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Income Tax Appellate Tribunal, B BENCH, BANGALORE, AS
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NC: 2023:KHC:24951-DB ITA No. 79 of 2018 C/W ITA No. 80 of 2018 ITA No. 81 of 2018 ITA No. 82 of 2018
IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 18TH DAY OF JULY, 2023 PRESENT THE HON'BLE MR JUSTICE P.S.DINESH KUMAR AND THE HON'BLE MR JUSTICE T.G. SHIVASHANKARE GOWDA INCOME TAX APPEAL NO. 79 OF 2018 C/W INCOME TAX APPEAL NO. 80 OF 2018 INCOME TAX APPEAL NO. 81 OF 2018 INCOME TAX APPEAL NO. 82 OF 2018
IN I.T.A No. 79 OF 2018
BETWEEN :
PR. COMMISSIONER OF INCOME TAX -1 BMTC COMPLEX, KORMANGALA BANGALORE. 2. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(2) BANGALORE. …APPELLANTS (BY SHRI. E.I. SANMATHI, STANDING COUNSEL)
AND :
M/S. CORNERSTONE PROPERTIES PRIVATE LTD, I AND II FLOOR NO.540, C.M.H. ROAD INDIRA NAGAR BANGALORE-560 038. PAN: AACCC3343B …RESPONDENT (BY SHRI. A. SHANKAR, SENIOR ADVOCATE FOR SHRI. M. LAVA, ADVOCATE) . . . .
Digitally signed by ANUSHA V Location: HIGH COURT OF KARNATAKA
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NC: 2023:KHC:24951-DB ITA No. 79 of 2018 C/W ITA No. 80 of 2018 ITA No. 81 of 2018 ITA No. 82 of 2018
THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 08.09.2017 PASSED IN ITA NO.1715/BANG/2013, FOR THE ASSESSMENT YEAR 2007-2008, PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED 08.09.2017 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, 'B' BENCH, BANGALORE, AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEE'S CASE, IN APPEAL PROCEEDINGS IN ITA NO.1715/BANG/2013 FOR A.Y 2007-2008 & GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE.
IN I.T.A. No. 80 OF 2018
BETWEEN :
PR. COMMISSIONER OF INCOME TAX -1 BMTC COMPLEX, KORMANGALA BANGALORE.
THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(2) BANGALORE. …APPELLANTS
(BY SHRI. E.I. SANMATHI, STANDING COUNSEL)
AND:
M/S. CORNERSTONE PROPERTIES PRIVATE LTD, I AND II FLOOR NO. 540, C.M.H. ROAD INDIRA NAGAR BANGALORE-560 038. PAN: AACCC3343B …RESPONDENT
(BY SHRI. A. SHANKAR, SENIOR ADVOCATE FOR SHRI. M. LAVA, ADVOCATE)
THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 08.09.2017 PASSED IN C.O. No. 63/BANG/2014 IN ITA No. 1715/BANG/2013, FOR THE ASSESSMENT YEAR 2007-2008, PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED 08.09.2017 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, 'B' BENCH, BANGALORE, AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEE'S CASE, IN APPEAL
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NC: 2023:KHC:24951-DB ITA No. 79 of 2018 C/W ITA No. 80 of 2018 ITA No. 81 of 2018 ITA No. 82 of 2018
PROCEEDINGS IN C.O. No. 63/BANG/2014 IN ITA No. 1715/BANG/2013 FOR A.Y 2007-2008 & GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE.
IN I.T.A No. 81 OF 2018
BETWEEN:
PR. COMMISSIONER OF INCOME TAX -1 BMTC COMPLEX, KORMANGALA BANGALORE.
THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(2) BANGALORE. …APPELLANTS
(BY SHRI. E.I. SANMATHI, STANDING COUNSEL)
AND:
M/S. CORNERSTONE PROPERTIES PRIVATE LTD, I AND II FLOOR NO. 540, C.M.H. ROAD INDIRA NAGAR BANGALORE-560 038. PAN: AACCC3343B …RESPONDENT
(BY SHRI. A. SHANKAR, SENIOR ADVOCATE FOR SHRI. M. LAVA, ADVOCATE)
THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 08.09.2017 PASSED IN ITA No. 1716/BANG/2013, FOR THE ASSESSMENT YEAR 2008-2009, PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED 08.09.2017 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, 'B' BENCH, BANGALORE, AS SOUGHT FOR, IN THE RESPONDENT- ASSESSEE'S CASE, IN APPEAL PROCEEDINGS IN ITA No. 1716/BANG/2013 FOR A.Y 2008-2009 & GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE.
IN I.T.A No. 82 OF 2018
BETWEEN:
PR. COMMISSIONER OF INCOME TAX -1 BMTC COMPLEX
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NC: 2023:KHC:24951-DB ITA No. 79 of 2018 C/W ITA No. 80 of 2018 ITA No. 81 of 2018 ITA No. 82 of 2018
KORMANGALA BANGALORE.
THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(2) BANGALORE. …APPELLANTS
(BY SHRI. E.I. SANMATHI, STANDING COUNSEL)
AND:
M/S. CORNERSTONE PROPERTIES PRIVATE LTD, I AND II FLOOR NO. 540, C.M.H. ROAD INDIRA NAGAR BANGALORE-560 038. PAN: AACCC3343B …RESPONDENT
(BY SHRI. A. SHANKAR, SENIOR ADVOCATE FOR SHRI. M. LAVA, ADVOCATE)
THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 08.09.2017 PASSED IN C.O. No. 64/BANG/2014 IN ITA No. 1716/BANG/2013, FOR THE ASSESSMENT YEAR 2008-2009, PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED 08.09.2017 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, 'B' BENCH, BANGALORE, AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEE'S CASE, IN APPEAL PROCEEDINGS IN C.O. No. 64/BANG/2014 IN ITA No. 1716/BANG/2013 FOR A.Y 2008- 2009 & GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE.
THESE ITAs, COMING ON FOR FINAL HEARING, THIS DAY, P.S.DINESH KUMAR, J., DELIVERED THE FOLLOWING:
JUDGMENT
These four appeals by the Revenue directed against the order dated 08.09.2017 in ITA No.1715/Bang/2013
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passed by the ITAT1 has been admitted to consider the following questions: 1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in not considering the appeal preferred by revenue on merits challenging CIT's order holding that assessee is entitled for Section 80IB(10) deduction even when the assessee had failed to satisfy the conditions prescribed under Section 801B(10) of the Act to avail such benefit?
Whether on the facts and in the circumstances of the case, the Tribunal is right in law in quashing the assessment order passed under Section 143(3) read with Section 153A of the Act by holding that the assessment order is not passed on the basis of incriminating materials found during the course of search by relying upon the decision of this Hon’ble Court in case of M/s. Lancy Constructions which has not reached finality and is distinguishable and without appreciating that in Section 153A of the Act, there is no where mention that assessment order has to be based on some incriminating material found during the course of search?
Heard Shri. Sanmathi. E.I, learned Standing Counsel for the Revenue and Shri. A. Shankar, learned Senior Advocate for the assessee.
1 Income Tax Appellate Tribunal
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NC: 2023:KHC:24951-DB ITA No. 79 of 2018 C/W ITA No. 80 of 2018 ITA No. 81 of 2018 ITA No. 82 of 2018
At the outset, Shri. Shankar submitted that the second question may be considered first because, if the said question is answered in favour of the assessee, then the first question becomes academic in nature. Accordingly, we have first considered the second question.
Briefly stated facts of the case are, a search was conducted in assessee's premises on 28.01.2010. Thereafter, assessment was completed under Section 143(3) r/w. Section 153A of the Income Tax Act (‘the Act’ for short). The Assessing Officer held that a copy of Joint Development Agreement (JDA) dated 09.08.2004 was found during the course of search, in terms of which, assessee was only a land owner and therefore, not entitled for the benefit of Section 80IB(10) of the IT Act.
The C.I.T.(A)2 allowed assessee's appeal holding that assessee is eligible for deduction under Section 80IB(10). Revenue challenged the said order before ITAT contending inter alia that assessee was not entitled for the
2 Commissioner of Income Tax (Appeals)
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NC: 2023:KHC:24951-DB ITA No. 79 of 2018 C/W ITA No. 80 of 2018 ITA No. 81 of 2018 ITA No. 82 of 2018
said deduction. Assessee filed cross-objection contending that the Assessing Officer had no jurisdiction to pass an order as there was no incriminating material.
Shri. E.I. Sanmathi, for the Revenue, urged that notwithstanding any incriminating material, once there is a search, the Assessing Officer shall have jurisdiction to complete the assessment under Sections 143 and 153A of the IT Act. He further contended that in any event the JDA having been found during the course of search must be construed as incriminating material.
In reply, Shri.Shankar submitted that this very aspect has been considered by the ITAT in paragraph No.11 of the impugned order. The ITAT has categorically held that copy of the JDA found during the course of search was examined by the Assessing Officer by making enquiry, which is a part of the record in the proceedings. Therefore, the JDA cannot be considered as an incriminating material. In view of the law laid down in Principal Commissioner of
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NC: 2023:KHC:24951-DB ITA No. 79 of 2018 C/W ITA No. 80 of 2018 ITA No. 81 of 2018 ITA No. 82 of 2018
Income-tax, Central-3 Vs. Abhisar Buildwell (P.) Ltd3., when no incriminating material was found during the search, the Assessing Officer would not get jurisdiction to assess under Section 153A of the IT Act.
We have carefully considered rival contentions and perused the records.
In paragraph No.11 of the impugned order, the ITAT has recorded thus: “In the present case also, the JDA copy found in the course of search was the basis of deduction claimed by the assessee u/s 80IB of the IT Act and this claim was very much examined by the AO by making belated enquiry as per the enquiry letter available on pages 56 to 57 of paper book in respect of the claim of the assessee for deduction u/s. 80IB of Rs. 6,14,61,531/-. Hence in the present case, we are of the considered opinion that the JDA copy cannot be considered as an incriminating material found in the course of search and there is no reference to any other seized material in the assessment order and therefore, in the absence of any incriminating material found in the course of search, the assessment proceedings u/s. 153A of IT Act is bad in law as per this judgment of Hon’ble Karnataka High Court rendered in the case of CIT Vs. Lancy Constructions (supra) on which reliance is placed by the Id. AR of the assessee. Respectfully following this judgment of Hon’ble Karnataka High Court, we quash the
3 (2023) 149 taxmann.com 399 (SC)
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assessment orders passed by the AO u/s. 143(3) r.w.s. 153A for Assessment years 2006-07. 2007-08 and 2008-09”
A careful perusal of the above shows that the JDA was considered by the Assessing Officer in the original assessment which was also a part of the record in the instant proceedings. In Abhisar, it is held that completed assessment can be interfered with by the Assessing Officer while making assessment under Section 153(A) only on the basis of some incriminating material unearthed during the course of search or requisitioned documents or undisclosed income or property discovered during the course of search, which were not already disclosed or made known in the course of original assessment. The fact recorded by the ITAT demonstrates that the JDA was available before the Assessing Officer in the ‘original’ proceedings.
In addition, it was also urged by Shri.Shankar that for A.Y.2008-09, the Assessing Officer has given relief based on the very same document. Shri. Shankar also submitted that on 20.03.2014, there was another search pursuant to which assessment for A.Y. 2008-09 was
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re-opened. The Assessing Officer has given the benefit for assessment year 2008-09.
Shri. Sanmathi argument is, assessment order for A.Y. 2008-09 is not relevant for consideration of this case.
In the light of facts recorded above, the main question for consideration is, whether there was any incriminating material found during the course of search on 20.03.2014 and whether the JDA was considered at the time of original assessment.
In view of the categorical finding recorded by the ITAT that the JDA was available for consideration of the Assessing Officer for original assessment and no other incriminating material was found, in the light of law laid down in Abhisar, the Assessing Officer did not have jurisdiction to re-assess the order under Section 153(A) of the Act. Accordingly, question No.2 must be answered in favour of the assessee and against the Revenue. Consequently, the first question does not survive for consideration.
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NC: 2023:KHC:24951-DB ITA No. 79 of 2018 C/W ITA No. 80 of 2018 ITA No. 81 of 2018 ITA No. 82 of 2018
Hence, the following: ORDER
(i) Appeals are dismissed.
(ii) Question No.2 is answered in favour of the assessee and against the revenue.
(iii) Question No.1 does not survive for consideration.
No costs.
Sd/- JUDGE
Sd/- JUDGE
PA/SPS List No.: 1 Sl No.: 22