PR COMMISSIONER OF INCOME TAX CENTRAL vs M/S PARESH EXPORTS P LTD

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 17TH DAY OF NOVEMBER, 2020

PRESENT

THE HON’BLE MR. JUSTICE ALOK ARADHE

AND

THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD

I.T.A. NO.514 OF 2017

BETWEEN:

PR. COMMISSIONER OF INCOME TAX (CENTRAL), C.R. BUILDINGS, QUEENS ROAD,

BENGALURU – 560 001.

THE DY. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-1(4),

BENGALURU.

... APPELLANTS (BY SRI E.I.SANMATHI, ADV.)

AND:

M/S. PARESH EXPORTS (P) LTD., NO.104, 1ST FLOOR, 56TH CENTRE POINT, RESIDENCY ROAD, BENGALURU – 560 025. ... RESPONDENT (VIDE COURT ORDER DT:22/01/2020 SERVICE OF NOTICE TO RESPONDENT IS ACCEPTED.) - - -

THIS I.T.A. IS FILED UNDER SECTION 260-A OF I.T.ACT, 1961, ARISING OUT OF ORDER DATED 09/12/2016 PASSED IN ITA NO.251/BANG/2013, FOR THE ASSESSMENT YEAR 2003-2004 PRAYING TO (1) DECIDE THE FOREGOING QUESTIONS OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULTED BY THE HON’BLE COURT AS DEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED:09/12/2016 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, ‘C’ BENCH, BENGALURU AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEE’S CASE, IN APPEAL PROCEEDINGS IN ITA NO.251/BANG/2013 FOR A.Y.2003-2004 & GRANT SUCH OTHER RELIEF AS DEEMED FIT.

THIS I.T.A. COMING ON FOR FINAL HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING: JUDGMENT

This appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’, for short) has been preferred by the revenue. The subject matter of the appeal pertains to the Assessment Years 2003-04 and 2005-06. The appeal was admitted by a Bench of this Court vide order dated 19.02.2020 on 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 deleting the addition made in respect of

cash sales not accounted without considering the fact that turnover reflected as per cash book does not reflect the sales as per bill book and the assessee has not been able to reconcile the same with evidences during the course of assessment proceedings and appellate proceedings?

Whether on the facts and in the circumstances of the case, the Tribunal is right in law in deleting the addition made by assessing authority in respect of peak negative cash balance without appreciating the fact that the assessee was unable to substantiate the sales made for the period March 2003 reflected as sales on 3-3-2003 with any sale bills and negative cash balance was worked out based on audited books of accounts of the assessee and the return of income filed by the assessee?

Whether on the facts and in the circumstances of the case, the Tribunal is right in law in deleting the addition made by assessing authority in respect of interest income without appreciating that the interest income cannot be adjusted and set off against other cost/business expenditure after setting up of business and the

assessing authority has rightly made addition in accordance with the provisions of the Act?”.

The facts giving rise to filing of the appeal briefly stated are that the assessee is engaged in the business of trading in bullion. A search and seizure operation was conducted on the premises of the assessee on 28.01.2005 and several incriminating materials were found. Thereafter, a Notice under Section 153A of the Act was issued on 18.04.2005 in respect of Assessment Years 2003-04 and 2005-06 and Assessment Orders were passed under Section 153A read with Section 143(3) of the Act on 25.06.2007. Being aggrieved, the asseessee filed appeals before the Commissioner of Income-Tax (Appeals), which were partly allowed by a Common Order dated 09.11.2012. The revenue thereafter, approached the Income Tax Appellate Tribunal (hereinafter referred to as ‘the Tribunal’, for short). The Tribunal by a Common Order dated 09.12.2016 dismissed the appeal pertaining to the

Assessment Year 2005-06 whereas, appeal pertaining to the Assessment Year 2003-04 was partly allowed. In the aforesaid factual background, this appeal has been preferred.

Learned counsel for the revenue submitted that with regard to substantial question of law No.3 framed in the memo of appeal, the matter has been remitted to the Assessing Officer and since the substantial questions of law No.1 and 2 are inextricably involved with substantial question of law No.3, the matter ought to have been remitted by the Tribunal to the Assessing Officer. It is further submitted that the Tribunal, which is a final fact finding authority ought to have assigned reasons for confirming the decision of the Commissioner of Income-Tax (Appeals).

We have considered the submissions made by learned counsel for the revenue and have perused the records. The Tribunal has upheld the finding

recorded by the Commissioner of Income-Tax (Appeals), which reads as under:-

’10. We have considered the above submissions. It is clear from the above that the CIT (A) has examined this issue and drawn due conclusion. The Revenue has not brought any material to assail such conclusion and hence we confirm the decision of the CIT (A).’

Thus, from a perusal of paragraph No.10 of the Order passed by the Tribunal, it is evident that the Tribunal has not assigned any reasons worth naming for confirming the finding recorded by the Commissioner of Income-Tax (Appeals). From a perusal of paragraph No.6 of the Order passed by the Tribunal, it is evident that the Tribunal has remitted the matter to the Assessing Officer with regard to the substantial question of law No.3 involved in this appeal. We find that substantial questions of law No.1 and 2 are inextricably involved with substantial question of law No.3. Since the

Order of the Tribunal, which is a final fact finding authority is cryptic and suffers from the vice of non- application of mind, the same is hereby quashed. The matter is remitted to the Tribunal to consider the substantial questions of law No.1 and 2 afresh by assigning reasons.

Since the matter has been remitted to the Tribunal for decision afresh, it is not necessary for us to answer the substantial questions of law framed in this appeal.

In the result, the appeal is disposed of.

Sd/- JUDGE

dn/- CT-HR

PR COMMISSIONER OF INCOME TAX CENTRAL vs. M/S PARESH EXPORTS P LTD