THE PRINCIPAL COMMISSIONER vs. SRI.BASETTEPPA B BADAMI

IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH

DATED THIS THE 05TH DAY OF FEBRUARY, 2018

PRESENT

THE HON’BLE MRS. JUSTICE S. SUJATHA

AND

THE HON’BLE MR. JUSTICE JOHN MICHAEL CUNHA

I.T.A. NO.100001/2017 C/W. I.T.A. NOS.100002/2017, 100008/2017 AND 100092/2016

IN ITA NO.100001/2017 BETWEEN :

OF INCOME TAX, DR.B.R.AMBEDKAR

VEEDHI, OPP: CIVIL HOSPITAL,

BELAGAVI.

WARD-2(2), BELAGAVI. … APPELLANTS (BY SRI.Y.V.RAVIRAJ, ADV.)

AND :

SRI.BASETTEPPA B BADAMI, PROP.: M/S BELGAUM PIPES AND TUBES, OLD P.B.ROAD, CANTONMENT COMPLEX, BELGAUM. … RESPONDENT (BY SRI.PRAMOD Y VAIDYA, ADV. AND SRI.SHASHANK S HEGDE, ADV.)

THIS APPEAL IS FILED UNDER SECTION 260A OF THE INCOME TAX ACT, 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTION OF LAW STATED ABOVE AND ALLOW

: 2 : THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, PANAJI BENCH, PANAJI, IN MA NO.13/PAN/2015 IN ITA NO.185/PNJ/2014, DATED 22.07.2016 AND CONFIRM THE ORDER PASSED BY THE INCOME TAX OFFICER, WARD-2(2), BELAGAVI.

IN ITA NO.100002/2017 BETWEEN :

OF INCOME TAX, DR.B.R.AMBEDKAR

VEEDHI, OPP: CIVIL HOSPITAL,

BELAGAVI.

WARD-2(2), BELAGAVI. … APPELLANTS (BY SRI.Y.V.RAVIRAJ, ADV.)

AND :

SRI.BASETTEPPA B BADAMI, PROP.: M/S BELGAUM PIPES AND TUBES, OLD P.B.ROAD, CANTONMENT COMPLEX, BELGAUM. … RESPONDENT (BY SRI.PRAMOD Y VAIDYA, ADV. AND SRI.SHASHANK S HEGDE, ADV.)

THIS APPEAL IS FILED UNDER SECTION 260A OF THE INCOME TAX ACT, 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTION OF LAW STATED ABOVE AND ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, PANAJI BENCH, PANAJI, IN MA NO.13/PAN/2015 IN ITA NO.186/PNJ/2014, DATED 22.07.2016 AND CONFIRM THE ORDER DATED 01.03.2013 PASSED BY THE INCOME TAX OFFICER, WARD-2(2), BELAGAVI FOR THE A.Y.2010-11.

IN ITA NO.100008/2017 BETWEEN :

OF INCOME TAX, DR.B.R.AMBEDKAR

VEEDHI, OPP: CIVIL HOSPITAL,

BELAGAVI.

: 3 : 2. INCOME TAX OFFICER,

WARD-2(2), BELAGAVI. … APPELLANTS (BY SRI.Y.V.RAVIRAJ, ADV.)

AND :

SRI.BASETTEPPA B BADAMI, PROP.: M/S BELGAUM PIPES AND TUBES, OLD P.B.ROAD, CANTONMENT COMPLEX, BELGAUM. … RESPONDENT (BY SRI.PRAMOD Y VAIDYA, ADV. AND SRI.SHASHANK S HEGDE, ADV.)

THIS APPEAL IS FILED UNDER SECTION 260A OF THE INCOME TAX ACT, 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTION OF LAW STATED ABOVE AND ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, PANAJI BENCH, PANAJI, IN MA NO.53/PAN/2015 IN ITA NO.413/PNJ/2014, DATED 16.09.2016 AND CONFIRM THE ORDER DATED 14.03.2014 PASSED BY THE INCOME TAX OFFICER, WARD-2(2), BELAGAVI FOR THE A.Y. 2011-12.

IN ITA NO.100092/2016 BETWEEN :

OF INCOME TAX, DR.B.R.AMBEDKAR

VEEDHI, OPP: CIVIL HOSPITAL,

BELAGAVI.

WARD-1(3), BELAGAVI. … APPELLANTS (BY SRI.Y.V.RAVIRAJ, ADV.)

AND :

SRI.BASETTEPPA B BADAMI, PROP.: M/S BELGAUM PIPES AND TUBES, OLD P.B.ROAD, CANTONMENT COMPLEX, BELGAUM. … RESPONDENT (BY SRI.PRAMOD Y VAIDYA, ADV. AND SRI.SHASHANK S HEGDE, ADV.)

: 4 :

THIS APPEAL IS FILED UNDER SECTION 260A OF THE INCOME TAX ACT, 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTION OF LAW STATED ABOVE AND ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, PANAJI BENCH, PANAJI, IN MA NO.13/PAN/2015 IN ITA NO.184/PNJ/2014, DATED 22.07.2016 AND CONFIRM THE ORDER PASSED BY THE INCOME TAX OFFICER, WARD-2(2), BELAGAVI.

THESE APPEALS COMING ON FOR ADMISSION THIS DAY, S.SUJATHA J., DELIVERED THE FOLLOWING:

COMMON JUDGMENT

These appeals are filed by the Revenue under Section 260A of the Income Tax Act, 1961, (for short the ‘Act’) challenging the orders of the Income Tax Appellate Tribunal, Panaji Bench, Panaji (for short the ‘Tribunal’) in M.A.No.13/PAN/2015 in ITA Nos.184 to 186/PNJ/2014 and in M.A.No.53/PAN/2015 in ITA No.413/PNJ/2014 for the assessment years 2006-07, 2008-09, 2010-11 and 2011-12. 2. The assessee is an individual engaged in the business of trading in pipes and tubes. Survey was conducted under Section 133A of the Act on 24.08.2011. During the course of survey, it was found that the assessee had made several deposits in cheque and cash in various bank accounts held with AXIS

: 5 : Bank, Canara Bank and pigmy account with Lokmanya Co-operative Society. 3. Assessment under Section 143(3) read with Section 147 of the Act was concluded for the assessment years 2006-07, 2008-09 and 2010-11. 4. Aggrieved by the assessment orders, the assessee preferred appeals before the Commissioner of Income Tax (Appeals), Belagavi (for short ‘CIT(A)’), who partially allowed the appeals. Aggrieved with the orders of the CIT(A), the Revenue preferred appeals before the Tribunal, which came to be dismissed holding that there was sufficient opening balance of cash in hand as on 01.04.2005 for each year by referring to the order of CIT(A) for the different assessment years. It was further held by the Tribunal that the Revenue has not contested the orders of the CIT(A) relating to the preceding assessment years, as such, the closing cash in hand as on 31st March of the previous assessment year would obviously be the opening cash in hand for the

: 6 : subsequent assessment year. Aggrieved by the same, the Revenue has filed these appeals. 5. The substantial question of law raised by the Revenue is as under: “Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in deleting the addition made by the assessing authority under Section 69A of the Income Tax Act, 1961 on account of unexplained money in the bank accounts by relying upon the brought forward balance of the preceding year as confirmed by the Commissioner of Income Tax (Appeals), which could not be challenged further before the Tribunal as the disputed tax involved for the year was less than the prescribed for filing an appeal by the Revenue? 6. Learned counsel, Sri.Y.V.Raviraj appearing for the Revenue would submit that it is trite law that a finding given by the CIT(A) having reached finality for not challenging the same by the Revenue due to monetary limits as provided under the CBDT instructions would not be a ground for the Tribunal in not providing an opportunity to the Revenue to establish

: 7 : that the opening cash in hand of the subsequent year is factually incorrect on merits of the case. This principle was given a go bye while deciding the appeals of the Revenue by the Tribunal. The Tribunal ought to have provided an opportunity to the Revenue to establish its case dehors the finding of the CIT(A). 7. Learned counsel, Sri.Pramod Y Vaidya representing the assessee would submit that it is well settled law that the closing cash in hand of the previous year has to be considered as the opening cash in hand of the subsequent assessment year. The Revenue accepting the finding of the CIT(A) for whatever reasons has not raised objections inasmuch as the closing cash in hand of the preceding year. This aspect of the matter was rightly appreciated by the Tribunal while dismissing the appeals filed by the Revenue. Hence seeks to answer the substantial question of law against the Revenue.

: 8 : 8. We have heard the learned counsel appearing for the parties and perused the material on record. 9. The sole question involved in these appeals is relating to the unexplained money in the bank accounts of the assessee relying upon the brought forward balance for the subsequent assessment year based on the closing cash on hand of the preceding assessment year. The argument advanced at the hands of the leaned counsel for the Revenue that owing to the circular instructions no appeal was preferred against the finding of CIT(A), would not be construed as an acceptance by the Revenue to challenge the order of CIT(A) in the subsequent years, no doubt, is a principle that could be adopted generally, but while adjudicating a case, particularly, with a specific closing cash in hand of the preceding year, it is obvious that the said amount would be the opening cash in the subsequent assessment year. If that is to be considered, adjudication on the opening cash in the subsequent

: 9 : assessment year would not arise. If the opening cash in hand is to be modified considering the arguments of the Revenue, it would certainly have an impact on the closing cash in hand of the preceding assessment year, which has attained finality. The issue which has reached finality cannot be reopened in the guise of the arguments now advanced by the Revenue. In view of the same, the Tribunal rejected the appeals filed by the Revenue. No infirmity or irregularity is found in the order of the Tribunal. Hence, we answer the substantial question of law against the Revenue and in favour of the assessee. In the result, appeals stand dismissed.

Sd/- JUDGE Sd/- JUDGE