Ita/332/2016 Of The Commissioner Of Income Tax v. M/S Canara Bank

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE J2ZND DAY OF NOVEMBER 202 PRESENT| THE HON’BLE MR. JUSTICE ALOK ARADHE AND| THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD BETWEEN: LT.A. NCO.332 OF 2016 1.|THE COMMISSIONER OF INCOME-TA® LTU, JSS TOWERS BSK III STAGE, BANGALORE-560085. 2.|THE ADDL. COMMISSIONER OF INCOME-TAX LTU, JSS TOWERS BSK III STAGE, BANGALORE-560085. .., APPELLANTS~ (BY SRI. K.V. ARAVIND, ADV.,) AND* M/S. CANARA BANK112, J.C. ROAD| BANGALORE.PAN: AAACC 6106G., ~. RESPONDENT (BY SRI. T. SURYANARAYANA, ADV.) THIS ITA IS FILED UNDER SECTION 260-A OF I.T. ACT,|1961L ARISING OUT OF ORDER DATED 11.12.20L5 PASSED IN ITANO.765/BANG/2011 FOR THE ASSESSMENT YEAR 1996-97,PRAYING TQ: (1) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW.STATED ABOVE. (II) ALLOW THE APPEAL AND SET ASIDE THE ORDER.PASSED BY THE ITAT, BANGALORE IN ITA NO.765/BANG/2011— DATED 11-17-2015 AND CONFIRM THE ORDER OF THE APPELLATE.COMMISSIONER CONFIRMING THE ORDER PASSED BY THE ADDL. COMMISSIONER OF INCOME TAX, LTU, BANGALORE & ETC. THIS ITA COMING ON FOR FINAL HEARING, THIS DAY,ALOK ARADHE J.,DELIVERED THE FOLLOWING: | JUDGMENT This appeal under Section 260A of the Income TaxAct, 1961 (nereinafter referred to as the Act for short)nas 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 10.10.2017 on the following substantialquestion of law: Whether the Tribunal was correct inholding that denial of opportunity of cross-examination results in violation of naturaljustice, despite efforts made by the.assessing officer to trace the assessee?The object of cross examination is to test|theveracityofvers/ongivenIn|examination-in-chief? In the Instancecase, when it is proved with fair marketamount certainty that leased equipmentsdia not exit, whether allowing’ cross examinationwouldhave.madeanydifference? 2D Facts leading to filing of this appeal brieflystated are that the assessee, which is a NationalizedBank filed its returns of income for Assessment Years1996-97 and 1997-98 on 29.11.1996 and 28.11.1997, in|whichtotal.incomeofRs.1,92,45,20,300/-and|Rs.2,96,99,47,660/- respectively was declared. In the)assessments made under Section 143(3) of the Act theAssessing Officer disallowed the depreciation claimed on.the assets leased to M/s Rajender Steels Pvt. Ltd., M/s_Kedia Castle Dellon Industries Ltd. And M/s Kedia Mills.and Distilleries Ltd. on the ground that the assets werenot found to be in existence In a searcn conducted underSection 132 of the Act by the Department in March 1998in the premises of M/s Rajender Steels and in September1996 in Kedia Group of Companies. The assessee.thereupon filed appeals before the Commissioner ofIncome Tax (Appeals) for the Assessment Years 1996-97. and 1997-98. The aforesaid appeals were dismissed vide.order dated 26.7.1999 and 12.06.2000 respectively. Tribunal (hereinafter referred to as ‘thetribunal for short). The tribunal vide order dated12.10.2004 held that Assessing Officer has failed tofurnish the copies of the statements recorded during the.course of search as well as other material and has also/not provided sufficient opportunity to the assessee tocross examine the lessee. The tribunal therefore,remitted the matter to the Assessing Officer with adirection to furnish copies of all the material relied uponby the Assessing Officer and to afford an opportunity tothe assessee of cross-examination. 3.The Assessing Officer Dy an order dated —28.12.2006 once again disallowed the depreciationclaimed by the assessee in respect of assets leased toM/s Rajender Steels Ltd., M/s Kedia Mills and DistilieriesLtd. And M/s Kedia Castile Dellon Industries Ltd. The 3.The Assessing Officer Dy an order dated —28.12.2006 once again disallowed the depreciationclaimed by the assessee in respect of assets leased toM/s Rajender Steels Ltd., M/s Kedia Mills and DistilieriesLtd. And M/s Kedia Castile Dellon Industries Ltd. The aSS@CSSC2thereuponfiledappealsbeforetheCommissioner of Income Tax (Appeals) who by an orderdated 01.06.7011inter allaheld that the assessee haddischarged the onus to prove the genuineness of.transaction by furnishing necessary documents viz.,.copies of sanction letter, lease agreements, invoices,|inspection records on various dates and inspectionreports pertaining to pre search and post search periodin support of its claim and the Assessing Officer did notrebut the corroborative evidence filed by the assessee.Thus, on the basis of meticulous appreciation ofevidence on record, the Commissioner of Income Tax(Appeals) held that the assessee has been able tocorroborate its claim of existence of leased equipmentwithincontrovertible evidenceanddirectedtheAssessingOfficer.CO allowthedepreciationOf Rs.2,18,57,/7/3/- and Rs.1,63,93,330/- for AssessmentYears 1996-97 and 1997-98 respectively on the assetsleased out to M/s Rajender Steels Ltd. The Assessing. Officer.WaSdirectedCO allowdepreciationOF Rs.1,52,80,650/- and Rs.1,14,60,488/- for AssessmentYears 1996-97 and 1997-98 respectively on the assetsleased out to M/s Kedia Castles and Dellon Industries.Ltd. And M/s Kedia Mills and Distilleries Ltd. In the.result, the appeal was allowed. Being aggrieved, therevenue preferred an appeal before the Income TaxAppellateTribunal. Thetribunal.by orderdate11.12.2015 affirmed the finding recorded by the.Commissioner of Income Tax (Appeals) and dismissedthe appeals preferred by the revenue. In the aforesaidfactual background, this appeal has been filed. 4Learned counsel for tne revenue submittedtnat the tribunal grossly erred in nolding that denial ofopportunity of cross-examination results in violation ofprinciples of natural justice. It is further submitted thatthe tridunal ought to nave appreciated that tne leasedassets were non-existent. On the other nand, learnedcounsel for tne assessee submitted that whetner or not! the leased assets are in existence is a finding of factwhich stands concluded in favour of the assessee by theCommissioner of Income Tax (Appeals) as well as theIncome Tax Appellate Tribunal. Therefore, no substantialquestion of law arises for consideration in this appeal. 5We have considered the submissions made bylearned counsel for the parties and have perused therecord. The issue whether or not the assets leased out.by the assessee to various companies were in existenceat the relevant time and whether the transactions in/question were genuine or not is a pure question of fact. |The Commissioner of Income Tax (Appeals) on the basisof meticulous appreciation of evidence on record hasneid that the assessee nas produced sanction letters,master / supplemental lease agreements, purchaseinvoices, installation certificates and inspection reports,a joint inspection conducted py the bank officials,independent valuation report in respect of assets leasedout to the companies as well as inspection reports 5We have considered the submissions made bylearned counsel for the parties and have perused therecord. The issue whether or not the assets leased out.by the assessee to various companies were in existenceat the relevant time and whether the transactions in/question were genuine or not is a pure question of fact. |The Commissioner of Income Tax (Appeals) on the basisof meticulous appreciation of evidence on record hasneid that the assessee nas produced sanction letters,master / supplemental lease agreements, purchaseinvoices, installation certificates and inspection reports,a joint inspection conducted py the bank officials,independent valuation report in respect of assets leasedout to the companies as well as inspection reports pertaining to pre search and post search period. On thebasis of the aforesaid material on record, it was heldthat the transactions of the assessee with the companiesin question was genuine and the assets, which wereleased out were in existence and the assessee wasentitled to depreciation. The aforesaid finding of fact has.been affirmed by the Income Tax Appellate Tribunal.Thus, the matter stands concluded by concurrentfindings of fact, whicn by no stretch of imagination canbe said to be either based on no evidence or perverse.Even otherwise, no perversity in the findings could bepointed out to us. It is well settled in law, that this courtin exercise of powers under Section 260A of the Actwould not interfere with the finding of fact until theSame is perverse |See:SANTHOSH HAZARI VS.PURUSHOTTAM TIWARI’, (2001) 3 SCC 179andadecision of this court inCIT VS. SOFT BRANDS (P).LTD.’, (2018) 406 ITR 513, ‘KULWANT KAUR S.|GURDIAL SINGH MANN, (2001) 4 SCC 262, VIJAY KUMARTALWARVS.CIT|330[TR1(SC), “‘K.RAVINDRANATHAN NAIR VS. CIT’, 247 ITR 178 (SC)and‘SUDHARSHAN SILKS AND SAREES VS.)CIT’, 300 ITR 205 (SC)] In view of preceding analysis, the substantialquestion of law framed in the appeal is answered against.the revenue and in favour of the assessee. In the result,we do not find any merit in this appeal, the same failsand is hereby dismissed. Sd/-JUDGE. SS| Sd/-—JUDGE.