Ita/96/2024 Of The Pr Commissioner Of Income Tax v. M/S Spr Spirits Pvt Ltd

Digitally signedbyMARIGANGAIAHPREMAKUMARILocation: HIGHCOURT OFKARNATAKA NC: 2024:KHC:41176-DBITA No. 96 of 2024 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. 96 OF 2024 BETWEEN: 1. THE PR. COMMISSIONER OF INCOME-TAX 3 FLOOR, C.R.BUILDING, QUEENS ROAD, BENGALURU - 560 001. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1(3) 3 FLOOR, C R BUILDING, QUEENS ROAD, BENGALURU - 560 001. …APPELLANTS (BY SRI. DILIP M., ADVOCATE ALONG WITH SRI. RAVIRAJ Y.V., ADVOCATE) AND: M/S SPR SPIRITS PVT. LTD., (FORMERLY KNOWN AS SPR GROUP HOLDINGS PVT. LTD.,) F 113, 2CD, CENTRAL CHAMBERS, 2 FLOOR, 2 MAIN, GANDHINAGAR, BENGALURU - 560 009. PAN NO. AAECS 2377M - 2 - NC: 2024:KHC:41176-DBITA No. 96 of 2024 …RESPONDENT (BY SRI. NARENDRA KUMAR J.JAIN, 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 ITA NO. 133/BANG/2023 DATED 24/07/2023 FOR ASSESSMENT YEAR 2010-2011 (ANNEXURE-A) AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(3), BENGALURU, AND ETC., THIS APPEAL IS COMING ON FOR FINAL 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. Narendra Kumar.J., 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 24.07.2023 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.133/Bang/2023 for the assessment year 2010-11. 3. This Court, admitted the appeal on 18.03.2024 to consider the following substantial question of law: "1. Whether on the facts and in the circumstances of the case, the Tribunal is right in deleting the addition of Rs.27 Crores in respect of bogus purchases, without considering the fact of evidences found during search and seizure - 4 - NC: 2024:KHC:41176-DBITA No. 96 of 2024 proceedings at the business premises of the assessee company revealing that three concerns were completely controlled by the assessee as their bank account statements and VAT return were kept and maintained by the assessee, which clearly reflects a well crafted scheme of tax evasion being resorted by the assessee? 2. Whether on the facts and in the circumstances of the case, the Tribunal is right in not considering the outcome of field verification inquiries conducted by the CIT(A) during the remand proceedings which clearly revealed the non-existence of the said 3 bogus concerns at the so called business addresses, thus crafting a serious doubts on the genuineness and authenticity of the transaction? 3. Whether on the facts and in the circumstances of the case, the Tribunal is right in holding that only profit element embedded in the transaction of bogus purchases at rate of 10% be considered, discarding the material evidence and incriminating material unearthed during search and overlooking all other surrounding circumstances like maintenance of books of accounts of supplying entities by the assessee and filing of their VAT returns, along with cheque book leafs of the 3 entities, which shows that the transactions were carried out to book bogus purchases and thereby reduce the incidence of tax?" 3. Whether on the facts and in the circumstances of the case, the Tribunal is right in holding that only profit element embedded in the transaction of bogus purchases at rate of 10% be considered, discarding the material evidence and incriminating material unearthed during search and overlooking all other surrounding circumstances like maintenance of books of accounts of supplying entities by the assessee and filing of their VAT returns, along with cheque book leafs of the 3 entities, which shows that the transactions were carried out to book bogus purchases and thereby reduce the incidence of tax?" 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. 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 - ITA No. 96 of 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 SMJ List No.: 2