Ita/211/2013 Of The Commissioner Of Income Tax v. Shri H E Panduranga

IN THE HIGH COURT OF KARNATAKA AT BENGALURUDATED THIS THE 8 DAY OF SEPTEMBER 2020 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND| THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD LT.A. NO.211 OF 2013 BETWEEN: 1.THE COMMISSIONER OF INCOME-TAX C.R. BUILDING, QUEENS ROAD BANGALORE. 2 |THE ASSISTANT COMMISSIONER OF INCOME-TAX. CENTRAL CIRCLE-2(2), C.R. BUILDING QUEENS ROAD, BANGALORE. ... APPELLANTS (BY SRI. K.V. ARAVIND, ADV.,) AND: SHRI. H.E. PANDURANGA|#4/3,4 CROSS, 8 MAINHANUMANTHNAGAR, BANGALORE. ... RESPONDENT (RESPONDENT SERVED) THIS ITA IS FILED UNDER SECTION 260-A OF I.T. ACT,196L ARISING OUT OF ORDER DATED 21.12.2012 PASSED IN ITANO.1081/BANG/2006 AND ITA NO.1001/BANG/2006, FOR THE|ASSESSMENT YEAR 1996-97, PRAYING THAT THIS HON'BLE|COURT MAY BE PLEASED 70: (1) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW.STATED THEREIN. (1) ALLOW THE APPEAL AND SET ASIDE THE ORDER OF THEITAT,BANGALOREIN|ITANO.1081/BANG/2006&ITANO.1001/BANG/2006 DATED 21-12-2012.| THIS ITA COMING ON FOR HEARING, THIS DAY, | ALOK ARADHE J.,DELIVERED THE FOLLOWING: JUDGMENT This appeal under Section 260A of the Income Tax)Act, 1961 (hereinafter referred to as the Act for short)has been preferred by the revenue. The subject matterof the appeal pertains to the Assessment year 1996-97.The appeal was admitted by a bench of this Court videorder dated 04.07.2013 on the following substantialquestions of law:| (I)Whether the Tribunal was correct inannulling—thereassessmen._madeprotectively under Section 14/7 for theassessment years 1996-97 and 1997-98by holding them as infructuous withoutgoing into the merits of the case whenthe issues with reference to unexplainedcash.creditsofRs. 50Lakhs|andRs.65,10,000/- have been found to beunexplained?annulling—thereassessmen._madeprotectively under Section 14/7 for theassessment years 1996-97 and 1997-98by holding them as infructuous withoutgoing into the merits of the case whenthe issues with reference to unexplainedcash.creditsofRs. 50Lakhs|andRs.65,10,000/- have been found to beunexplained? //$Whetner the Tribunal was correct In applying the provisions of sub-Section 2to explanation (c) of section 158BA whichspecifically provides that income arisesunderChapterXIV -BSha!notbeincluded in the regular assessment of anyprevious year without appreciating theobservation of the Hon’ble Apex Court inthe case of Suresh N.Gupta reported in297 ITR 322 (166 Taxman 313) 2. Facts leading to filing of this appeal brieflystated are that the assessee is the proprietor of M/s.Rajarajeshwari Enterprises. On 27.03.2000, a search.was conducted under Section 1327 of the Act. In thecourse of the search, the Bank accounts of the assessee was examined and it was found that the assessee couldnot explain the sources of various deposits made in the|bank. Thereafter, Block assessment order was passed|Of)28.03.2002,DY ,96,78,150/-, wherein among other additions three.credits pertaining to assessment years 1996-97 and. 1997-98amountingtO|Rs.6/7,29,564/-and|Rs.60,63,900/- respectively were also assessed underundisclosed income. The assessee filed an appealbefore the Commissioner of Income Tax (Appeals), whoby an order dated 06.06.2002 deleted the additions onaccount of three credits and held that the credits in thebank accounts were already disclosed by the assessee tothe department and cannot be assessed in blockassessmen.However,liberty|WaSgivenTO.theAssessingofficerCO take|recourseCO regular.assessment. 3.The department challenged the aforesaidorder in an appeal before the Income Tax AppellateTribunal (hereinafter referred to as ‘the Tribunal’ forShort). The Tribunal remitted the matter to theCommissioner of Income Tax (Appeals) with a directionto consider all the tissues afresh on merits. Theassessments for the years 1996-97 and 1997-98 were.re-opened under Section 14/7 to tax the unexplained 3.The department challenged the aforesaidorder in an appeal before the Income Tax AppellateTribunal (hereinafter referred to as ‘the Tribunal’ forShort). The Tribunal remitted the matter to theCommissioner of Income Tax (Appeals) with a directionto consider all the tissues afresh on merits. Theassessments for the years 1996-97 and 1997-98 were.re-opened under Section 14/7 to tax the unexplained credits protectively in view of finding given by theCommissioner of Income Tax (Appeals) in order dated06.06.2002. The assessment was concluded underSection 143(3) read with Section 147 of the Act for boththe assessment years and the total income wasdetermined at Rs.1,25,03,622/- and Rs.1,31,83,189/-for assessment years 1996-97 and 1997-98 respectively|which included unexplained cash credits in bankaccountstO.thecune|ofRs.50,00,000/-and.Rs.65,10,000/-. 4Tne assessee challenged the aforesaid orderin an appeal before the Commissioner of Income Tax(Appeals). In the proceeding before the Commissionerof Income Tax (Appeals), the assessee neither adducedany evidence nor produced the books of account. TheCommissioner of Income Tax (Appeals) by an orderdated 18.09.2006 upheld the order passed by theAssessing officer. The Tribunal however, by an orderdated 21.12.2012 inter alia held that findings recorded by the Commissioner of Income Tax (Appeals) do notsurvive In view of the order of the Tribunal dated20.01.2006. It was further held that various additionsimpugned in this appeals by the assessee and revenueneed not be adjudicated and the proceedings havebecome infructuous in view of the order of the Tribunaldated 20.01.2006 in block assessment appeals. Theappeals preferred by the assessee were allowed. In theaforesaid factual background, the revenue has filed thisappeal. 5.|Learned counsel for the revenue submittedthat Tribunal erred in annulling the reassessment madeprospectively under Section 14/7 for the assessmentyears 1996-97 and 1997-98 by treating the same as.infructuous and in not dealing with the matter on meritsespecially when the issue with reference to unexplainedcash credits of Rs.50,00,000/- and Rs.65,10,000/- werefound to be unexplained. It is also urged that Tribunalcommitted an error in applying provisions of sub-Section (2) to Explanation(c) of Section 158BA to the facts ofthe case and failed to notice the decision of the supremecourt In)‘CIT VS. SURESH N. GUPTA’ (2008)297 ITRcy rAlternatively, it is submitted that the matter be|remitted to Commissioner of Income Tax (Appeals) toverify whether the unexplained credits of Rs.50,00,000/-and Rs.65,10,000/- have reached finality or not. 6.|We have considered the submissions madeby learned counsel for the revenue and have perused.the record. From perusal of the order passed by the.Income Tax Appellate Tribunal, we find that the Tribunalhas not decided the issue on merits and ought to haveadjudicated the issue with regard to unexplained creditsto the tune of Rs.50,00,000/- and Rs.65,10,000/-. TheTribunal has held that orders of reassessment have beenrenderedinfructuous. The.ISSUC|withregardtO.unexplained credits to the tune of Rs.50,00,000/- andRs.65,10,000/- needs to be adjudicated. The Tribunalerred in not adjudicating the issues on merits and therefore, we answer the first substantial question oflaw in favour of the revenue. Therefore, it is notnecessary to answer the second substantial question oflaw.. Intheresult,theimpugned|orderdated|21.12.2012 passed by the Income Tax AppellateTribunal is hereby quashed and the matter is remitted toCommissioner of Income Tax (Appeals) to determine theissue afresh with regard to the unexplained cash credits to the tune of Rs.50,00,000/- and Rs.65,10,000/-. Accordingly, the appeal is disposed of. — SS| Sd/-—JUDGE. Sd/-JUDGE.