Karnataka High Court
The Commissioner Of Income Tax vs Sri Srikant V Baddi on 13 January, 2012
Bench: K. Sreedhar Rao, A.S. Bopanna
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IN1TflEHKHiCOURTCH'KARNATAKACfi
(HRCUYFBENCHJVFDHARWAD
DATED THIS THE 13%; DAY OF IJANUARY" _
PRESENT
THE I-ION'BLE MR.JUsT1c§I3 I§gSz;EF,D'I51'AI2' I'
. _AND 4
THE HON'BLE MR.J'U$*rICE A;*s,i§*ci>AI§I:I\IA
V' ....... ,.
_ 'fi1O~_§}_8%§T;'1»46[2OO9
I3E:TwEEI'£:" ~ '
ITA Ng;§3'1éé,;.;;;I:,:. '
I. "CC)'M1\/1vISSI.C)NE§R' OF INC()I\/II3: TAX,
IIEVRCIZ I<H_IMZIBHAICOMMERCIAL COMPLEX,
c)P'P.jI'().c:I\/'IL'IIOvs.m'AL, DR.AIvII3EDI<AR ROAD,
V _ _BELC}}'dJ}\/I'%59O O01. .
TE%.E"ASSIST}§NT COMMISSIONER OF INCOME TAX,
CENTRAL CIRCLE, FEROZ KHIMZIBHAI
. C'QM~MI;'_RCIAL COMPLEX, OPP. CIVIL HOSPITAL,
. D'R'AMEIE:DKAR ROAD,
' BELCIAUM 590 001. ...APPE2LLAN'I'S
(BY s'RI.$r:.v.RAvIRAII, ADV. FOR SR1 K.V.ARA\/IND, ADV.)
} 5fl,'.%=..._....I»1V'J".1"3._;
__ V 5:21 SRIKANT V. BADDI,
VI * ...I--I;I\Io. 103, SHIVACANCA EXTENSION,
0;/M
KUSUGAL ROAD, I<ESIIwAPIIR, HUBLI.
...RESPON.DENT
(BY SRI.A.SHANI<AR, ADV),
THIS APPEAL IS PILED UNDER SECTIOIV IT
ACT, 1961 ARISING OUT OP ORDER DA'I""E.Df:.0 6 O'_9.20_O'7».,
PASSED IN IT(SS)A NO.I,o/PNII'/201%,), "E_O'R'TI¥IE»..ISLO(;I< '
ASSESSMENT PERIOD OI .04. I99'ST<.)'_ 20. I I; PRA'aIINO
TO ALLOW THE APPE.ALI'TA'I'-ID SET ASI_DE_ ORDER.
PASSED BY ITAT BANGALORI§;=fl' _
IN ITA NO.I6og2ooS _
BETWEEN: '
PER-OZ" _I<,I'I=II»I';?.IE-IITA,I"COM MERCIAL COMPLEX,
OPP TOi..C;jVIL HOSP1"F.AL,
DR.AIvIEEDIE:A.R'=ROAD, BELGAUM-590 001.
1. THE C<§Mig<IISS.IONE.R'.c)E'INCOME TAX,
2. THE'ASS1STANTCONIMISSIONER
OP INCOM_E ~TP.X,*f..ZF)'I<ITRAL CIRCLE,
EEROZ I<HIMZ~I._EHA'CI, COMMERCIAL COMPLEX
_ OPP. CIVIL-IIOS-.PITAL, DRAMBEDKAR ROAD,
BELGAUM» 59H(_)__(7)O1. ...APPELLANTS
1. (gygSRbI.$(.V,.A:R~I4\VIRAJ, ADV. POR SRI I<.V.ARAVIND, ADV.)
SR'I"'--SHA:NRA;RASA V. EADDI,
_ PAWAR COMPOUND,
. HI;N__DUNAGAR, TILAKWADI,
I~I,I_IS~LI. ...RESPONDENT
(EV SRI.A.SHANI<AR, ADV),
THIS APPEAL IS EILED UNDER SECTION 260=--A OF IT
ACT, 1961 ARISING OUT OP ORDER DATED ,0~5j.fI4_0;~:2_007
PASSED IN IT(SS}A NO.I5/ENG/2007, F()I2;"'1'}~lfE_~...l3LQ_CK
ASSESSMENT PERIOD 01.04.1995 TO 20. 1I2';"2:()O1'0"l5VRAYINQV'
TO ALLOW THE APPEAL ANDSET4 AS'IDE"'*TTHE" ORDER'; '
PASSED BY ITAT, BANGALORE.
IN [TA NO.€>3/2008
' BETWEEN:
A
I. THE COMMISSIONFLRAOF I.NCO--Iv[I-E TAX,
PEROZ KHIMZIEHAI cOIvIIvIERCIAI,, COMPLEX,
OPP TO CIVIL HOSP_lTAL--,_ I " "
DR.AM_EED-I_<AR; ROAD, EELIOAONI'.
3. THEASSISTAI\IT..CO_I»IMISSIONER
,OP. {NCO TAX,» CENTRAL' CIRCLE,
PEROZEHVIIIIZIEHIAI COMMERCIAL COMPLEX
'OPP; OIvI'LfH4OSvPI*T_AL,.__ DR.AIvIEEDI<AR ROAD,
BELGAUM_ 590 00-I__ " ...APPELLANTS
(I3Y_SRI.Y.\E/';R_AvIR'AII;-ADV.)
SR1' V. EADDI,
~NO.._1'19,uO'_'"_' CROSS, NEAR SCHOOL,
(BY S"RI.}\.SHANKAR, ADV),
vISwESwA:RAIAH NAGAR, HUBLI 580 032.
...RESPONDENT
THIS APPEAL IS FILED UNDER SECTION 2E0-A OP IT
0 'ACT, 19m AGAINST THE ORDER DATED 06.09.2007
'' -PASSED IN IT(SS)A N011/PNJ/2006 ON THE PILE (.)F THE
I V /A
9%,,»
v HI_I\__I'DL{NA:3AR, TI'L'A'}'{WADI, BELGAUM
INCOME TAX APPELLATE TRIBUNAL, BANGALOREBENCH
ALLOWING THE APPEAL FILED UNDER SECTION.L:'2.€>3_'C)F
INCOME TAX ACT. A '. . V.
IN ITA NO. I46/2009
BETWEEN:
I. THE COMMISSIONERO-F_ INCOME TAXQ'
FEROZ KHIMZIBHAI COIVIMERCIAL C.QMP'LEX,
OPP TO CIVIL HOsPITAL',w__'
DR.AMBEDKAR;..ROAD,,-BELGAUM.
2. THE ASSISTANT'C'O*I»INIISS§'IO'NEER,VL .
OE INCOME TAX, C'EvN'I'RA.L C1*RC'LE---,-"
FEROZ I:HI,MzII3HAI COI\/IME_RCIA«L' COMPLEX
OPP. CIvI'L;.I,IIIc>sIIé>ITAI;, DRI,AIvrI3EDI<AR ROAD,
BELGA»!II\/il.,_5.90"OQ.I_." I ...APPELLANTS
(BY SR1 ,1yV.v';RAVI;RAq,..AD:$/.)"
A N D.__: I I I
SR1 EHANKARAEA "Vi EADDI,
PAWAR COMPOIIND,"v_ '
OANESH EMPIRE, NEAR RPD CROSS,
...RESPONDENT
I (BY SARZIIIASPIAANKAR, ADV.),
IS FILED UNDER SECTION 2E>O--A OF IT
_' ACT, ARISING OUT OF ORDER DATED 10.09.2008
PASSED IN IT(SS)A NO.4/PNJ/2008, PRAYING TO ALLOW
V_ __I'THE'H"APPEAL AND SET ASIDE THE ORDER PASSED BY
.1, __I.'I"AT, BANGALORE.
THESE APPEALS COMING oN FOR FINAL HEARING
THIS DAY, K.SREEDI-IAR RAO, J, DELIvERE;I)"I»-.f_rII_3:
FOLLOWING: ' "
The search was conducted=..:'on_-~20.
residential premises of the assessee'; ._ s'eVera1"d.ocuments
marked vide AnneXure_--A/ 1. 1 / SSBC / 10 A
8: 11 have been -Authority while
assessing the seized
materials incriminating
assessed the income
for to 20.12.2001 and levied
the tax. A A A A
A 2: The Commissioner of Income Tax exercising
tinder Section 263 of the Income Tax Act
A --V found 'fhat";the Assessing Authority has not properly
if A '' aprprgeciated the material found in the documents seized.
-- Therefore, directed the Assessing Authority to redo the
assessment. Aggrieved by the order, the assessee filed
appeal before the Appellate Tribunal. The
Tribunal in Para 9 and 10 of the order has H
following observations.
"9. The Apex Court:'»._in.:-'~thieu7case'
Malabar Industrial Co.' Ltd.(su_pra) has?
that the provision of Section 263
invoked to correct each" a'nd"e.veryfi'type/Eof
mistake or error Assessing
Officer. The incoprreét'~assu.mption--. of facts or
incorrect 'application * of 'wi11.:isatisfy the
requii'enient" ""Df3:i:j:'51§'--.ber1'oneous. If the
Assiessing' 'adopted the course
the order cannot be
treatedyas though it may result in
loss of"reven.ue.': Net asset method is one of
'Vthe permissible' course to ascertain the
._undisclosed income, in case the same is not
"~l'.__pasc'ertaina'ble from the seized documents.
We 'have seen that such method has been
adopted by the department while making
Vi"-.block assessment to assess undisclosed
"income. From the figure mentioned by the
CIT for the financial year 1998--99, it is clear
that undisclosed income cannot be
determined on the basis of those figures.f"*--,g
Hence, we are satisfied that the Assessing-fl.'-.
Officer has chosen one of the A"
courses for determining the undis--clo.se'd
income and, therefore, the
Assessing Officer cannotaslf
erroneous and prejudici'alV_pto the inte'r:eus~t'"of'
the revenue. _
10. Sectiorif permits the
Assessing Officer" to of
such pQ.ir.¢;:S':~or statement
of all -V..liab1lities»'H'Vof assessee
or not for
Hence, net asset
me-thodf is . _of.. «recognized method for
ascertaining~inco1n.e} In case the assessee is
Qfound to 'eevowner for benami property and
jprovperties are not included in the list of
such method of computing
O' _ wincome 'from the net assets may not be
if applicable. However, in the instant case,
A * there is no finding on record that the net
9assets as determined by the Assessing
Officer for purpose of computing undisclosed
A/g_k
income were incorrect or false. Under the
circumstances, we feel that the learnecls"-.c
Assessing Officer has adopted one of
possible courses and the View adoptec1.'4"tjd2~y it
Assessing Officer is also one of the 'possible
Views. 'The learned CIT VJas,>_cthjerefor'e;--._not.__
justified in canceling the A
The order of the CIT 'Ll.f1€1p€r Section
cancelled." H A if
3. The Appellate" it-has'w__set aside the
order of the":.()'_iT appeal. The
departmeritllvaggrieeed"by,ti1e':i.saicd'w--order has filed these
appeals. H
4. learned counsel for the
appellant strenuously submitted that, it is evident from
the Assessing Authority has not
conslidere'dj'jthe documents for assessing the income and
non consideration of the said documents amounts to
A serious error and prejudice to the interests of the
revenue.
......
U
5. Per contra, learned counsel for the assessee submitted that the Assessing Authority has the documents seized while making the order. In this regard referred"'2the. A_Ftar§{":.c1:V assessment order, wherein ther_e'"__is a'_yc'ate'gor4ic~a1 reference to all the seized C':o:cuments._ and they" have been considered. The .o"bserv_atior1-s; made in Para 1 of the assessment order is as foliowsft "
"on same day :i.2e'; ,x 25/ 12/2001, search conducted in the resi.d.entia1 of 'Sh.u;'bhandrashekhar C,_Hakari"'wh_o"ishace-ountant of the assessee and 4' his and incriminating Avdocurinents/evidences, books of accounts belongingwto the assessee group were __found«,:Ain the residential premises of the and the same have been seized A vide 22 AnneXure--A/CCH/ 1 to 41. Shri.Chandrashekhar C.Hakari in his 2 Vtikstatement recorded on 26/ 12/2001 has 2 "stated that the books of accounts and other documents found in his residence belong to :10: Shri.Shrikant V. Baddi and his brothers. Shri.Shrikant V. Baddi in his statement''''.. u/s--132(4) on 20/12/2001 has confirmed that the books of accAo:un.ts;:.."' documents etc., found in the resi"denc'_e "or Shri.Chandrashekhar jbeiohgi-.. 'A, 2 3 business carried on by hirn..alo_ng his two brothers."
6. In Para fiof order the following observation jg ._ seized mate.rilals"*/'Z8, 29, 30 and A,'-¢Sl3t.:C;/l;(l¢i§:.3& "ll.ll'-The""'un'disclosed income earned "business is applied towardsl'=inVe'stii1elr1t in purchase of Avimmoxlfablle V. properties, construction of '7<re_sidential'H 'bungalow, investment in fixed " ~ _ V deposits' etc. l' _ counsel submitted that merely because the" portion of the order, there is no specific gltfeferehce to the documents 28 and 29, it cannot be said "that, Assessing Authority had not considered said the :ll:
documents. In this regard referred to the decision of the Supreme Court in the ease of CIT Vs. Max reported in [2007] 295 ITR 282 (so). decision, the Supreme Court has also refe1're:d~ the C_aS,€ of Malabar Industrial Co. Ltd.,
83.
8. The Appellate eonsidered the decision of the C-ourt.I'V_1jeferred to above and has given" Asettingijaside the order of the CIT. Appellate Authority is soundqanld for interference.
The..appeals'Vare 2009 ':w:": ._ITA V VA appeal, the CIT keeping in View the order the Appellate Tribunal set aside the ll"»~v.__V»assessrci_ent made after the remand and the original restored. The State aggrieved by the order of the has filed an appeal before the Tribunal. The %/ rrrrr :12: Tribunal has dismissed the appeal which does not call for interference.
Accordingly, ITA No.1-46/2009 is also