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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
ON THE 13TH DAY OF NOVEMBER, 2018
BEFORE THE HON'BLE MR. JUSTICE RAVI MALIMATH
AND
THE HON'BLE MR. JUSTICE K.NATARAJAN
INCOME TAX APPEAL No.239 OF 2010
BETWEEN:
The Commissioner of Income -Tax
Central Circle, C.R. Building
Queens Road, Bangalore.
The Asst. Commissioner of Income -Tax
Central Circle – 2(3), C.R. Building
Queens Road, Bangalore.
… Appellants
(By Sri. K.V. Aravind, Advocate)
AND:
M/S Concorde Shelters Pvt. Ltd., No.42, Rajini Towers 27th Cross, 7th B Main IV Block, Jayanagar Bangalore. …Respondent
(By Sri.A Shankar and Sri. M. Lava, Advocates)
This income tax appeal is filed under Section 260-A of I.T Act, 1961 arising out of order dated: 10.02.2009 passed in ITA No.855/BNG/2009, for the Assessment year 2005-06 praying to i) formulate the substantial questions of law stated therein ii) allow the appeal ant set aside the order passed by
the ITAT Bangalore in ITA No.855/BNG/2009, dated 10.02.2009 and confirm the order passed by the Assistant Commissioner of Income Tax, Circle-2(3), Bangalore and etc.
This income tax appeal, coming on for hearing, this day, RAVI MALIMATH.J., delivered the following:
J U D G M E N T
On 13.04.2005, the premises of the assessee was searched under Section 132 of the Income Tax Act. Consequent to the search, a notice was issued under Section 153A of the Income Tax Act. In response to the said notice, the assessee filed a letter stating that the return of income filed originally on 31.10.2005 be treated as the return filed in response to the notice. The assessee filed return of income at Rs.1,45,88,733/-. The assessing officer by his order vide Annexure-A dated 28.12.2007, adopted the figure of a sum of Rs.6,91,60,347/- as undisclosed investment and added the same to the income of the assessee. Aggrieved by the same, an appeal was filed before the Commissioner of Income Tax (Appeals). By the order vide Annexure-B dated 02.06.2009, the appeal was allowed. The addition made in respect of work-in-progress was set-aside. Challenging the same, the Revenue preferred an appeal before the Income-Tax Appellate
Tribunal. The Tribunal, by its order dated 10.02.2009 vide Annexure-C, dismissed the appeal. Hence, the present appeal by the Revenue.
By order dated 28.05.2012, the appeal was admitted to consider the following substantial questions of law:
(i) Whether the appellate authorities were correct in holding that a sum of Rs.6,91,60,347/- the difference between work in progress shown as on 31.03.2005 of Rs.14,64,97,693/- by the assessee and the certificate issued by the assessee’s architect/structural engineer/civil engineer dated 28.02.2005 showing Rs.21,56,58,040/- supported by the bills raised to the customers cannot be treated as the income of the assessee as the same had been boosted to avail of bank loan?
(ii) Whether the Tribunal is justified in accepting the explanation offered by the assessee at variance with its own admitted documents and more so when such documents had been unearthed by the revenue in the course of search conducted in terms of Section 132 of the Income Tax Act, 1961, for the purpose of deciding the appeal before it?
Both the learned counsels submitted that the substantial questions of law, on which the appeal was admitted may not arise for consideration. They would submit that the only substantial question of law that arises for consideration is as to whether the orders passed by the authorities are sustainable in law in view of non-considering the material available on record?
Having considered the contentions, we concur with the contentions advanced by both the learned counsels. Therefore, both the substantial questions of law on which appeal was admitted by the order dated 28.05.2012 are modified. The appeal shall be considered on the following substantial questions of law:
Whether the authorities were justified in passing the impugned orders without considering the relevant material on record?
The counsel for the assessee contends that the valuation made by the District Valuation Officer is much less than the return as submitted by the assessee. On the other
hand, the counsel for the revenue contends that the report was not even available before the assessing authority. The same is countered by the counsel for the assessee who indicates that the report was placed before the assessing authority before the assessment order could be passed. Even otherwise, on considering the impugned orders we do not find that the report of the District Valuation Officer has been considered. Therefore, we are of the view that non- consideration of the report would be erroneous. Non- consideration of relevant material would necessarily vitiate the proceedings.
Under these circumstances, in view of non- consideration of the relevant material on record we find that the interest of the assessee as well as the Revenue stands affected by such non-consideration. Therefore, we deem it just and necessary that while answering the substantial question of law the matter be remanded for a fresh consideration before the assessing authority. Consequently, the substantial question of law is answered by holding that the authorities were not justified in passing the impugned orders without considering the relevant material on record.
The substantial question of law is accordingly answered. Consequently, the appeal is allowed. The order of the Tribunal dated 10.02.2010 passed in I.T.A.No.855/Bang/2009 is set aside. The matter stands remitted to the assessing authority for considering the issue pertaining to the amounts expended towards work-in-progress for the assessment year 2005-06, based on the aforesaid observations.
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