THE PR COMMISSIONER OF INCOME TAX vs. SMT G VIJAYA

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ITA/222/2023HC KarnatakaKAHC01019430202330 September 2024Bench: S.G.PANDIT,C.M. POONACHA4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court disposed of the appeal based on CBDT circulars regarding tax effect. The court granted liberty to the revenue to revive the appeal if exceptions under the circulars apply, keeping the substantial questions of law open.

What were the facts?

The Revenue appealed against an ITAT order that restricted additions related to bogus trading liabilities. The Revenue argued that the entire trading liabilities were unproved and should have been added back under Section 68, not Section 41(1).

What were the issues?

Whether the ITAT's order restricting additions for bogus trading liabilities was perverse, and whether the onus was on the Revenue to prove unproved creditors under Section 68.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 41(1),Section 68

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:41201-DB ITA No. 222 of 2023

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. 222 OF 2023 BETWEEN:

1.

THE PR. COMMISSIONER OF INCOME TAX CENTRAL 3RD FLOOR, C R BUILDING, QUEENS ROAD, BENGALURU 560001

2.

THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1(3) 3RD FLOOR, C R BUILDING, QUEENS ROAD, BENGALURU 560001 …APPELLANTS (BY SRI. DILIP M.,ADVOCATE A/W SRI. RAVIRAJ Y V, ADVOCATE)

AND:

SMT G VIJAYA NO. 8 ASHOK NAGAR, HAVAMBHAVI,SIRUGUPPA ROAD BELLARY 583103 PAN NO AIHPG 0523H …RESPONDENT (BY SRI. NAGHARISH G S.,ADVOCATE)

THIS ITA / INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF THE INCOME TAX ACT, 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE, ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO. 948/BANG/2013 DATED 28.04.2022 FOR ASSESSMENT YEAR 2008-2009 ANNEXURE-

Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:41201-DB ITA No. 222 of 2023

D 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 learned counsel Sri Raviraj Y.V, for appellants/Revenue and learned counsel Sri Nagharish G.S., 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 28.04.2022 passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.948/Bang/2013 for the assessment year 2008-09, raising the following substantial questions of law: “1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in restricting the

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NC: 2024:KHC:41201-DB ITA No. 222 of 2023

addition relating to bogus trading liabilities to Rs.50 lakhs on estimated basis without appreciating that the material brought on record by assessing authority which proved that entire trading liabilities were unproved and as such order of Tribunal to this extent is perverse in nature?

2.

Whether on the facts and circumstances of the case and in law, the Tribunal's order can be said as perverse in nature in holding that the addition of unproved liability could be made only by invoking provisions of Section 41(1) of the Act whereas it was a case of unproved creditors and required to be added back as per provision of section 68 of the Act?

3.

Whether on the facts and circumstances of the case and in law, the Tribunal's order can be said as perverse in nature in holding that onus is on Revenue to prove bogus creditors without appreciating that burden is on assessee to discharge prima facie onus by establishing that transaction was genuine and by identifying creditors and proving their credit worthiness in relation to liabilities added back by assessing authority?

4.

Whether on the facts and circumstances of the case and in law, the Tribunal's order can be said as perverse in nature in giving relief to assessee without considering the materials on record and findings of assessing authority?”

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

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NC: 2024:KHC:41201-DB ITA No. 222 of 2023

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.

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.: 34

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