Karnataka High Court
The Commissioner Of Income Tax vs H V Krishnaswamy on 9 April, 2013
Bench: N.Kumar, B.Manohar
1
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 09TH DAY OF APRIL 2013
PRESENT
THE HON'BLE MR.JUSTICE N.KUMAR
AND
THE HON'BLE MR.JUSTICE B.MANOHAR
ITA NO.69/2007
BETWEEN
1. THE COMMISSIONER OF INCOME TAX
CENTRAL CIRCLE,
C.R.BUILDING
QUEEN'S ROAD
BANGALORE
2. THE DEPUTY COMMISSIONER OF INCOME TAX
CIRCLE-1(1)
C.R.BUILDING
QUEEN'S ROAD
BANGALORE. ... APPELLANTS
(BY SRI.M.THIRUMALESH, ADV)
AND
SRI.H.V.KRISHNASWAMY,
113, 3RD CROSS, 8TH C MAIN ROAD,
JAKKASANDRA,
JAKKASANDRA BLOCK,
2
KORAMANGALA,
BANGALORE. ... RESPONDENT
(BY SRI.A.SHANKAR, ADV)
ITA filed u/S.260A of I.T.Act, 1961 arising out of
Order dated 27-06-2006 passed in ITA
No.51/Bang/2001 for the Block Assessment Period
1989-90 to 1999-2000, praying that this Hon'ble Court
may be pleased to:
i. formulate the substantial questions of law stated
therein,
ii. allow the appeal and set aside the order passed by
the ITAT, Bangalore in ITA 51/Bang/2001 dated 27-06-
2006 confirming the order of the Appellate
Commissioner & confirm the order passed by the
Deputy Commissioner of Income Tax(Inv.), Circle-1(1),
Bangalore, in the interest of justice and equity.
This appeal coming on for hearing this day,
N.KUMAR J., delivered the following:
JUDGMENT
This appeal came to be admitted on 20-09-2007 for considering the following substantial question of law:
"Whether the Appellate Authorities were right in holding that a sum of Rs.21,30,000/- detected in search declared by the assessee as a loan amount and having failed to identify the creditor proved his credit 3 worthiness and genuineness of the transaction cannot be treated as the income of the assessee as held by the Assessing Officer by shifting the burden.?"
2. The assessee's residential premises was searched on 5-8-1998. The assessee had filed the return of income for the assessment years 1996-97 to 1998-99. In response to the notice issued under Section 158 BC of the Income Tax Act, 1961 (for short, hereinafter referred to as 'the Act'), the assessee filed NIL undisclosed income in the returns for the Block Period under protest. The assessee was called for particulars, and they were all furnished. Ultimately, the Assessing Authority determined a sum of Rs.21,30,000/- as undisclosed income. The assessee objected for the same. The case of the assessee was that no cash, jewellery or assets were found during the course of search and no incriminating documents showing any undisclosed income by the assessee under Section 4 158BB(1) of the Act were also found and seized from the premises. The loan in a sum of Rs.21,30,000/- was raised by the assessee for purchase of properties was fully accounted for. In respect of the same, the Assessing Authority passed the assessment order holding that the assessee has failed to explain the loss totaling to Rs.21,30,000/-. Aggrieved by the said order, the assessee preferred an appeal to the Commissioner of Income Tax (Appeals). The Commissioner carefully went through the entire material on record and was of the view that in the assessment order there is no mention of any evidence being found during the course of search either by way of documents, papers, notings or by way of any admission during the course of statement under Section 132(4) of the Act that the assessee has undisclosed income for the block assessment period. Therefore, the requirement of Section 158DB(1) is not fulfilled and cancelled the assessment order. Against the said order, the Revenue preferred an appeal to the 5 Income Tax Appellate Tribunal (for short, hereinafter referred to as 'the Tribunal'). The Tribunal went into each item of the loan transaction of property which according to the Assessing Authority had not been properly explained. On a careful re-examination of the entire material on record, it recorded the finding that each and every item is properly explained and accounted for and there is no undisclosed income. Therefore, it upheld the order of the lower Appellate Authority. Aggrieved by the said order, the present appeal is filed.
3. Admittedly when no incriminating documents, papers, cash, jewellery etc. were seized at the time of search, initiation of block assessment proceedings itself was held as invalid by the lower Appellate Authority. As held by the Tribunal, each and every item of loan for purchase of the property has been completely explained with documentary evidence. Under those 6 circumstances, we do not see any merit in this appeal. Accordingly, the substantial question of law which was framed are answered in favour of the assessee and against the Revenue. No merits. Dismissed.
Sd/-
JUDGE Sd/-
JUDGE mpk/-*