Ita/361/2016 Of The Commissiner Of Income -Tax v. M/S Canara Bank

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 3RD DAY OF NOVEMBER 27072 PRESENT| THE HON’BLE MR. JUSTICE ALOK ARADHE AND| THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD ILT.A. NO.361 OF 2016 BEITWEEN 1.THE COMMISSIONER OF INCOME-TAX. LTU, JSS TOWERS| BSK III STAGE, BANGALORE-560085. 2D.THE ADDL. COMMISSIONER OF INCOME TAX LTU, JSS TOWERS BSK III STAGE BANGALORE-560085. _.. APPELLANTS (BY SRI. ARAVIND K.V. ADV.) AND M/S. CANARA BANK112, J.C. ROADBANGALORE PAN: AAACC 6106G. ~-.. RESPONDENT (BY SRI. T. SURYANARAYANA RAO, ADV.) THIS I.T.A. IS. FILED UNDER SECTION 260-A OFI.T.ACT, 1961, ARISING OUT OF ORDER DATED 11-12-2015 PASSED IN ITA NO.768/BANG/2011, FOR THE ASSESSMENTYEAR 1999-2000, PRAYING TO:I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAWSTATED ABOVE. I] ALLOW THE APPEAL AND SET ASIDE THE ORDERS|PASSED|BY|THE|ITAT, BENGALURUIN|ITANO. 768/BANG/2011 DATED 11-12-2015 AND CONFIRM THEORDER OF THE APPELLATE COMMISSIONER CONFIRMINGTHE ORDER PASSED BY THE ADDL. COMMISSIONER OFINCOME TAX, LTU, BENGALURU. THIS IL.T.A. COMING ON FOR HEARING, THIS DAY,ALOK ARADHE J.,DELIVERED THE FOLLOWING: JUDGMENT Mr.K.V.Aravind, learned counsel for the revenue. Mr.T.Suryanarayana,learnedcounselfortheaSSe@SSAEC This appeal under Section 260A of the Income TaxAct, 1961 (hereinafter referred to as the Act for short)has been preferred by the revenue. The subject matter|of the appeal pertains to the Assessment year 1999-2000. Tne appeal was admitted by a bench of this Courtvide order dated 11.10.2017 on the following substantial question of law: Whether the Tribunal was correct inholding that denial of opportunity of cross-examination results in violation of natureljustice, 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 equipmentdid not exit, whether allowing’ crossexaminationwouldhave.madeanydifference? 2.Facts leading to filing of this appeal brieflystated are that the assessee, which is a NationalizedBank filed its returns of income for Assessment Years1999-2000 on 30.12.1999, in which total income of.Rs.63,44,12,149/- was declared. In the assessmentmade under Section 143(3) of the Act the Assessing.Officer disallowed the depreciation claimed on the assetsleased to M/s Rajender Steels Pvt. Ltd., M/s Kedia CastleDellon Industries Ltd. and M/s Kedia Mills and Distilleries| Ltd. on the ground that the assets were not found to bein existence in a search conducted under Section 1327 ofthe Act by the Department in March 1998 in thepremises of Rajender Group and in September 1996 inKedia Group of Companies. The assessee thereupon filedappealbeforetheCommissionerOf Income.Tax(Appeals) for the Assessment Years 1999-2000. Theaforesaid appeal was dismissed vide order dated03.11.2004. The assessee thereupon approached theIncome Tax Appellate Tribunal (hereinafter referred toas ‘the tribunal for short). The tribunal vide order dated12.10.2004 held that Assessing Officer has failed tofurnish the copies of the statements recorded during thecourse of searcn as well as otner material and nas 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 upon by the Assessing Officer and to afford an opportunity tothe assessee of cross-examination. by the Assessing Officer and to afford an opportunity tothe assessee of cross-examination. 3.The Assessing Officer Dy an order dated —15.12.2009 once again disallowed the depreciationclaimed by the assessee in respect of assets leased toM/s Rajender Steels Ltd., M/s Kedia Mills and DistilleriesLtd. And M/s Kedia Castle Dellon Industries Ltd. TheaSS@CSSC2thereuponfiledappealbeforetheCommissioner of Income Tax (Appeals) who by an orderdated 027.06.7201inter allaheld that the assessee haddischarged the onus to prove the genuineness of.transaction by furnishing necessary documents ViIZ.,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.1,56,6/7,/7/2/- for Assessment Year 1999-2000 on thassets leased out to M/s Kedia Castles Dellon IndustriesLtd. 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.|The.tribunal by|orderdated|11.12.2015 affirmed the finding recorded by theCommissioner of Income Tax (Appeals) and dismissedthe appeals preferred by the revenue. In the aforesaidfactual background, this appeal nas been filed. 4Learned counsel for the revenue submittedthat the tribunal grossly erred in holding that denial ofOpportunity of cross-examination results in violation ofprinciples of natural justice. It is further submitted tnatthe tridunal ought to nave appreciated that tne leased assets were non-existent. On the other hand, learnedcounsel for the assessee submitted that whether 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 tne relevant time and whetner tne transactions iInquestion 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 hasheld that the assessee has 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 reportspertaining 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 tne Income Tax Appellate Tribunal.Thus, the matter stands concluded by concurrentfindings of fact, which by no stretch of imagination can.be 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 settied in law, that this courtin exercise of powers under Section 260A of the Actwould not interfere with the finding of fact until the.Same is perverse |[See:SANTHOSH HAZARI VS.PURUSHOTTAM TIWARI’, (2001) 3 SCC 179andadecision of tnis court inCIT VS. SOFT BRANDS (P). LTD.’, (2018) 406 ITR 513, ‘KULWANT KAUR S.|GURDIAL SINGH MANN’, (2001) 4 SCC 262, ‘VIJAY 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)] 6. 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 fails and is hereby dismissed. | Sd/-JUDGE Sd/-' JUDGE RV