IN HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS 17THDAY OF FEBRUARY 2020 PRESENT HONBLE MR. JUSTICE ALOK ARADHE AND HON BLE MR. JUSTICE RAVI V. HOSMANI ITA No.346/2010 BETWEEN: 1. Commissioner of Income Tax, Central Revenue Buildings, Queens Road, Bangalore- 560 001 2. Deputy Commissioner Of Income Tax, Circle -8(1),Bangalore. APPELLANTS (By Sri. Jeevan J Neeralagi, Advocate) a/w Sri. E.I. Sanmathi, Advocate) AND: Shri D.M. Purnesh, 6/1, Connaught Road, Bangalore. RESPONDENT (By Sri. V Chandrashekar, Advocate) a/w Sri V Narendra Sharma, Advocate) THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 16/04/2010 PASSED IN ITA NO.408/BANG/2009, FOR ASSESSMENT YEAR 2004-05, PRAYING TO i) FORMULATE SUBSTANTIAL QUEISTIONS OF LAW STATED THEREIN ii) SET ASIDE APPELLATE ORDER DATED 16/04/2010 PASSED BY ITAT, 2 BENCH, BANGALORE, IN APPEAL PROEEIDNGS ITA NO.408/BANG/2009, AS SOUGHT FOR IN THIS APPEAL. THIS APPEAL COMING ON FOR FINAL HEARING, THIS DAY, ALOK ARADHE J., DELIVERED FOLLOWING: JUDGMENT Mr. Jeevan J Neeralagi, learned counsel, along with Mr. E.I. Sanmathi, learned counsel for revenue. Mr. V Chandrashekar, learned counsel along with Mr. V. Narendra Sharma, for respondent. This appeal is filed under Section 260-A of Income Tax Act has been filed by revenue, which was admitted by Bench of this Court on following substantial questions of law: i) Whether on facts and in circumstances of case, Tribunal is right in law in setting aside disallowance of Rs.39,86,424 when assessing authority has made disallowance considering that assessee along with two others, has jointly developed sites by converting three acres out of 6.5 acres of agricultural land by entering into agreement M/s Amalgamated property developers and total proceeds realized out of sale of these 44 sites is Rs.1,62,81,350/- which is undisputed? ii) Whether on facts and in circumstances of case, Tribunal is right in law in setting aside disallowance towards de-notification charges of Rs.18,00,000/-, administrative charges of 3 Rs.6,60,000/-, total disallowance to extent of Rs.24,60,000/- when assessing authority has done same considering share of assessee being 1/3rd of total profit and after allowing applicable costs? iii) Whether on facts and in circumstances of case, Tribunal is right in law in setting aside computation of long term capital gain made by assessing authority relating to Rs.2,94,26,600/- as long term capital being transfer of land in Devagiri Farms by assessee when assessee was owner of said land and had gifted same to his wife Smt. Anitha Purnesh through registered Gift Deed dated 20.1.2003 subsequently assessee s wife in turn transferred said lands to firm known as Devagiri Farms which was constituted by partnership deed dated 28.9.2003 when assessing officer has rightly held said transaction as gift of lands to assessee s wife and subsequent transfer of these lands to above said firm is within 9 months from date on which these were gifted, as transfer within meaning of Sec. 64(1)(IV) of Act and 45(3) of Act? iv) Whether on facts and in circumstances of case, Tribunal is right in law in setting aside disallowance made in respect of long term capital asset even when land in question was not agricultural land and same is rightly treated as capital asset within meaning of Sec.2(14) of Act by assessing authority? v) Whether on facts and in circumstances of case, Tribunal is right in law in setting aside disallowance made by assessing 4 authority to tax amount of Rs.1,12,745/- under head Income of other sources even when assessing authority rightly observed that assessee had not furnished any proof with regard to foreign tour taken by assessee during year except that amount was spent by M/s Classic Coffee and Spices (P) Ltd., in which assessee is Director? vi) Whether on facts and in circumstances of case, Tribunal is right in law in setting aside disallowance made by assessing authority to extent of Rs.37,31,000/- under head Income from others even when assessee had not proved liability and assessee had not produced any documentary evidence in support of his claim that said amount is due to HUF of D.M. Purnesh and D.M. Shankar? vii) Whether on facts and in circumstances of case, Tribunal is right in law in setting aside disallowance made by assessing authority to tax amount of Rs.42,09,420/- claimed as cash deficit even when assessee had not produced any of his personal account nor bank pass books/bank statements in spite of several reminders and assessing authority based on bank statements, rightly worked out cash deficit amount? viii) Whether on facts and in circumstances of case, Tribunal is right in law in setting aside disallowance made on account of amounts deposited by cheques to extent of Rs.84,61,055/- even when assessee failed to explain said deposit with proper material? 5 2. facts giving rise to filing of this appeal briefly stated are that, assessee files income tax returns for assessment year 2004-2005 declaring loss of Rs.8,12,981/- and agricultural income of Rs.8,20,000/-. total income consisted of income from salary, business and other sources. return filed by assesse was processed under Section 143(3) of Income Tax Act. order of assessment was passed on 17.03.2005. Assessing Authority passed order of assessment by making certain additions such as income from joint development of sites, long term capital gains on transfer of land, income declared under agriculture was brought under head, income from other sources, addition of income from coffee estate, addition relating to personal savings and other additions. aforesaid order was challenged before Commissioner of Income Tax (Appeals) by assessee. appeal preferred by assessee was allowed. Being aggrieved, revenue challenged aforesaid order in appeal before Income Tax Appellate Tribunal. Income Tax Appellate Tribunal by 6 order dated 16.04.2010 dismissed appeal preferred by revenue and partly allowed appeal preferred by assessee. In aforesaid factual background, revenue has filed this appeal. 3. Learned counsel for revenue has taken us through orders passed by Assessing Officer and has submitted that Commissioner of Income Tax (Appeals) has reversed findings recorded by Assessing Officer on basis of material produced before it and Income Tax Appellate Tribunal in cryptic and cavalier manner has upheld finding recorded by Commissioner of Income Tax(Appeals). It is further submitted that Tribunal committed error of law in setting aside disallowance of Rs.39,86,424/-, when Assessing Authority has made disallowance on considering that assessee along with two others has jointly developed sites by converting 03 acres out of 6.5 acres of agricultural land. It is further submitted that Tribunal grossly erred in setting aside computation of long term capital gain made by Assessing Authority 7 relating to sum of Rs.2,94,26,600/- as long term capital being transfer of land in Devagiri Farms by assessee. It was also submitted that Tribunal grossly erred in disallowing assessment made by Assessing Authority to tax amount of Rs.1,12,745/- under head Income of other sources . Even when Assessing Authority rightly observed that assessee had not furnished any proof with regard to foreign tour undertaken by assessee during year except that amount was spent by M/s Classic Coffee and Spices (P) Ltd., in which assessee is Director. 4. On other hand, learned counsel for assessee has submitted that powers of Commissioner of Income Tax (Appeals) are co-extensive with Assessing Officer and assessee had produced material before Commissioner of Income Tax (Appeals). Commissioner of Income Tax (Appeals) had called for Remand Report from Assessing Officer and in Remand Report, Assessing Officer himself after going through material produced by appellant had submitted that as 8 assessee s argument with regard to addition as long term capital gains to tune of Rs.2,94,600/- is acceptable. 5. It is also pointed out that assessee submits with regard to addition as income from other sources to tune of Rs.84,61,055/- also be accepted. It is also pointed out from Remand Report by counsel for assessee that Assessing Officer has stated that argument of assessee with regard to addition of income from other sources namely, foreign tour to tune of Rs.1,12,475/- may be accepted. Thus, it is submitted that aforesaid Remand Report has been made basis by Commissioner of Income Tax (Appeals) for passing order, which has been affirmed by Income Tax Appellate Tribunal that instant appeal does not involve any substantial questions of law. 6. Lastly, it is urged that amount under three heads as recommended by Assessing Officer is accepted, appeal filed by revenue before this Court is not maintainable, as same is covered by monetary limit 9 prescribed in sub-Clause 17 of circular 2019 dated 08.08.2019. 7. We have considered submissions made by learned counsel for parties and perused record. 8. Section 250(4) of Income Tax Act provides that Commissioner (Appeals) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct (Assessing) Officer to make further inquiry and report result of same to Commissioner(Appeals). When assessee produced material before Commissioner of Income Tax (Appeals), Commissioner, in exercise of power under Section 250(4) of Act, directed Assessing Officer to submit Remand Report. relevant extract of remand report reads as under: Addition as long term capital gain Rs.2,94,26,600/-(point 7) assessee s argument in this regard are acceptable. Addition as income from other sources Foreign Travel-Rs.1,12,475/-( Point 11) 10 assessee has filed certificate issued by Director of M/s Classic Coffee & Spices (P) Ltd., wherein it is stated that Sri. D.M. Purnesh, Director was requested to represent Company and attend Specialty Coffee Association of America s Trade Show and Conference at Boston, U.S.A. in April 2003. Further, it is stated that expenditure of Rs.1,12,475/-has been posted under head of account business promotion expenses of company. argument of assessee in this regard may be accepted. On addition of Rs.84,61,055/ assessee s Chartered Accountant Sri Kiron has stated that cheque deposits in assessee s Savings account are all transfers from within family members, firms and companies wherein He is either partner or director. assessee s submissions may be accepted. Addition as income from other sources- unexplained investment in Harey estate of Rs.9,45,000/-(Point 15) Assessee s submissions may be accepted. 9. Thus, from perusal of report submitted by Assessing Officer himself, it is evident that, if Remand Report is accepted with regard to long term capital gains, then addition as income from other sources and income from other sources is also accepted, therefore, question of law framed in this regard namely, substantial questions of law 11 No.3, 4, 5 and 8 do not arise for consideration in this appeal, as Commissioner of Income Tax (Appeals) has passed order on aforesaid Remand Report and order passed by Commissioner of Income Tax(Appeals) has been accepted by Income Tax Appellate Tribunal. So far as other substantial questions of law are concerned, it is not necessary for us to answer same as Remand Report is accepted in respect of aforesaid three heads, appeal filed by revenue would not be acceptable before this Court in view of circular 2019 dated 8.8.2019. In view of preceding analysis, we do not find any merit in this appeal. same fails and is hereby dismissed. Sd/- JUDGE Sd/- JUDGE Commissioner of Income-tax, Bangalore/Deputy Commissioner of Income-tax, Circle-8(1),Bangalore v. D.M. Purnesh