THE PRINCIPAL COMMISSIONER OF INCOME TAX vs. SRI.MURUGESH R NIRANI

Date of judgment 30.01.2017 ITA NO.100151/2015 The Principal Commissioner of Income Tax & Anr. Vs. Sri. Murugesh R Nirani 1/6 IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH DATED THIS THE 30TH DAY OF JANUARY 2017 PRESENT THE HON’BLE DR. JUSTICE VINEET KOTHARI AND THE HON’BLE MR. JUSTICE SREENIVAS HARISH KUMAR INCOME TAX APPEAL No.100151/2015 BETWEEN: 1. THE PRINCIPAL COMMISSIONER OF INCOME TAX DR.B.R.AMBEDKAR ROAD BELAGAVI 2. ACIT CENTRAL CIRCLE PANAJI

... APPELLANTS (BY SRI. Y V RAVIRAJ, ADV.) AND: 1. SRI.MURUGESH R NIRANI A-916, BASAVA NAGAR MUDHOL BAGALKOT PAN NO.AALPN 3890 L

... RESPONDENT (BY SRI. H.R. KAMBIYAVAR & ASHOK A KULKARNI, ADVS.) THIS APPEAL IS FILED UNDER SECTION 260A OF THE INCOME TAX ACT, 1961, PRAYING TO A) FORMULATE THE SUBSTANTIAL QUESTION OF LAW STATED ABOVE. B) ALLOW THE APPEAL AND SET-ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL,

Date of judgment 30.01.2017 ITA NO.100151/2015 The Principal Commissioner of Income Tax & Anr. Vs. Sri. Murugesh R Nirani 2/6 PANAJI BENCH, PANAJI IN ITA NO.191/PNJ/2014, DATED 24.03.2016 FOR THE ASSESSMENT YEAR 2004-05 AND CONFIRM THE ORDER PASSED BY THE ASSISSTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, PANAJI, IN THE INTEREST OF JUTICE AND EQUITY. THIS APPEAL COMING ON FOR ADMISSION, THIS DAY, Dr. VINEET KOTHARI. J, DELIVERED THE FOLLOWING: JUDGMENT Mr. Y.V. Raviraj, Adv. for the appellants Mr. H.R. Kambiyavar and Ashok A Kulkarni, Advs. for respondent 1. The Revenue has filed this appeal under Section 260A of the Income Tax Act, 1961(for short, ‘the Act’), aggrieved by the order passed by the Income Tax Appellate Tribunal, Panaji Bench, Panaji(for short, ‘the Tribunal) in ITA No.191/PNJ/2014, on the ground that the investment made by the assessee of Rs.75,00,000/- for purchase of cement factory in the auction held by the KSIDC was unexplained investment under Section 69 of the Act and the Tribunal had wrongly deleted the addition of the unexplained investment which was liable to be assessed in the hands of the appellant/assessee, as taxable income.

Date of judgment 30.01.2017 ITA NO.100151/2015 The Principal Commissioner of Income Tax & Anr. Vs. Sri. Murugesh R Nirani 3/6 2. The relevant portion of the findings of the Tribunal at Paras 6 and 7 of the order are extracted as under: “6. We have heard the rival contentions of the both the parties. Looking into the facts and circumstances of the case, we find that the assessee has adduced the evidence before the Ld.CIT(A) that he has taken this amount by DD on Basaveswhar Cooperative Bank Ltd. In favour of the cement company for purchasing it. During the remand proceedings, the assessee has explained the source of this investment before Assessing Officer, we reproduced the same hereinunder:- “on the basis of the seized material marked as A/MRN, the investment made in purchase of DD is worked out to Rs.74 Lakh. As per assessee’s explanation land building and machineries were bought in auction organized by KSIDC for Rs.75 Lakhs. During the course of assessment proceedings and also during the search and post search proceedings no complete details are furnished and therefore, addition of Rs.75 Lakh was made. In the submissions made before the Hon’ble Ld. CIT(A) assessee has stated that

Date of judgment 30.01.2017 ITA NO.100151/2015 The Principal Commissioner of Income Tax & Anr. Vs. Sri. Murugesh R Nirani 4/6 Mr. Sangamesh Nirani had savings Bank account with Basveshwar Sahakari Bank Mudhol and payments were made from the said bank accounts. Money was collected for the purpose of issue of shares and since te company M/s. Nirani Cements Ltd. was in the formation stage, the mat collected was deposited in Sangamesh Nirani, according to which cash was deposited from time to time in lakhs and the same is withdrawn on 9.5.2003 and 10.05.2003. The assessee has also filed copy of IT return for the AY 2005-06 in the case of Nirani Cements Pvt. Ltd. and details of share capital and unsecured loans which works out to Rs.75 Lakhs. The return of income is filed on 31.03.2006, the verification of the return is done by Shri Murgesh Nirani on 28.02.2006. The assessment under Section 153A was concluded on 21.03.2006, in that case, it is not know why the relevant details readily available with the assessee, could not placed before the AO. Therefore, the Aos action in treating the unexplained investment of Rs.75 Lakhs in the hands of the assessee in the

Date of judgment 30.01.2017 ITA NO.100151/2015 The Principal Commissioner of Income Tax & Anr. Vs. Sri. Murugesh R Nirani 5/6 absence of details appears to be proper. However, the issue may be decided on facts and on merits of the case”.” 3. After hearing the learned counsel for the parties, we are of the opinion that the learned Tribunal has relied upon the observation of the Assessing Officer himself, during the remand proceedings that he has verified the investments made for the purchase of cement unit, namely cash deposits in the bank account of M/s. Nirani Cements Ltd., share capital andloan etc. Therefore, the explanation furnished by the assessee for the purchase of the cement unit from KSIDC in open auction was through bank account. The Assessing Officer, however, treated the same as unexplained investment and added the same to the income, only on the ground that if the assessee had placed plausible explanation available with him, there was no reason not to produce the same at earlier stage.

Date of judgment 30.01.2017 ITA NO.100151/2015 The Principal Commissioner of Income Tax & Anr. Vs. Sri. Murugesh R Nirani 6/6 4. We are satisfied that even in the remand proceedings, if the assessee has produced the relevant evidence and there is no adverse finding against the assessee by the learned Assessing Officer in this regard, these finding of facts returned and recorded by the Tribunal cannot be said to be perverse in any manner and the same appear to be proper and cogent finding based on the relevant material and evidence and therefore no substantial question of law arises for consideration by this Court. 5. The appeal filed by the Revenue therefore deserves to be dismissed and accordingly, the same is dismissed. No costs. Sd/- JUDGE Sd/- JUDGE JTR/-