THE PR. COMMISSIONER OF INCOME-TAX vs. Sri Krishna Diamonds And Jewellery

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ITA/6/2024HC KarnatakaKAHC01000106202426 September 2024Bench: S.G.PANDIT,C.M. POONACHA5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court disposed of the appeal with liberty to the revenue to revive it if exceptions under CBDT circulars apply. The substantial question of law was kept open for future adjudication.

What were the facts?

The Revenue appealed against an ITAT order that treated excess stock found during a survey as business income, not unexplained income. The assessee argued the appeal should be dismissed due to low tax effect as per CBDT circulars.

What were the issues?

Whether excess stock found during a survey should be taxed as business income or unexplained income. The applicability of CBDT circulars regarding tax effect on revenue appeals.

Which sections of the Income-tax Act were involved?

Section 133A,Section 69,Section 115BBE,Section 260-A

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:40504-DB ITA No. 6 of 2024

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 26TH 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.6 OF 2024

BETWEEN:

1.

THE PR. COMMISSIONER OF INCOME-TAX, CENTRAL, 3RD FLOOR, C.R. BUILDING, QUEENS ROAD, BENGALURU-560 001.

2.

THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2(2), 3RD FLOOR, C.R. BUILDING, QUEENS ROAD, BENGALURU-560 001. …APPELLANTS

(BY SRI. DILIP M., A/W SRI. RAVIRAJ Y.V., ADVOCATES)

Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:40504-DB ITA No. 6 of 2024

AND:

SRI. KRISHNA DIAMONDS AND JEWELLERY, NO.1, COMMERCIAL STREET, BENGALURU-560 001, PAN: AAQFS5345A. …RESPONDENT

(BY SRI. SUDHEENDRA B.R., ADVOCATE)

THIS ITA / INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 01/08/2023 PASSED IN ITA NO.453/BANG/2023, FOR THE ASSESSMENT YEAR 2018-2019. PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN 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

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NC: 2024:KHC:40504-DB ITA No. 6 of 2024

ORAL JUDGMENT (PER: HON'BLE MR JUSTICE S.G.PANDIT)

Heard the learned counsel Sri. Dilip.M., along with Sri. Raviraj.Y.V., learned counsel for appellants/Revenue and learned counsel Sri. Sudheendra.B.R. for 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 01.08.2023 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.453/Bang/2023 for the assessment year 2018-19.

3.

This

Court,

admitted the appeal on 10.01.2024 to consider the following substantial question of law: “Whether on facts and circumstances of the case and in law, the Tribunal is right in holding that, the excess stock found and admitted during survey action u/s 133A of the Act has to be treated as

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NC: 2024:KHC:40504-DB ITA No. 6 of 2024

income under “profit and Gains from Business & Profession” and not as “unexplained income” u/s 69 of the Act to be subjected to tax at special rates given in section 115BBE of the IT Act.”

4.

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 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.

5.

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.

6.

In view of the aforesaid submissions, the appeal is disposed of with liberty as prayed for by the learned

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NC: 2024:KHC:40504-DB ITA No. 6 of 2024

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

SMJ List No.: 3 Sl No.: 23

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