,Z;ND_:_ '
e*'AA....vUdyambgagh, _. E
IN THE HIGH COURT OF KARNATAKA
CIRCUIT BENCH AT DHARWAD
DATED THIS THE 30TH DAY OF ocToBE;~Té 2o::)§'Tj"' C *
PRESENT_m_
THE HON'BLE MRJUSTICZE jsAB_FIA:PfI1~1f"
ANDx _
TI-IE HONBLE MR. JUSTICEANAVND B*;RA:REvfi)DY
INCOME TA.}.{':.a'\PP'?EA;_:V_11\.IL'3..;2.?.,"2A.'7/2006
BETWEEN:
I. The CoIr_irni'§s;iOne:i% of:
Khimj.ibh;Q_y 'C.o1'nme_1v.e_ia}_ Cnrrzplex,
Opp. Hospital, A_ '
Bye.1gaufn,559'€-:;:O0
2. The Income "
Ward--1«,uB'e1gauzjn; " .. Appellant
(By Shri.I\_/{,V. Sfidewjachala,."Adyocate)
M Teehxzot l.ndustries,
B-17',.1r1dustfie's-Esi;ate,
}3e_1gaum;*-- Respondent
W Svhankar, Advocate)
T. C ‘gTh*is”CInc0me Tax Appeal is filed u/s 260«~A of Income
Aejz, 1961, praying to set aside the order passed by the
ITA.96/BGM/2001-0 1. The Appellate Authority by order
dated 27.1.2001 allowed the appeal by holding,
admission made during the assessment proceedings:..ca._nho_t”A _
be treated as admission in the penalty proc~eed:i:11gvs’,»i:asAthe
proceedings are separate, and acceptedthe c’on’ten*tio1n.’o_f
assessee and set aside the order passed byepth7e,Asses;sinlg
Officer imposing penalty of Rs.ti;’1.§i.3i’;O()_O/–ii’
4. Being aggrieved- by the of the Appellate
Authority dated 2′? i8.2QO’1″,’» the Revenue preferred ag; appeal
before the .’fribunal, Panaji Bench,
Panaji,_.–(here’1n_’iaiter “”*tQ.7§as the “T1–jbuna1”), in
ITA.163/P1’=IJ/QOC}if-~._l”ssiessment year 1997-98), and the
Tribunal order _diat.ed.yi::_3’O.8.2005, dismissed the appeal
and,,o§onfii*med theorder passed by the appeliate authority.
aggrieved by the said order passed by the
Tribunal,vthelpfievenue has preferred this appeal.
A. ii The appeal has been admitted on 11.12.2006 by
iolpiining that the questions of law raised in the memorandum
-ofiappeal would arise for consideration of this court.
\,./% .
‘7. We have heard the learned Counsel for the
appellants and the learned Counsel appearing’…fo;l:”.a;he
respondent.
8. It is contended by the-ll’earned–‘_:Counsel
appellants, that the appellate as 2
Tribunal have failed to considerl’-ethe qlue.stio.n1s-.offact’; as to ”
whether apart from the the assesisee has
produced any material t’oxloyf-f.er– ¢’§§pL1afi:a’rion and thfi Said
explanation is bonafide,'”arid:’¥th.ere’fore.v’.it.::.ifii»as not necessary
to impose to that effect was
given, the- be dropped by the
Assessing O’t’fioer’a1aidnlolrncionlsideration of the said question
of law is it”se__lf”a_ subsltant.ia,i’ question of law as the said order
_ of lTri’bunall’a-ffirminlg the order of the Appellate Authority,
.Withoutvl’gi.vinfg’–.a finding on the requisite condition necessary
or setting aside the order of penalty by
:-1cce’ptin–g. the explanation offered by the assessee, would
ejrenrder the order perverse and arbitrary. The learned
._l(L’,ounsel has taken us through the order passed by the
\5,J’
Assessing Authority as well as the order passed by the
Tribunal, to substantiate his contention.
9. The learned Counsel for theA”—.res.pondent,__
submitted that the penalty has b’eenillimplose-d
ground that the assessee has admitted_ that (lathe “incoi’;neaolf=.(
Rs.15,-42,665/– pertaining to”~vs.pRr’evious’*–yearr (predated as
income for the assessrncnpt He ‘submitted that
the said assessment admission in the
penalty procpeedjings pertain to the
assessrnentll assessment 1997-98 and
therefore~5~.i(l(v;i.s apaywavriy tax, and therefore, the
question (‘Would not arise. He submitted
that the ‘ha.~::ll..accepted the contention of the
ass’?-lssee. th-atllithepvsaid credits pertain to the year prior to
.0 «I)n”~–,s__upport of his contentions he relied on the
0′ following fgiecisiolnsz
1°…’ “Union of India 815 Others Vs. Dharrnendra
* Textiles Processors and Others. (2008) 306 ITR
. 277 (SC)
2. Union of India Vs. Rajasthan Spinning 8r,n
‘ Weaving Mills. (2009) 224 CTR 1 (SC)
3. Commissioner of Income–‘l’ax Vs. Atul Mohan
Bindal, (2009) 317 ITR 1 (SC).
K?’
10.
11.
Commissioner of Income–Tax vs. Narashima
Prasad (2001) 250 KTR 852 (Kar).
Commissioner of Income Tax Vs. M:
Gujamgadi (2007) 290 ITR 168 (Kar.
Bhadra Advancing (P) Ltd.
447 (Kar).
Commissioner of Income Tax
Agricultural Farms L’.=;d. (2)008) 3.84)’
(Delhi). «
Commissioner of » Income Tax –Vs,~v –iV–iPramesi}wirar k
Bohra (2007) 208 18 (R’a_i_).’-I A
Sudarshan Silks and “Sarees –Vs—-« Commissioner
of Income Tax. (2.0’0’8)* 30OV”IT_R 205″(sc)
Commissioner” _of_ I2ncorQ¢..) Tax –Vs– Suresh
Chandra Mittal; (2oo1;’25)1′-ma 9;_(sc).
Comrnissi0n..e;=.._of Vinconie ‘Fax –Vs– Suresh
Chandra Miittal (2«0O0)”~2’_4.—.1) {TR 124 (MP)
Commi(s_sioVncr’;of Income ‘fax –Vs– Mrs.Ba1jeet
Jolviiy)'(20)O3)”-2*53′”ITR’_ (Delhi).
3;. Buiideris-i_’anid'”Another –Vs– ACIT. (2004)
– _2c:33 I’I”i}?-.3 56;2_(sc).
C’on_1misision)eir~«. of Income Tax –Vs~ Suraj Bhan
= ‘(2v0o’i).j’2.94i.1fn2.__4-3_1 (P & I–I).
‘Commis-si’one-r__ofincome Tax –Vs– Rajnish Nath
Aggamaal ‘(20Q_s) 219 cm 590 (9 8:. H).
“Commissioner
Commissioner of Income Tax –Vs– Hukam
Chand_Ij_1__ariprakash (2002) 1’72 CTR 271 (P8z.H)
of Income Tax –Vs–
‘Vamchampigons and Agro Products (2006) 284
I ~1″rR_ 4.08 (Delhi)
–Cornmissioner of Income Tax –Vs– Rajiv Garg
. “a,1id Others (2009) 313 ITR 256 (P8514)
is 10;.
In response to the argument of the learned
Courlsel for the respondent, the learned Counsel for the
it ” -‘a;;ipe11ant has relied upon the following decisions:
‘x
9.
;’g:’:;«
Commissioner of Income Tax, (2008) v2,1_9- I’
1. K17′. 1’/Eadhusudhanan vs. Commissioner of
Income Tax. 251 ITR 99 (SC)
2. Union of India 82, Ors. Vs. Dharamendraflfiextile
Provessors & Ors. 305 {TR 277 (sc).__ – ‘
3. Commissioner of Income Tax.
Madhusudanan. 246 ITR 218 (Ker)}7._ 1′
4. Commissioner of Income Tax \;”s’.”vT;:i’As’h..olt_Pai,””
(200?) 292 ITR 5(Kar).:”
11. Having regard to=th_e above ‘said c;o’ri’tc.:1_tioni3,
find it necessary to re-frame the».substaritialiiiqtiestigon of law
that arises for conside:ration.’fliiland”ithefifollowing substantial
question of law is framed
1. the passed by the
“order passed by the
iiii H _’ of ..–iiiiIr1come Tax (Appeals) is
eand;_:iari5itrary for nor1~consideration of
rnaterialiidnestion of fact?
2,.’-e Whetherthe explanation offered by the assessee
ivl4i’s::b_onafide and would not attract penalty and
‘calls for interference in this appeal?
12’… We have given our careful consideration to the
‘coriteintions of the learned Counsel for the parties, in the
-«blight of the principles laid down in the decisions relied upon
\/5
by the learned Counsel for the parties referred to above, and
we answer the substantial questions of law in the affirndative
and in favour of the Revenue for the following r6&&*3:o1’illSyi}’~_’ .
The fact that in the Return iilezlisy. ythelasslessee :the, it
assessment year 1997-98, which :h«ad7’_been
explanation was called for regarding trade _credits’;”*’las”jthe ” 9
same entries were repeated frorn.uejarlie.rzyear”s’.-._ln_1:esponse
to the said letter calling exp1aria:tio”nl,i,tithe assessee did not
offer any explanation said amount of
Rs. 15,42,665; ifgisisessirient year 1997-98
and hlasxbeen passed, which is
not in Zdisputed principles laid down in the
various decisions u.pon by the learned Counsel for the
resporident, it cannot also be disputed that the admission
made in assessment proceedings cannot be the sole basis for
penalty, which is an independent proceeding.
Howhevergh ion’; the scrutiny of the order passed by the
_’1’ri.bunaI; s which confirmed the order passed by the
a._tZ’_omn’1:issioner of Income Tax (Appeals), Belgaum, we find
* -»that the Tribunal being a final authority on the question of
KM
ii ” . of rietiiv. ,
IO
fact, has failed to consider as to whether the explanation
submitted by the assessee was bonafide within the, meaning
of Section 271(1)(c) of the Act, and therefore, .
presumption regarding concealment and”‘conis1eq11e’ntl}5
whether the concealment had been
finding on the said question V-jtfact is’-a icondiitiion; precedent
for imposition of penalty, as imposed
under section 271(l)(ici)._._i’§~nty–l_fi.tl*1e_’g~.satisfaction that the
assessee has concealed. his income or
furnished lisuchilincome. It is well
settled, that’. material question of
fact issue that arises for
deterrnination rexnder the decision perverse and
arbitrary and itseltconstitute a substantial question
« l3:ii.”_..,.siv’ii:;i’si..also clear from the perusal of the material
oniii’eCo=rd, that the Tribunal having not referred to books of
accounts and other documents produced by the assessee, as
Assessing Officer had no occasion to consider the said
*-«blocks of account and the documents produced as he
K/’
proceeded on the basis of the admission made in the
assessment proceedings,iand wherefore, it is clear”‘thfa–t the
order passed by the Tribunal is perverse ~
non–consideration of the rnateri.a1__ quelstionsj of elfiface-t.
However, this court in exercise of the :powerl’o_f the appellate
authority under section 260A cannot’considefllthewqtiestion–.V”
of fact and it is appropriate thatiilthe meatteris. remitted to the
Tribunal, which is a final.i:,.autheor{ityl. todecirzle on the question
of fact and pass fresh orde.r_s’=in’a,ccor’dé.nc’e§_vJith law.
14. substantial questions of
law of the Revenue and
against; the the following:
V .h= ORDER
.. appeal..i,se_a1lcwed.
passed by the Income Tax Appellate
inTri’h;ana’i,lfg}?a’n’aji Bench, Panaji, in rm 165/PNJ/2001
(asis’ess1iri,er’rt”llyear 1997-98) dated 30.8.2005, is set aside.
_iiThre__ said appeal ITA 165/PNJ/2001 (assessment year 1997-
‘ restored to the file of Income Tax Appellate Tribunal,
\./’
Panaji Bench, Panaji, with a direction to dispose the
appeal afresh in accordance with law.
AI} the contentions of the parties are to be
urged before the Tribunal.
V _ *sub?””