1 IN HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS 2ND DAY OF NOVEMBER 2020 PRESENT HON BLE MR. JUSTICE ALOK ARADHE AND HON BLE MR. JUSTICE H.T.NARENDRA PRASAD I.T.A. NO.332 OF 2016 BETWEEN: 1. COMMISSIONER OF INCOME-TAX LTU, JSS TOWERS BSK III STAGE, BANGALORE-560085. 2. ADDL. COMMISSIONER OF INCOME-TAX LTU, JSS TOWERS BSK III STAGE, BANGALORE-560085. ... APPELLANTS (BY SRI. K.V. ARAVIND, ADV.,) AND: M/S. CANARA BANK 112, J.C. ROAD BANGALORE PAN: AAACC 6106G. ... RESPONDENT (BY SRI. T. SURYANARAYANA, ADV.) --- THIS ITA IS FILED UNDER SECTION 260-A OF I.T. ACT, 1961 ARISING OUT OF ORDER DATED 11.12.2015 PASSED IN ITA NO.765/BANG/2011 FOR ASSESSMENT YEAR 1996-97, PRAYING TO: (I) FORMULATE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE. (II) ALLOW APPEAL AND SET ASIDE ORDER PASSED BY ITAT, BANGALORE IN ITA NO.765/BANG/2011 2 DATED 11-12-2015 AND CONFIRM ORDER OF APPELLATE COMMISSIONER CONFIRMING ORDER PASSED BY ADDL. COMMISSIONER OF INCOME TAX, LTU, BANGALORE & ETC. THIS ITA COMING ON FOR FINAL HEARING, THIS DAY, ALOK ARADHE J., DELIVERED FOLLOWING: JUDGMENT This appeal under Section 260A of Income Tax Act, 1961 (hereinafter referred to as Act for short) has been preferred by revenue. subject matter of appeal pertains to Assessment year 1996-97. appeal was admitted by bench of this Court vide order dated 10.10.2017 on following substantial question of law: Whether Tribunal was correct in holding that denial of opportunity of cross- examination results in violation of natural justice, despite efforts made by assessing officer to trace assessee? object of cross examination is to test veracity of version given in examination-in-chief? In instance case, when it is proved with fair market amount certainty that leased equipments did not exit, whether allowing cross- 3 examination would have made any difference? 2. Facts leading to filing of this appeal briefly stated are that assessee, which is Nationalized Bank filed its returns of income for Assessment Years 1996-97 and 1997-98 on 29.11.1996 and 28.11.1997, in which total income of Rs.1,92,45,20,300/- and Rs.2,96,99,47,660/- respectively was declared. In assessments made under Section 143(3) of Act Assessing Officer disallowed depreciation claimed on assets leased to M/s Rajender Steels Pvt. Ltd., M/s Kedia Castle Dellon Industries Ltd. And M/s Kedia Mills and Distilleries Ltd. on ground that assets were not found to be in existence in search conducted under Section 132 of Act by Department in March 1998 in premises of M/s Rajender Steels and in September 1996 in Kedia Group of Companies. assessee thereupon filed appeals before Commissioner of Income Tax (Appeals) for Assessment Years 1996-97 4 and 1997-98. aforesaid appeals were dismissed vide order dated 26.7.1999 and 12.06.2000 respectively. assessee thereupon approached Income Tax Appellate Tribunal (hereinafter referred to as 'the tribunal' for short). tribunal vide order dated 12.10.2004 held that Assessing Officer has failed to furnish copies of statements recorded during course of search as well as other material and has also not provided sufficient opportunity to assessee to cross examine lessee. tribunal therefore, remitted matter to Assessing Officer with direction to furnish copies of all material relied upon by Assessing Officer and to afford opportunity to assessee of cross-examination. 3. Assessing Officer by order dated 28.12.2006 once again disallowed depreciation claimed by assessee in respect of assets leased to M/s Rajender Steels Ltd., M/s Kedia Mills and Distilleries Ltd. And M/s Kedia Castle Dellon Industries Ltd. 5 assessee thereupon filed appeals before Commissioner of Income Tax (Appeals) who by order dated 01.06.2011 inter alia held that assessee had discharged onus to prove genuineness of transaction by furnishing necessary documents viz., copies of sanction letter, lease agreements, invoices, inspection records on various dates and inspection reports pertaining to pre search and post search period in support of its claim and Assessing Officer did not rebut corroborative evidence filed by assessee. Thus, on basis of meticulous appreciation of evidence on record, Commissioner of Income Tax (Appeals) held that assessee has been able to corroborate its claim of existence of leased equipment with incontrovertible evidence and directed Assessing Officer to allow depreciation of Rs.2,18,57,773/- and Rs.1,63,93,330/- for Assessment Years 1996-97 and 1997-98 respectively on assets leased out to M/s Rajender Steels Ltd. Assessing 6 Officer was directed to allow depreciation of Rs.1,52,80,650/- and Rs.1,14,60,488/- for Assessment Years 1996-97 and 1997-98 respectively on assets leased out to M/s Kedia Castles and Dellon Industries Ltd. And M/s Kedia Mills and Distilleries Ltd. In result, appeal was allowed. Being aggrieved, revenue preferred appeal before Income Tax Appellate Tribunal. tribunal by order date 11.12.2015 affirmed finding recorded by Commissioner of Income Tax (Appeals) and dismissed appeals preferred by revenue. In aforesaid factual background, this appeal has been filed. 4. Learned counsel for revenue submitted that tribunal grossly erred in holding that denial of opportunity of cross-examination results in violation of principles of natural justice. It is further submitted that tribunal ought to have appreciated that leased assets were non-existent. On other hand, learned counsel for assessee submitted that whether or not 7 leased assets are in existence is finding of fact which stands concluded in favour of assessee by Commissioner of Income Tax (Appeals) as well as Income Tax Appellate Tribunal. Therefore, no substantial question of law arises for consideration in this appeal. 5. We have considered submissions made by learned counsel for parties and have perused record. issue whether or not assets leased out by assessee to various companies were in existence at relevant time and whether transactions in question were genuine or not is pure question of fact. Commissioner of Income Tax (Appeals) on basis of meticulous appreciation of evidence on record has held that assessee has produced sanction letters, master / supplemental lease agreements, purchase invoices, installation certificates and inspection reports, joint inspection conducted by bank officials, independent valuation report in respect of assets leased out to companies as well as inspection reports 8 pertaining to pre search and post search period. On basis of aforesaid material on record, it was held that transactions of assessee with companies in question was genuine and assets, which were leased out were in existence and assessee was entitled to depreciation. aforesaid finding of fact has been affirmed by Income Tax Appellate Tribunal. Thus, matter stands concluded by concurrent findings of fact, which by no stretch of imagination can be said to be either based on no evidence or perverse. Even otherwise, no perversity in findings could be pointed out to us. It is well settled in law, that this court in exercise of powers under Section 260A of Act would not interfere with finding of fact until same is perverse [See: SANTHOSH HAZARI VS. PURUSHOTTAM TIWARI , (2001) 3 SCC 179 and decision of this court in CIT VS. SOFT BRANDS (P) LTD. , (2018) 406 ITR 513, KULWANT KAUR S. GURDIAL SINGH MANN , (2001) 4 SCC 262, VIJAY 9 KUMAR TALWAR VS. CIT 330 ITR 1 (SC), K.RAVINDRANATHAN NAIR VS. CIT , 247 ITR 178 (SC) and SUDHARSHAN SILKS AND SAREES VS. CIT , 300 ITR 205 (SC)] In view of preceding analysis, substantial question of law framed in appeal is answered against revenue and in favour of assessee. In result, we do not find any merit in this appeal, same fails and is hereby dismissed. Sd/- JUDGE Sd/- JUDGE ss Commissioner of Income-tax, LTU, Bangalore / Addl. Commissioner of Income-tax, LTU, Bangalore v. Canara Bank