M/S GENEVA INDUSTRIES LTD V. DEPUTY COMMISSIONER OF INCOME TAX

ITA/456/2018

AI Insights

This case involves an appeal by M/s. Geneva Industries Ltd against the order of the Income Tax Appellate Tribunal (ITAT), Bengaluru, which had reversed the decision of the Commissioner of Income Tax (Appeals) and upheld the addition of Rs.183 Lakhs as income for the Assessment Year 2009-2010. The dispute arose from a survey conducted under Section 133A of the Income Tax Act, 1961, where certain notings were found, which the AO treated as financial transactions. The CIT(A) found these notings were incorrectly treated as financial transactions, but the ITAT reversed this finding, placing the burden on the assessee to prove these were not income. The High Court did not address the substantive questions of law due to the remand of the case.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 764388 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 05-04-2023
• Assessment Year: misc
• Other Referred Cases: Fibre Boards (P) Ltd. Vs. CIT, P.R.Metrani Vs. Commissioner of Income Tax, Bengaluru
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: E I SANMATHI
• Assessee Lawyers: M V SESHACHALA; K V KUMAR NAIDU
• Keywords: Assessment Year 2009-2010; Financial transactions; Financial transactions; Income addition; Income tax appeal; Loose Sheets; Survey
• Section: 133A; 54G; 260-A; 132(4)(A)

Judgement Text

"- 1 - ITA No. 456 of 2018 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 5TH DAY OF APRIL, 2023 PRESENT THE HON'BLE MR. JUSTICE P.S.DINESH KUMAR AND THE HON'BLE MR. JUSTICE C.M. POONACHA INCOME TAX APPEAL NO. 456 OF 2018 BETWEEN: M/s. GENEVA INDUSTRIES LTD (FORMERLY GENEVA FINE PUNCH ENCLOSURES LTD) NO.140/1, PATTANDUR AGRAHARA VILLAGE WHITEFIELD ROAD BENGALURU-560 066 REP. BY ITS DIRECTOR SRI. T. MURALI KRISHNA REDDY …APPELLANT (BY SHRI. M.V. SESHACHALA, SENIOR ADVOCATE FOR SHRI. K.V. VINODA KUMAR NAIDU, ADVOCATE) AND: 1. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-11(3), BMTC BUILDING KORAMANGALA BENGALURU-560 095 2. PRL.COMMISSIONER OF INCOME TAX-1 C.R.BUILDINGS, QUEENS ROAD BENGALURU-560 001 …RESPONDENTS (BY SHRI. E.I. SANMATHI, STANDING COUNSEL) THIS ITA IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT 1961, ARISING OUT OF THE ORDER DATED 19.01.2018 PASSED IN ITA NO.1560/BANG/2013 FOR THE ASSESSMENT YEAR 2009-2010, PRAYING TO FORMULATE THE SUBSTANTIAL Digitally signed by ANUSHA V Location: HIGH COURT OF KARNATAKA - 2 - ITA No. 456 of 2018 QUESTIONS OF LAW AS STATED THEREIN AND ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.1560/BANG/2013 DATED 19.01.2018 SETTING ASIDE THE ORDER OF THE APPELLATE COMMISSIONER WHO HAD SETASIDE THE ORDER PASSED BY THE (ASSESSING OFFICER) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-11(3), BENGALURU AND ETC. THIS ITA, COMING ON FOR FINAL HEARING, THIS DAY, P.S.DINESH KUMAR, J., DELIVERED THE FOLLOWING: JUDGMENT This appeal by the assessee challenging the order dated January 19, 2018 in ITA No.1560/Bang/2013 for the A.Y. 2009-2010 passed by the ITAT1, Bengaluru, has been admitted to consider following questions of law: \"1. Whether the Tribunal was correct in holding that ‘rough figures’ showing sales projections impounded should be treated as income of the assessee when there is no supporting evidence nor any presumptive value attached to these figures and without taking any expert opinion recorded a perverse finding? 2. Whether the Tribunal was correct in disallowing the claim u/s. 54G of the IT Act, in respect of investment made on purchase of land and amount paid for purchase of plant and machinery out of the consideration amount on sale of industrial plot as criteria prescribed in the said provision was not satisfied contrary to the law declared by the Apex court in Fibre Boards (P) Ltd., Vs. CIT (2015) 376 ITR 596 (SC).\" 2. Heard Shri M.V.Seshachala, learned Senior Advocate for the appellant and Shri E.I.Sanmathi, learned standing counsel for the Revenue. 1 Income Tax Appellate Tribunal - 3 - ITA No. 456 of 2018 3. Shri Seshachala, learned Senior Advocate does not press question No.2. 4. Revenue's case is, in a survey conducted on 02.03.2009, under Section 133A of the Income Tax Act, 19612, by the Deputy Director, Income-Tax (Inv.) Unit-II(2), certain incriminating papers and documents were found. At page No.76 in a document, following notings were found; “76.00 10.00 75.00 12.00 10.00 183.00” The AO3 treated them as financial transactions and added them back as income for A.Y.2009-10. On appeal, the CIT(A)4 held that the AO has construed that the scribblings made in the material found as financial transactions and held that the same had remained unexplained. According to the CIT(A), the AO was not sure about the transaction and accordingly, allowed the appeal. Revenue challenged the same 2 ‘The Act’ for short 3 Assessing Officer 4 Commissioner of Income Tax (Appeals) - 4 - ITA No. 456 of 2018 before the ITAT. Without even adverting to the facts of the case, the ITAT has reversed the finding recorded by the CIT(A) by holding that the initial burden of proving is always on the assessee to show that the transactions in the loose sheets are not in the nature of income and assessee had merely denied transaction without tendering any explanation. According to the ITAT, the same did not amount to discharge of burden on the part of the assessee and that the AO is justified for drawing adverse finding and making addition of Rs.183 Lakhs. 5. Shri Seshachala, placing reliance on Para 29 and 30 in P.R.Metrani Vs. Commissioner of Income Tax, Bengaluru5 submitted that presumption under Section 132(4-A) is not available to the authorities for framing the regular assessment. Therefore, the ITAT could not have reversed the decision of the CIT(A) holding that the presumption drawn by the AO is correct. 5 (2007) 1 SCC 789 - 5 - ITA No. 456 of 2018 6. This position of law is not disputed by Shri Sanmathi. However, he urged that no explanation was offered by the assessee when the loose sheets were confronted at the time of assessment proceedings. 7. We have carefully considered rival contentions and perused records. 8. Undisputed facts of the case are, some notings were found in Page No.76. The CIT(A) has held that the AO had incorrectly treated them as financial transactions. The ITAT has reversed the said finding on the premise that initial burden of proving that transaction in loose sheets is not in the nature of income, is upon the assessee and in this case, assessee had merely denied without tendering any credible explanation. 9. Shri Sanmathi is right in his submission that since the assessee has not tendered any explanation with regard to the loose sheets, the same needs to be re-examined. Shri Seshachala, in his usual fairness, did not dispute Shri Sanmathi’s contention. - 6 - ITA No. 456 of 2018 10. In view of the above, the following; ORDER (i) Appeal is allowed in part; (ii) Order dated 19.01.2018 in ITA No.1560/Bang/2013 passed by ITAT, Bengaluru, is set-aside; (iii) The matter is remanded to the file of the AO for fresh consideration in accordance with law; (iv) All contentions of both parties are kept open; and v) Since the matter is remanded, question of law does not require any answer and it is accordingly not answered. No costs. Sd/- JUDGE Sd/- JUDGE AV List No.: 1 Sl No.: 15 "