SRI. PANDURANGA NAGESH KAMATH V. PRINCIPAL COMMISSIONER OF INCOME TAX

WP/3299/2020

AI Insights

The case involves Sri Panduranga Nagesh Kamath, the petitioner, who challenged the assessment order for the assessment year 2017-18, which was passed by the Assistant Commissioner of Income Tax. The petitioner argued that the Assessing Officer incorrectly treated a non-deposited cash amount as 'unexplained income', presuming it consisted of specified bank notes. The court examined the submissions and evidence presented, including a letter from the petitioner detailing the nature of his business and cash handling practices. Despite the petitioner's arguments, the court upheld the Assessing Officer's decision, suggesting that the matter be taken up in an appeal rather than through a writ petition.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 695694 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 14-02-2022
• Assessment Year: misc
• Laws Referred To: Income Tax Act, Constitution of India
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND
• Assessee Lawyers: THIRUMALESH
• Keywords: Assessment Order; Income Tax; Specified bank notes; Unexplained income; Writ of Certiorari
• Section: 143(3); 69A; 115BBE

Judgement Text

"IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 14TH DAY OF FEBRUARY, 2022 BEFORE THE HON'BLE MR. JUSTICE S. SUNIL DUTT YADAV WRIT PETITION NO.3299 OF 2020 (T-IT) BETWEEN: SRI PANDURANGA NAGESH KAMATH, PROPRIETOR OF M S/O SRI NAGESH KAMATH NO.10/3/1970, KALSANKA, UDUPI - 576 101. ...PETITIONER (BY SRI THIRUMALESH.M., ADVOCATE) AND: 1. PRINCIPAL COMMISSIONER OF INCOME TAX, C.R.BUILDING, N.G.ROAD, ATTAVARA, MANGALURU - 575 001. 2. ASST.COMMISSIONER OF INCOME TAX, CIRCLE-1, AAYAKAR BHAVAN, MALPE ROAD, UDUPI - 576 103. ...RESPONDENTS (BY SRI K.V.ARAVIND, ADVOCATE) 2 THIS WRIT PETITION FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ASSESSMENT ORDER PASSED FOR THE ASSESSMENT YEAR 2017-18 UNDER SECTION 143(3) OF THE INCOME TAX ACT DATED 24.12.2019 BY THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 1 , UDUPI ANNEXURE-J. THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP, THIS DAY, THE COURT MADE THE FOLLOWING: O R D E R The petitioner has sought for quashing of the Assessment Order passed for the assessment year 2017-18 under Section 143(3) of the Income Tax Act dated 24.12.2019 passed by the Assistant Commissioner of Income Tax at Annexure-J. The petitioner has also sought for issuance of writ of certiorari to quash the Demand Notice for the assessment year 2017-18 at Annexure-K. 2. Learned counsel appearing for the petitioner submits that the Assessing Officer in the Assessment Order has proceeded on the premise that the non-deposited amount 3 consisted of specified bank notes and such premise has led to his conclusion at Paragraph No.7 wherein the Assessing Officer has treated the amount that was not deposited and retained in the form of cash as 'unexplained income' while proceeding to conclude the assessment proceedings. It is pointed out that the premise upon which the Assessing Officer has proceeded while treating the amount that was not deposited being specified bank notes is contrary to the case as putforth before the Assessing Officer. The learned counsel for the petitioner draws attention to the observations made in Paragraph No.4 of Annexure-J, which is as follows: \"4. The assessee filed a letter dated 07.01.2019 and stated that the cash carrying ratio used to be high in this business. The assessee stated as under: \"On account of nature of business carried on by me, the cash carrying ratio used to be high As on 8-11-2016 the closing cash balance was Rs.74.87 lakhs. Out of this balance, specified bank notes to the extent of Rs.30.77 lakhs were deposited into the bank. The balance of Rs.44.09 lakhs was held in the 4 form of small denominations of '100', '50 '20 '10 '5 coins etc. These notes were used for cash payments for expenses/purchases less than Rs.20,000/- and sums were deposited into bank also. Since, banks used to charge cash counting charges and normally they refuse to take small denomination notes it was accumulated and in the normal course of business it was used for payments for expenses/ purchases\". \"The assessee also furnished details of small denomination notes deposited during demo period amounting to Rs.14.70 lakhs. Even after considering the same, there was un-reconciled cash balance with the assessee. The assessee could not offer any satisfactory explanation as to how such a balance of Rs.59.01 lakhs was not deposited into the bank account as it is no more usable in the normal course of business\". It is submitted by the counsel for the petitioner that the reference to the letter dated 07.01.2009 must be read as 07.12.2009. 3. Learned counsel for the Revenue Shri K.V.Aravind would submit the matter that the Assessing Officer has concluded as follows: 5 \"Such a peculiar situation also shows that there are certain expenses/investments made which are not recorded in the books of account leading to a higher book balance of cash and accordingly, the difference remains unexplained. The entire cash deposits are claimed to be from out of sales and advances and assessee has no other explanation for the nature and source of cash in the books which are not actually used/deposited. It is only to be inferred that the cash is utilized earlier for unexplained investment/expenses. In view of the above, the difference amount is hereby brought to tax under the specific provisions of section 115BBE by treating the same as unexplained money u/s.69A of the IT Act, which are not recorded in the books of account\". 4. It is submitted that such conclusion by the Assessing Officer does not warrant interference in exercise of writ jurisdiction and accordingly, petitioner may be relegated to avail the remedy of appeal. 5. Heard both sides. 6. No doubt, there is reference in the assessment order as to the amount non-deposited as being specified bank 6 notes. However, that by itself will not lead to setting aside the conclusion at Paragraph No.7, which is extracted above. The Assessing Officer has concluded that the amount, that is, non-deposited could be inferred as cash utilized for unexplained investment/expenses. The conclusion arrived at by the Assessing Officer that by difference of amount brought to tax by treating the same as unexplained money under Section 69A of the Income-Tax Act is not a finding that could be called in question by invoking the writ remedy. Such conclusion is a matter left open to be taken up in the substantive appeal proceedings. This Court while exercising writ jurisdiction has to exercise such power conservatively and only in exceptional cases. The present case does not fall in such category providing for invocation for writ remedy. Accordingly, petition is dismissed. If the petitioner files an appeal within four weeks from today, the same will be taken up by the Appellate Authority without raising any objections as regards to the aspect of limitation. Such direction is made 7 as the challenge to the order at Annexure-A has been pending for consideration before this Court for some period of time. All contentions of petitioner are kept open and the observations made in this order are only for the limited purpose for disposal of the writ and not to be construed by the Appellate Authority as being any finding recorded on the merits of the matter. Sd/- JUDGE DH "