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HC-KAR NC: 2025:KHC:34342-DB ITA No. 193 of 2024
IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 2ND DAY OF SEPTEMBER, 2025 PRESENT THE HON'BLE MR. JUSTICE S.G.PANDIT AND THE HON'BLE MR. JUSTICE K. V. ARAVIND INCOME TAX APPEAL No. 193 OF 2024 BETWEEN:
THE PR. COMMISSIONER OF INCOME TAX, 5TH FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU - 560095.
THE INCOME TAX OFFICER, WARD-6(2)(4), 2ND FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU - 560095. …APPELLANTS (BY SRI Y. V. RAVIRAJ, SENIOR STANDING COUNSEL)
AND:
M/S THE HAMLET, No.11, KEMWELL HOUSE, TUMKUR ROAD, YESHWANTHPUR, BENGALURU - 560 022 PAN. AAAFT 6690D, REP. BY MANAGING DIRECTOR. …RESPONDENT (BY SRI A. SHANKAR, SENIOR ADVOCATE FOR SRI SHREEHARI KUTSA, ADVOCATE)
Digitally signed by VALLI MARIMUTHU Location: HIGH COURT OF KARNATAKA
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HC-KAR NC: 2025:KHC:34342-DB ITA No. 193 of 2024
THIS ITA / INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 16.11.2023 PASSED IN ITA No.70/BANG/2023, FOR THE ASSESSMENT YEAR 2012-13 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.70/BANG/2023 DATED 16.11.2023 FOR ASSESSMENT YEAR 2012-2013 ANNEXURE-A AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE INCOME TAX OFFICER, WARD-6 2 4, BENGALURU.
THIS APPEAL, COMING ON FOR ADMISSION THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE S.G.PANDIT and HON'BLE MR. JUSTICE K. V. ARAVIND
ORAL JUDGMENT
(PER: HON'BLE MR. JUSTICE K.V. ARAVIND)
The Revenue is in appeal, assailing the order passed by the Income Tax Appellate Tribunal (hereinafter referred to as 'the Tribunal') in ITA No.70/Bang/2023 dated 16.11.2023, pertaining to the Assessment Year 2012-2013.
The following substantial questions of law are raised for consideration of this Court: " 1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law by allowing fresh evidence being filed for the first time before it which has not remanded or scrutinized by the
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HC-KAR NC: 2025:KHC:34342-DB ITA No. 193 of 2024
revenue for examining the veracity of such evidence"? 2. Whether on the facts and in the circumstances of the case, the Tribunal is right in law deleting addition of Rs.7,00,00,000/-brought to tax under section 68 of the act when the purchasers of the preference shares had not established their credit worthiness or the genuineness of the transaction before the AO"?
"Whether in the facts and circumstances of the case, the decision of the ITAT is devoid of principle of natural justice and matter ought to be remanded back to Assessing Officer as the details regarding acquisition of alleged preferred shares or the alleged sale transaction regarding transfer of land were never produced during assessment proceedings?"
The assessee filed its return of income, declaring a short-term capital loss on the sale of shares held in M/s. Kemwell Biopharma Private Limited to three entities, namely, M/s. Newedge Realtors Private Limited, M/s. Swift Residency Private Limited, and M/s. Rootstar Builders Private Limited (hereinafter referred to as the 'purchasers'). The Assessing Officer, having doubted the genuineness of the transactions, held that the sum of Rs.7 Crores received on account of the sale of shares is taxable under Section 68 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act').
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HC-KAR NC: 2025:KHC:34342-DB ITA No. 193 of 2024
On appeal, the CIT(A) upheld the order of the Assessing Officer by order dated 27.12.2022. Thereafter, the assessee preferred an appeal before the Tribunal. The Tribunal, by the impugned order dated 16.11.2023, deleted the addition of Rs. 7 Crores made under Section 68 of the Act, holding that the transaction entered into by the assessee was genuine.
Sri Y.V. Raviraj, learned Senior Standing Counsel appearing for the appellant-Revenue, submits that the assessee has failed to substantiate the identity, genuineness, and creditworthiness of the purchasers; hence, the addition was rightly made under Section 68 of the Act. It is further submitted that the Tribunal, having considered additional evidence produced for the first time, recorded a finding in favour of the assessee. Learned counsel contends that, upon acceptance of such additional evidence, the Tribunal ought to have remanded the matter to the Assessing Officer for fresh consideration.
Per contra, Sri A. Shankar, learned Senior Counsel appearing on behalf of Sri Shreehari Kutsa, learned counsel for the respondent-assessee, submits that the Tribunal has not
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HC-KAR NC: 2025:KHC:34342-DB ITA No. 193 of 2024
relied on any additional evidence, contrary to the contentions of the Revenue. It is submitted that the Tribunal, upon examination of the documents produced before the Assessing Officer, namely, the Bank Statements and other Books of Accounts, held that the purchaser companies were genuine and possessed sufficient funds at their disposal. Learned Senior Counsel further submits that, as the alleged credit of Rs.7 Crores has been satisfactorily explained by the assessee, Section 68 of the Act is not attracted. It is contended that the finding recorded by the Tribunal is a finding of fact and, therefore, no substantial question of law arises for consideration by this Court. In view of the above submissions, learned Senior Counsel prays for dismissal of the appeal.
We have considered the submissions advanced by the learned counsels for the parties and carefully perused the papers on record.
The Assessing Officer doubted the transaction of sale of shares by the assessee held in M/s. Kemwell Biopharma Private Limited to three entities, namely, M/s. Newedge Realtors Private Limited, M/s. Swift Residency Private Limited,
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HC-KAR NC: 2025:KHC:34342-DB ITA No. 193 of 2024
and M/s. Rootstar Builders Private Limited. Disagreeing with the explanation offered by the assessee, the Assessing Officer held that the sum of Rs.7 Crores is taxable in the hands of the assessee under Section 68 of the Act. The CIT(A) confirmed the finding recorded by the Assessing Officer. However, the Tribunal examined the Bank Statements and other evidence on record to determine the genuineness of the transaction as well as the identity and creditworthiness of the purchasers. After referring to the Bank Statements of the three purchaser companies, the Tribunal held that the purchasers had sufficient funds at their disposal for the acquisition of the shares. The Tribunal further noted the net worth of these companies, which is as under:
NAME OF THE COMPANY SHAREHOLDERS FUNDS(SHARE CAPITAL + RESERVES & SURPLUS) RELEVANT PAGE No. OF PAPER BOOK FILED 1. NEWEDGE REALTORS PVT. LTD. 29,97,00,604/- 128 2. ROOTSTAR BUILDERS PRIVATE LIMITED 21,83,01,898/- 142 3. SWIFT RESIDENCY PRIVATE LIMITED 9,45,00,930/- 155
The Tribunal further recorded a finding that the Assessing Officer did not question the creditworthiness,
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HC-KAR NC: 2025:KHC:34342-DB ITA No. 193 of 2024
genuineness of the transaction, or the identity of the purchasers. In fact, the Tribunal observed that the purchasers had responded to the notices issued by the Assessing Officer under Section 133(6) of the Act. Apart from doubting the transaction, no other material was brought on record by the Assessing Officer to discredit the explanation offered by the assessee.
We have perused the findings recorded by the Tribunal. Such findings are purely factual and based on the documents available on record. It is a settled position that a finding of fact, unless shown to be perverse, does not give rise to any substantial question of law. The findings recorded by the Tribunal are, therefore, findings of fact. We find no substantial question of law warranting interference with the order of the Tribunal. Accordingly, the appeal filed by the Revenue is dismissed.
Sd/- (S.G.PANDIT) JUDGE
Sd/- (K. V. ARAVIND) JUDGE VBS/List No.: 1 Sl No.: 30