Ita/58/2023 Of The Pr Commissioner Of Income Tax v. M/S Hariyappa Kotian

Digitally signed by BLAVANYA Location: HIGHCOURT OFKARNATAKA NC: 2024:KHC:41183-DBITA No. 58 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 1 DAY OF OCTOBER, 2024 PRESENT THE HON'BLE MR JUSTICE S.G.PANDIT AND THE HON'BLE MR JUSTICE C.M. POONACHA INCOME TAX APPEAL NO.58 OF 2023 BETWEEN: 1. THE PR. COMMISSIONER OF INCOME TAX CENTRAL, 3 FLOOR, OF INCOME TAX CENTRAL, 3 FLOOR, C R BUILDING, QUEENS ROAD, BENGALURU-560 001. QUEENS ROAD, BENGALURU-560 001. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX OF INCOME-TAX CENTRAL CIRCLE-I, C R BUILDING, ATTAVARA, MANGALORE-575 001. C R BUILDING, ATTAVARA, MANGALORE-575 001. …APPELLANTS (BY SRI.DILIP M., ADVOCATE ALONG WITH SRI.RAVIRAJ Y.V., ADVOCATE) AND: M/S. HARIYAPPA KOTIAN, KARTHIK COMPLEX, MALPE MAIN ROAD, UDUPI-576 108. PAN NO: . …RESPONDENT (BY SRI. MADHUSUDHAN U.A., ADVOCATE) THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT, 1961, PRAYING TO ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BENGALURU IN IT(TP)A NO.431/BANG/2022 DATED 19.09.2022 FOR ASSESSMENT YEAR 2018-2019 (ANNEXURE-C) AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, MANGALURU AND ETC., THIS APPEAL IS COMING ON FOR HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE S.G.PANDIT AND HON'BLE MR JUSTICE C.M. POONACHA - 3 - ORAL JUDGMENT (PER: HON'BLE MR JUSTICE S.G.PANDIT) Heard the learned counsel Sri.Dilip.M., along with Sri. Raviraj.Y.V., learned counsel for appellants/Revenue and learned counsel Sri. Madhusudhan.U.A., for respondent/assessee. 2. The Revenue is in appeal under Section 260-A of the Income Tax Act, 1961 (for short, ‘the Act’) questioning the correctness and legality of order dated 19.09.2022 passed by the Income Tax Appellate Tribunal, "B" Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(TP)A.No.431/Bang/2022 for the assessment year 2018-19. 3. This Court, admitted the appeal on 20.02.2023 to consider the following substantial questions of law: "1. Whether on the facts and in the circumstances of the case in law, the Tribunal’s in quashing order passed by Commissioner under section 263 of the Act by relying on its earlier order passed in case of M/s.Karthik estates in ITA No.432/Bang/2022 dated 24/8/2022 wherein it was held that the Pr.Commissioner of Income Tax was not justified in revisiting the order of assessing authority for examining the source of income which was already offered to tax as business income during assessment proceedings without appreciating that assessee had offered Rs.3 Crores as additional income in course of search proceedings and not in the course of business and even when the said amount is not recorded in books of account of assessee? 2. Whether on the facts and in the circumstances of the case and in law, the Tribunal’s order can be said as perverse in nature as Tribunal has failed to consider the facts that Pr.Commissioner of Income Tax has power to set aside the assessment order and send the matter for fresh assessment if he is satisfied that impugned order is erroneous and prejudicial to interest of Revenue? 3. Whether on the facts and in the circumstances of the case in law, the Tribunal’s in quashing order passed by Commissioner under section 236 of the Act ignoring that conditions for invoking revision under Section 263 of the Act are fully satisfied in case of assessee?" 4. Learned counsel for the assessee submits that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal should not be entertained at the instance of the revenue in view of the Circular No.09/2024 dated 17.09.2024 issued by the Central Board of Direct Taxes. It is also submitted that the aforesaid Circular binds the revenue. - 5 - 3. Whether on the facts and in the circumstances of the case in law, the Tribunal’s in quashing order passed by Commissioner under section 236 of the Act ignoring that conditions for invoking revision under Section 263 of the Act are fully satisfied in case of assessee?" 4. Learned counsel for the assessee submits that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal should not be entertained at the instance of the revenue in view of the Circular No.09/2024 dated 17.09.2024 issued by the Central Board of Direct Taxes. It is also submitted that the aforesaid Circular binds the revenue. - 5 - 5. On the other hand, learned counsel for the revenue submits that he be granted liberty to revive the appeal in case the matter falls within the exceptions under the aforesaid Circular dated 17.09.2024 and Circular No.5/2024 dated 15.03.2024. 6. In view of the aforesaid submissions, the appeal is disposed of with liberty as prayed for by the learned counsel for the revenue. However, the question of law is kept open to be adjudicated in an appropriate proceeding. Sd/- (S.G.PANDIT) JUDGE Sd/- (C.M. POONACHA) JUDGE