMENT YEAR 2007-2008 PRAYING TO 1. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED AS STATED ABOVE AND ANSWER THE SAME IN FAVOR OF THE APPELLANT. 2. ALLOW THE APPEAL AND SET ASIDE THE FINDINGS TO THE EXTENT AGAINST THE APPELLANT IN THE ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL,
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BANGALORE 'B' BENCH, BANGALORE IN ITA NO.1611/BANG/2012 DATED 05.07.2013 RELATING TO THE ASSESSMENT YEAR 2007-2008.
THIS APPEAL COMING ON FOR FINAL HEARING, THIS DAY, S. SUJATHA, J., DELIVERED THE FOLLOWING:
J U D G M E N T
This appeal is filed by the assessee under Section 260A of the Income Tax Act, 1961 (for short, ‘the Act’) assailing the order dated 05.07.2013 passed by the Income Tax Appellate Tribunal, Bengaluru ‘B’ Bench in ITA No.1611/Bang/2012 relating to the assessment year 2007-08.
The appeal was admitted by this Court to consider the following substantial questions of law: “(a) Whether the assessing officer erred in law in assessing an amount of Rs.8,00,000/- and Rs.71,169/- belonging to Shri H.N.Subbarama Gupta and his deceased wife Smt.Vathsala in their personal capacities, in the hands of the HUF on the basis of mere surmises and conjectures and consequently passed a perverse order under the facts and circumstances of the case?
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(b) Whether the authorities below failed to appreciate that consent cannot confer jurisdiction and the amount of Rs.80,00,000/- does not belong to the Appellant and hence the assessment is bad in law and consequently passed a perverse order? (c) Whether the authorities below are justified in levying interest under Section 234B of the Act and more so that the period, rate and quantum are contrary to the relevant section of the Act and the decision of this Hon’ble Court in the case of Vijay Kumar Saboo (HUF) v. Assistant Commissioner of Income Tax reported in 340 ITR 382 on the facts and circumstances in this case?”
The assessee, a Hindu Undivided Family (HUF, for short) represented by its kartha, Shri H.N.Subba Rama Gupta, is the proprietor of Gupta Enterprises, Hassan, which derives income from business as well as from house properties. The assessee had furnished his return of income for the assessment year in question declaring a total income of Rs.1,97,500/- on 20.02.2008 which was subsequently revised on 31.03.2010
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admitting a total income of Rs.9,22,490/-. The Assessing Officer initiated proceedings under Section 147 of the Act. During the course of assessment proceedings, the Assessing Officer noticed admitted income of Rs.8,00,000/- and the investment made in construction of house properties, made an addition of Rs.71,169/- as unexplained cash deposit found in the bank account maintained in the joint names of the members of the assessee-HUF. The same was, therefore, brought to tax.
Being aggrieved, the assessee preferred an appeal before the CIT (Appeals) unsuccessfully. On further appeal before the Tribunal, the same grounds now urged were taken and the same having been dismissed, this appeal is preferred by the assessee.
The learned counsel appearing for the assessee would submit that the authorities have failed to appreciate that the addition of Rs.71,169/- being the
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closing balance of the joint account of individuals who are members of HUF, the same ought not to have been taxed in the hands of the HUF. In other words, he contended that when the bank account does not pertain to the HUF and it is only a joint account of two individuals, the same ought not to have been considered as unexplained cash deposit in the hands of the HUF. At the most, the same ought to have been assessed in the hands of the said two individuals who are the account holders.
The learned counsel appearing for the Revenue, on the contrary, justifying the impugned orders, submitted that the authorities have critically analysed the issue while dismissing the grounds urged by the assessee in challenging the addition of Rs.71,169/-. Indeed the assessee has filed the return declaring unexplained investment of Rs.8,00,000/-. No defence about the source of income taken before the CIT
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(Appeals) was raised before the Assessing Officer pursuant to the notice issued under Section 148 of the Act. Moreover, the issues now raised being pure questions of fact, the same cannot be considered as substantial questions of law in adjudicating the appeal filed under Section 260A of the Act.
We have considered the rival submissions of the learned counsel for the parties and perused the material on record.
The assessee having filed the revised return declaring unexplained investment of Rs.8,00,000/-, made an effort to explain the source of income before the CIT (Appeals) contending that the amount of Rs.3,87,875/- was the contribution of the wife of Subba Rama Gupta having generated the same from the sale of her jewelry and an amount of Rs.4,12,125/- was the contribution of Subba Rama Gupta as the Kartha of the HUF having accumulated over the years in his
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individual funds. Such explanation was offered for the first time before the CIT (Appeals) which indeed was not supported by any material evidence.
Having considered these aspects, the Tribunal has rightly rejected the appeal as far as these grounds are concerned. The argument advanced by the learned counsel for the appellant that the Assessing Officer ought not to have assessed to tax the amount of Rs.71,169/- in the hands of the HUF found in the joint names of Subba Rama Gupta and his wife is totally misconceived for the reason that the fact finding authorities have given a categorical finding that the members of HUF had no independent source of income and moreover, the said factual aspect was admitted by the assessee before the Assessing Officer, as recorded by the CIT (Appeals) and the Tribunal. In such circumstances, the assessee declaring his income by filing a revised income and offering to tax the amount
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utilized for the purpose of construction cannot be permitted to contend that the amount in the joint names of two members of the HUF cannot be considered to be the income of the HUF. These factual aspects having been considered by the fact finding authorities, we do not find any merit in considering the issues which are purely fact related, in appeal proceedings under Section 260A of the Act. Accordingly, we answer the substantial questions of law in favour of the Revenue and against the assessee.
In the result, the appeal stands dismissed.
SD/- JUDGE
SD/- JUDGE
VGH