Karnataka High Court
The Commissioner Of Income Tax vs M/S Blue Lines on 2 August, 2014
Bench: N.Kumar, B.Manohar
1
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 02ND DAY OF AUGUST, 2014
PRESENT:
THE HON'BLE Mr.JUSTICE N.KUMAR
AND
THE HON'BLE Mr.JUSTICE B.MANOHAR
ITA No.760/2008
c/w
ITA No.761/2008,
ITA No.762/2008,
ITA No.763/2008,
ITA No.764/2008,
ITA No.765/2008,
ITA No.766/2008,
ITA No.769/2008
In ITA No.760/2008
BETWEEN:
1. The Commissioner of Income-Tax,
Central Circle, C.R.Building,
Queens Road, Bangalore.
2. The Assistant Commissioner of Income-Tax,
Central Circle - 1(2),
C.R.Building,
Queens Road,
Bangalore.
...Appellants
(By Sri.K.V.Aravind, Adv.)
2
AND:
M/s.Blue Lines,
Prop : Sri.Balakrishna Setty K.S. (HUF),
No.106, 1st Floor,
Money Chambers,
#6, K.H.Road,
Bangalore - 560 027.
...Respondent
(By Sri.S.Sarangan, Sr.Counsel for
Sri.P.Dinesh, Adv.)
ITA No.760/2008 is filed under Section 260-A of Income-
Tax Act, 1961 arising out of order dated 07.03.2008 passed in
ITA No.1249/BNG/2007, for the Assessment Year 1998-1999,
praying that this Court may be pleased to formulate the
substantial questions of law stated therein and allow the appeal
and set aside the order passed by the ITAT, Bangalore in ITA No.
1249/BNG/2007 dated 07.03.2008 confirming the order of the
Appellate Commissioner and confirm the order passed by the
Assistant Commissioner of Income Tax, Central Circle - 1(2),
Bangalore.
****
In ITA No.761/2008
BETWEEN:
1. The Commissioner of Income-Tax,
Central Circle, C.R.Building,
Queens Road, Bangalore.
2. The Assistant Commissioner of Income-Tax,
Central Circle - 1(2),
3
C.R.Building,
Queens Road,
Bangalore.
...Appellants
(By Sri.K.V.Aravind, Adv.)
AND:
M/s.Blue Lines,
Prop : Sri.Balakrishna Setty K.S. (HUF),
No.106, 1st Floor,
Money Chambers,
#6, K.H.Road,
Bangalore - 560 027.
...Respondent
(By Sri.S.Sarangan, Sr.Counsel for
Sri.P.Dinesh, Adv.)
ITA No.761/2008 is filed under Section 260-A of Income-
Tax Act, 1961 arising out of order dated 07.03.2008 passed in
ITA No.1250/BNG/2007, for the Assessment Year 1999-2000,
praying that this Court may be pleased to formulate the
substantial questions of law stated therein and allow the appeal
and set aside the order passed by the ITAT, Bangalore in ITA No.
1250/BNG/2007 dated 07.03.2008 confirming the order of the
Appellate Commissioner and confirm the order passed by the
Assistant Commissioner of Income Tax, Central Circle - 1(2),
Bangalore.
****
4
In ITA No.762/2008
BETWEEN:
1. The Commissioner of Income-Tax,
Central Circle, C.R.Building,
Queens Road, Bangalore.
2. The Assistant Commissioner of Income-Tax,
Central Circle - 1(2),
C.R.Building,
Queens Road,
Bangalore.
...Appellants
(By Sri.K.V.Aravind, Adv.)
AND:
M/s.Blue Lines,
Prop : Sri.Balakrishna Setty K.S. (HUF),
No.106, 1st Floor,
Money Chambers,
#6, K.H.Road,
Bangalore - 560 027.
...Respondent
(By Sri.S.Sarangan, Sr.Counsel for
Sri.P.Dinesh, Adv.)
ITA No.762/2008 is filed under Section 260-A of Income-
Tax Act, 1961 arising out of order dated 07.03.2008 passed in
ITA No.1251/BNG/2007, for the Assessment Year 2000-2001,
praying that this Court may be pleased to formulate the
substantial questions of law stated therein and allow the appeal
and set aside the order passed by the ITAT, Bangalore in ITA No.
1251/BNG/2007 dated 07.03.2008 confirming the order of the
5
Appellate Commissioner and confirm the order passed by the
Assistant Commissioner of Income Tax, Central Circle - 1(2),
Bangalore.
****
In ITA No.763/2008
BETWEEN:
1. The Commissioner of Income-Tax,
Central Circle, C.R.Building,
Queens Road, Bangalore.
2. The Assistant Commissioner of Income-Tax,
Central Circle - 1(2),
C.R.Building,
Queens Road,
Bangalore.
...Appellants
(By Sri.K.V.Aravind, Adv.)
AND:
M/s.Blue Lines,
Prop : Sri.Balakrishna Setty K.S. (HUF),
No.106, 1st Floor,
Money Chambers,
#6, K.H.Road,
Bangalore - 560 027.
...Respondent
(By Sri.S.Sarangan, Sr.Counsel for
Sri.P.Dinesh, Adv.)
ITA No.763/2008 is filed under Section 260-A of Income-
Tax Act, 1961 arising out of order dated 07.03.2008 passed in
6
ITA No.1252/BNG/2007, for the Assessment Year 2001-2002,
praying that this Court may be pleased to formulate the
substantial questions of law stated therein and allow the appeal
and set aside the order passed by the ITAT, Bangalore in ITA No.
1252/BNG/2007 dated 07.03.2008 confirming the order of the
Appellate Commissioner and confirm the order passed by the
Assistant Commissioner of Income Tax, Central Circle - 1(2),
Bangalore.
****
In ITA No.764/2008
BETWEEN:
1. The Commissioner of Income-Tax,
Central Circle, C.R.Building,
Queens Road, Bangalore.
2. The Assistant Commissioner of Income-Tax,
Central Circle - 1(2), C.R.Building,
Queens Road, Bangalore.
...Appellants
(By Sri.K.V.Aravind, Adv.)
AND:
M/s.Blue Lines,
Prop : Sri.Balakrishna Setty K.S. (HUF),
No.106, 1st Floor,
Money Chambers,
#6, K.H.Road,
Bangalore - 560 027.
...Respondent
(By Sri.S.Sarangan, Sr.Counsel for
Sri.P.Dinesh, Adv.)
7
ITA No.764/2008 is filed under Section 260-A of Income-
Tax Act, 1961 arising out of order dated 07.03.2008 passed in
ITA No.1253/BNG/2007, for the Assessment Year 2002-2003,
praying that this Court may be pleased to formulate the
substantial questions of law stated therein and allow the appeal
and set aside the order passed by the ITAT, Bangalore in ITA No.
1253/BNG/2007 dated 07.03.2008 confirming the order of the
Appellate Commissioner and confirm the order passed by the
Assistant Commissioner of Income Tax, Central Circle - 1(2),
Bangalore.
****
In ITA No.765/2008
BETWEEN:
1. The Commissioner
of Income-Tax,
Central Circle,
C.R.Building,
Queens Road,
Bangalore.
2. The Assistant Commissioner
of Income-Tax,
Central Circle - 1(2),
C.R.Building,
Queens Road,
Bangalore.
...Appellants
(By Sri.K.V.Aravind, Adv.)
8
AND:
M/s.Blue Lines,
Prop : Sri.Balakrishna Setty K.S. (HUF),
No.106, 1st Floor, Money Chambers,
#6, K.H.Road, Bangalore - 560 027.
...Respondent
(By Sri.S.Sarangan, Sr.Counsel for
Sri.P.Dinesh, Adv.)
ITA No.765/2008 is filed under Section 260-A of Income-
Tax Act, 1961 arising out of order dated 07.03.2008 passed in
ITA No.1254/BNG/2007, for the Assessment Year 2003-2004,
praying that this Court may be pleased to formulate the
substantial questions of law stated therein and allow the appeal
and set aside the order passed by the ITAT, Bangalore in ITA No.
1254/BNG/2007 dated 07.03.2008 confirming the order of the
Appellate Commissioner and confirm the order passed by the
Assistant Commissioner of Income Tax, Central Circle - 1(2),
Bangalore.
****
In ITA No.766/2008
BETWEEN:
1. The Commissioner of Income-Tax,
Central Circle,
C.R.Building,
Queens Road,
Bangalore.
9
2. The Assistant Commissioner of Income-Tax,
Central Circle - 1(2),
C.R.Building,
Queens Road,
Bangalore.
...Appellants
(By Sri.K.V.Aravind, Adv.)
AND:
M/s.Blue Lines,
Prop : Sri.Balakrishna Setty K.S. (HUF),
No.106, 1st Floor,
Money Chambers,
#6, K.H.Road,
Bangalore - 560 027.
...Respondent
(By Sri.S.Sarangan, Sr.Counsel for
Sri.P.Dinesh, Adv.)
ITA No.766/2008 is filed under Section 260-A of Income-
Tax Act, 1961 arising out of order dated 07.03.2008 passed in
ITA No.1272/Bang/2007, for the Assessment Year 1999-2000,
praying that this Court may be pleased to formulate the
substantial questions of law stated therein and allow the appeal
and set aside the order passed by the ITAT, Bangalore in ITA No.
1272/Bang/2007 dated 07.03.2008 confirming the order of the
Appellate Commissioner and confirm the order passed by the
Assistant Commissioner of Income Tax, Central Circle - 1(2),
Bangalore.
****
10
In ITA No.769/2008
BETWEEN:
1. The Commissioner of Income-Tax,
Central Circle, C.R.Building,
Queens Road, Bangalore.
2. The Assistant Commissioner of Income-Tax,
Central Circle - 1(2),
C.R.Building,
Queens Road,
Bangalore.
...Appellants
(By Sri.K.V.Aravind, Adv.)
AND:
M/s.Blue Lines,
Prop : Sri.Balakrishna Setty K.S. (HUF),
No.106, 1st Floor,
Money Chambers,
#6, K.H.Road,
Bangalore - 560 027.
...Respondent
(By Sri.S.Sarangan, Sr.Counsel for
Sri.P.Dinesh, Adv.)
ITA No.769/2008 is filed under Section 260-A of Income-
Tax Act, 1961 arising out of order dated 07.03.2008 passed in
ITA No.1273/BNG/2007, for the Assessment Year 1998-1999,
praying that this Court may be pleased to formulate the
substantial questions of law stated therein and allow the appeal
and set aside the order passed by the ITAT, Bangalore in ITA No.
11
1273/BNG/2007 dated 07.03.2008 confirming the order of the
Appellate Commissioner and confirm the order passed by the
Assistant Commissioner of Income Tax, Central Circle - 1(2),
Bangalore.
These Appeals coming on for Hearing, this day,
N.KUMAR, J., delivered the following:
JUDGMENT
All these appeals are preferred by the Revenue. They are taken up together for consideration as a common question of law is involved in all these appeals and the assessee is the same.
2. In so far as ITA No.760/2008, 762/2008, 763/2008, 764/2008, 765/2008 are concerned, the Revenue is in appeal, challenging the observation made by the Tribunal that in the facts of this case, the Revenue was not justified in drawing the presumption under Section 132(4)(A) on the ground the assessee name was not reflected in any of the seized materials. However, they are not disputing the quantum of tax 12 determined by the Authorities. As a consequence thereof, only if the presumption is held in favour of the Department, they would be entitled to the consequential claim regarding interest. The reason given by the Tribunal is, though there was a seizure and there were materials seized in the search, the said materials did not reflect the name of the assessee. Most of the cheques were stale and some other cheques were blank and some other cheques were in the name of the third parties.
3. In the facts of these cases, we are of the view that the finding recorded by the Tribunal on this aspect cannot be found fault with and therefore, we are not going into the legal issue regarding the scope of presumption, which arrises under Section 147 read with Section 143(3) and infact in other three appeals also, similar finding was recorded by the Tribunal. 13
4. In so far as ITA No.761/2008, ITA No.766/2008 and ITA No.769/2008 are concerned, the claim was three-fold. First claim is of Rs.2,05,00,000/- undisclosed income. The recipient of the income during the course of the search of the premises admitted the receipt of the said payment. The second claim pertains to an amount of Rs.33,05,000/- additions made by the Assessing Authority representing the unaccounted money lending cheques. The third claim was regarding cash found during the time of search was Rs.20,03,680/-.
5. In so far as claim for Rs.2,05,00,000/- is concerned, the Tribunal has not properly appreciated the case of the assessee and taking into consideration, a sum of Rs.79,55,280/- reflected in the statement of affairs filed on 31.03.1999 has granted the relief. The said statement was not put forth as a defence before the Assessing Authority or before the First Appellate Authority though an assessment order disclosing the 14 said amount was placed before both the Authorities. Under these circumstances, it is not possible to affirm the said finding recorded by the Tribunal. The Tribunal shall re-hear the matter, take note of the materials on record and decide the said question afresh.
6. In so far as the claim for Rs.33,05,000/- representing unaccounted money lending cheques are concerned, the First Appellate Authority has set aside the said finding by giving cogent reasons. That was challenged by the Revenue before the Tribunal. Though the Tribunal has set out in detail the facts regarding the said claim and the contention of the assessee explaining the same, it has not appreciated the material on record, heard the arguments and recorded the finding one way or the other. Therefore, when the Tribunal holds appeal is allowed, if that claim is also set aside without assigning any reasons, it 15 cannot be sustained. Therefore, the said claim also requires to be considered by the Tribunal afresh.
7. In so far as the cash found at the time of search, Rs.20,03,680/-, the third claim is concerned, the First Appellate Authority has affirmed the finding recorded by the Tribunal. The assessee was in appeal. The Tribunal has not recorded any finding on this aspect of the matter. Again, in the operative portion of the order, states that the appeal is allowed, it cannot be construed as setting aside the order of the Appellate Authority as no reasons are given. Therefore, that aspect also requires to be considered by the Tribunal afresh.
8. In ITA No.764/2008, a claim for Rs.11,39,000/- was stated to be unaccounted on the basis of the cheque found but the Tribunal has not recorded any finding on that aspect though the First 16 Appellate Authority has granted the relief to the assesee. Hence, we pass the following order:
i) ITA No.760/2008, ITA No.762/2008, ITA No.763/2008, ITA No.765/2005 are dismissed.
ii) ITA No.761/2008, ITA No.764/2008, ITA No.766/2008, ITA No.769/2008 are allowed.
iii) The impugned order passed by the Tribunal is set aside. The matter is remanded back to the Tribunal for fresh consideration in the light of the observations made in this order.
Ordered accordingly.
Sd/-
JUDGE Sd/-
dh* JUDGE