Sri. Y v. Raviraj Learned Counsel For The Revenue

IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH DATED THIS THE 10 DAY OF OCTOBER, 2019 PRESENT THE HON’BLE MR.JUSTICE ALOK ARADHE AND THE HON’BLE MR.JUSTICE P.G.M. PATIL I.T.A. NO.100037 OF 2018 BETWEEN 1.THE PR COMMISSIONER OF INCOME TAX (CENTRAL), BENGALURU. 2.DY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, BELAGAVI. ... APPELLANTS (BY SRI. Y.V.RAVIRAJ, ADVOCATE) AND M/S STAR PVG EXPORTS, C/O PRASANNA V GHOTAGE, 202, CHIDAMBAR NAGAR, ANGOL, BELAGAVI-590006, PAN: AAFFS 2661 H. ... RESPONDENT (BY SRI. SANGRAM S.KULKARNI, ADVOCATE) THIS ITA IS FILED UNDER SECTION 260A OF THE INCOME TAX ACT, 1961 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTION OF LAW AS STATED ABOVE; ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, PANAJI BENCH, PANAJI IN C.O NO.11/PAN/2017, DATED 07.12.2017 AND CONFIRM THE ORDER DATED 21.03.2014 PASSED BY THE ASSISTANT COMMISSIONER OF INCOME TAX OFFICER, CENTRAL CIRCLE-2, BELAGAVI FOR THE A.Y.2007-08 AND ETC. THIS APPEAL COMING ON FOR ADMISSION THIS DAY, ALOK ARADHE, J, DELIVERED THE FOLLOWING: JUDGMENT Sri. Y. V. Raviraj learned counsel for the Revenue. 2.Sri. Sangram S Kulkarni, learned counsel for the respondent. 3.Heard on the question of admission. 4.This is an appeal under Section 260A of the Income Tax Act, 1961, (hereinafter referred to as “Act” for short) against the order dated 07.12.2017 passed by the Income Tax Appellate Tribunal, Panaji Bench, Panaji. 5.The facts giving rise to filing of the appeal briefly stated that the respondent-assessee is engaged in the business of trading of iron ore. The assessment was completed under Section 144 read with Section 153C of the Act by making an addition of Rs.3,00,63,324/- and the income of the respondent was determined at Rs.8,05,87,220/-. Being aggrieved, the respondent preferred an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) deleted addition on the ground that the addition cannot be made on the items without any incriminating material found during the course of the search. Being aggrieved, the Revenue approached the Income Tax Appellate Tribunal by filing an appeal, which has been dismissed by the impugned order dated 07.12.2017. By way of cross-objection, the Assessee raised issue with regard to non-recording of satisfaction before invoking provision of Section 153C of the Act. In the aforesaid factual background, this appeal has been filed. 6.Learned counsel for the Revenue, while inviting the attention of this Court to the note dated 06.01.2014, submitted that on perusal of the aforesaid note it is evident that the conditions, prescribed under Section 153C of the Act, were satisfied by the Assessing Officer. However, aforesaid fact has not been appreciated either by the Commissioner of Income Tax or by the Income Tax Appellate Tribunal. 7.On the other hand, the learned counsel for the assessee has supported the order passed by the Tribunal and has placed reliance on the decision of the Hon’ble Supreme Court in the case of Commissioner of Income Tax – III versus M/s.Calcutta Knitwears, Ludhiana rendered in Civil Appeal No.3958 of 2014 on 12[th] March, 1947 as well as the judgment of this Court in ITA No.528/2014 c/w ITA Nos.529/2014, 530/2014 and 531/2014 dated 15[th] of December, 2015. 8.We have considered the submissions made by the learned counsel for the parties and have perused the records. 9.The Ministry of Finance, Government of India has issued a circular namely Circular No.24/2015, which deals with recording of satisfaction note under Section 158BD/153C of the Act. In view of the decision of the Hon’ble Supreme Court in the case of M/s.Calcutta Income Tax – III versus M/s.Calcutta Knitwears, Ludhiana rendered in Civil Appeal No.3958 of 2014 on 12[th] March, 1947 as well as the judgment of this Court in ITA No.528/2014 c/w ITA Nos.529/2014, 530/2014 and 531/2014 dated 15[th] of December, 2015. 8.We have considered the submissions made by the learned counsel for the parties and have perused the records. 9.The Ministry of Finance, Government of India has issued a circular namely Circular No.24/2015, which deals with recording of satisfaction note under Section 158BD/153C of the Act. In view of the decision of the Hon’ble Supreme Court in the case of M/s.Calcutta Knitwears (supra) it has been held that the guidelines laid down by the Hon’ble Supreme Court in the aforesaid decision has to be strictly followed while recording of satisfaction note under Section 158BD/153C of the Act. Thus, it is evident that before invoking the proceedings under Section 153C of the Act, the following conditions are required to be complied with. (i)the AO of such person has to be satisfied that no money, bullion, jewellery or any other valuable article or things or books of account of documents seized or requisitioned belongs or belonging to a person other than the persons with respect to whom search has been initiated, that no money, bullion, jewellery or any other valuable article or things or books of account of documents seized or requisitioned belongs or belonging to a person other than the persons with respect to whom search has been initiated, (ii)the books of account, documents or assets seized or requisitioned shall be assets seized or requisitioned shall be handed over to the AO having jurisdiction for such other person, and (iii)that the AO shall proceed against such other person in the same manner as the person searched to make the assessment or reassessment in accordance with the provisions of Section 153A. other person in the same manner as the person searched to make the assessment or reassessment in accordance with the provisions of Section 153A. 10. We have carefully gone through the satisfaction note recorded by the Assessing Officer dated 06[th] of January, 2014. The aforesaid assessment note nowhere satisfies the requirements referred to, in the preceding paragraph. Before the Tribunal, the Revenue could not adduce any cogent material or evidence to prove that the addition in all the assessment years was made in the case of Assessee in the Assessment completed under Section 144 read with section 153C of the Act on the basis of any incriminating material or document being found during the course of the search. It is further noticed that even no such incriminating material or document has been referred to by the Assessing Officer during the course of the search while completing Assessment. The order passed by the Assessing Officer has been passed in contravention of the law laid down by the Hon’ble Supreme Court in the case of M/s. Calcutta Kintwears (supra). Therefore, the appeal preferred by the Assessee was rightly allowed by the Commissioner of Income Tax (Appeals) and the appeal preferred by the Revenue was rightly dismissed by the Income Tax Appellate Tribunal. No substantial question of law arises for consideration in this appeal. 11.In view of the preceding analysis, we do not find any merit in this appeal. Same fails and hereby dismissed. Sd/-JUDGE Sd/- JUDGE yan