Ita/239/2010 Of The Commissioner Of Income Tax v. M/S Concorde Shelters Pvt Ltd

IN THE HIGH COURT OF KARNATAKA AT BENGALURU| ON THE 13 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 1.|The Commissioner of Income -Tax Central Circle, C.R. Building Queens Road, Bangalore. 2 |The Asst. Commissioner of Income -Tax. Central Circie — 2(3), C.R. Building Queens Road, Bangalore. ... Appellant (By Sri. K.V. Aravind, Advocate) AND M/S Concorde Shelters Pvt. Ltd.,No.42, Rajini Towers|2 [1%]Cross, 7[1%]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 |) formulate the substantial questions of law statedtherein ti) allow the appeal ant set aside the order passed by tneITATBangaloreIn|TTA.No.855/BNG/2009,|dated10.02.2009 and confirm the order passed by the Assistant.Commissioner of Income Tax, Circle-2(3), Bangalore and etc. Tnis income tax appeal, coming on for nearing, this day,RAVI MALIMATH.J., delivered the following: JUDGMENT 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 atRs.1,45,88,733/-. The assessing officer by his order videAnnexure-A dated 28.12.2007, adopted the figure of a sum oT 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. Tne Tribunal, by its order dated 10.02.2009 vide)Annexure-C, dismissed the appeal. Hence, the present appeal by the Revenue. | 2. By order dated 28.05.2012, the appeal was admittedto consider the following substantial questions of law: (i) Whether the appellate authorities were.correct in nolding that a sum of Rs.6,91,60,347/-the difference between work in progress shown ason 31.03.2005 of Rs.14,64,97,693/- by theassessee and the certificate issued by theassessee's|archnitect/structuralengineer/civilengineerdated20.02.2005.SnowingRs.21,56,58,040/- supported by the bills raised tothe customers cannot be treated as the income ofthe assessee as the same had been poosted toavail of bank loan? (ii) Whether the Tribunal is justified in.accepting the explanation offered by the assesseeat variance witn its own admitted documents andmoreSO|whenSUCN|documentsnadbeen|unearthed by the revenue in the course of searchconducted in terms of Section 132 of the IncomeTax Act, 1961, for the purpose of deciding theappeal before it? 3. 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? 4. Having considered the contentions, we concur with|tne contentions advanced by both the learned counsels. —Tnerefore, 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? 3. 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? 4. Having considered the contentions, we concur with|tne contentions advanced by both the learned counsels. —Tnerefore, 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? 5. 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 reportwas 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 findthat the report of the District Valuation Officer nas 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. 6. 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 tne 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 expendedtowards work-in-progress for the assessment year 2005-06,|based on tne aforesaid observations. | Sd/-Sd/-JUDGE|JUDGE| Cm/-_