THE COMMISSIONER OF INCOME TAX V. H V KRISHNASWAMY

ITA/69/2007

AI Insights

The case revolves around a block assessment period from 1989-90 to 1999-2000 concerning Sri H.V. Krishnaswamy, where the Revenue contended that a sum of Rs.21,30,000 declared as a loan by the assessee was undisclosed income. The assessee's premises were searched, but no incriminating evidence such as cash, jewelry, or documents indicating undisclosed income was found. The Assessing Officer initially treated the amount as undisclosed income, but this was overturned by the Commissioner of Income Tax (Appeals) and subsequently by the ITAT, which found that all transactions were well-documented and explained. The Revenue's appeal to the High Court was dismissed, affirming the lower authorities' decisions.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 729153 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 09-04-2013
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: A SHANKAR
• Assessee Lawyers: M THIRUMALESH
• Keywords: Block assessment; Loan transaction; Search and seizure; Undisclosed income
• Section: 260A; 132(4); 158BB(1); 158(BC); 158DB(1)

Judgement Text

" 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: J U D G M E N T 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/-* "