- 1 - HC-KAR NC: 2025:KHC:52383-DB ITA No. 147 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 10TH DAY OF DECEMBER, 2025 PRESENT THE HON'BLE MR. JUSTICE B M SHYAM PRASAD AND THE HON'BLE MR. JUSTICE T.M.NADAF INCOME TAX APPEAL NO. 147 OF 2025 BETWEEN: 1. THE PR. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, 3RD FLOOR, C.R BUILDING, QUEENS ROAD, BENGALURU-560 001. 2. THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1(1), 3RD FLOOR, C.R BUILDING, QUEENS ROAD, BENGALURU-560 001. …APPELLANTS (BY SRI. Y V RAVIRAJ., ADVOCATE) AND: SRI KUMARASWAMY MINERAL EXPORTS PVT LTD NO. 61, CUNNIGHAM CROSS ROAD, VASANTH NAGAR, Digitally Signed by REKHA R Location : High Court of Karnataka - 2 - HC-KAR NC: 2025:KHC:52383-DB ITA No. 147 of 2025 BENGALURU-560 052. REP. BY ITS MANAGING DIRECTOR. …RESPONDENT (BY SRI. A. SHANKAR., SENIOR ADVOCATE FOR SRI. MADHUSUDHAN U.A., ADVOCATE) THIS INCOME TAX APPEAL IS FILED UNDER SEC. 260-A OF INCOME TAX ACT 1961., PRAYING TO ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.1062/BANG/2024 DATED 25.04.2025 FOR ASSESSMENT YEAR 2013-14 ANNEXURE -A CONFIRMING THE ODER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(1), BENGALURU. THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD and HON'BLE MR. JUSTICE T.M.NADAF - 3 - HC-KAR NC: 2025:KHC:52383-DB ITA No. 147 of 2025 ORAL JUDGMENT (PER: HON'BLE MR. JUSTICE B M SHYAM PRASAD) The Revenue is in appeal being aggrieved by the Income Tax Appellate Tribunal's [for short, 'the Tribunal'] order dated 25.04.2025 in ITA No.1062/BANG/2024 relevant to the assessment year 2013-14 [Annexure-A]. The Tribunal, by the impugned order dated 25.04.2025, has allowed the respondent's appeal opining [i] that the assessee had an opening stock [as on 31.03.2012] of 16,93,672 metric tons of sub-grade iron ore, [ii] that the assessee had sold [during the financial year 2012-13] 5,68,000 metric tons resulting in a closing stock of 11,03,983 metric tons, and [iii] that the Assessing Officer has not considered that the opening stock as of 31.03.2012 [16,93,672 metric tons] was higher than the closing stock of 11,03,983 metric tons. 2. Crucially, the Tribunal has opined that the difference between the opening and closing stocks - 4 - HC-KAR NC: 2025:KHC:52383-DB ITA No. 147 of 2025 is disclosed in the profit-and-loss Statement as Sales and offered to income tax. On the question of law on incriminating material to justify assessment under Section 153A of the Income Tax Act, 1967 [for short, 'the IT Act'] read with Section 143 thereof, the Tribunal has relied upon the decision of the Apex Court in Principal Commissioner of Income-tax, Central-3 vs. Abhisar Buildwell (P.) Ltd.1, and the Apex Court has detailed thus. In view of the above and for the reasons stated above, it is concluded as under: (i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes jurisdiction for block assessment under Section 153A: (ii) all pending assessments/reassessments shall stand abated: (iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the 1 [2023] 149 taxmann.com 399 (SC) - 5 - HC-KAR NC: 2025:KHC:52383-DB ITA No. 147 of 2025 AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and (iv) In case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration other material regarding completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in the absence of an incriminating material found during a search under section 132 or requisition under section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under sections 147/148 of the Act, subject to fulfillment of the conditions as envisaged/mentioned under Section 147/148 of the Act and those powers are saved. - 6 - HC-KAR NC: 2025:KHC:52383-DB ITA No. 147 of 2025 3. Sri Y.V. Raviraj, the learned Standing counsel for the Revenue, submits that whether the mahazar/s dated 21.08.2017 and 05.01.2018 drawn by the Office of the Deputy Director of Department of Mines and Geology (DMG) would constitute incriminating material will have to be considered in the light of the provisions of Section 153A of the IT Act, and Sri A. Shankar, the learned Senior Counsel for the respondent, submits that this aspect will not be germane if ultimately the Revenue cannot show any perversity in the Tribunal's finding on facts, and the learned Senior Counsel relies upon the following to substantiate his case. [a] The respondent has consistently declared the opening and closing stock for the assessment years 2009-10 to 2018-19 which are as follows. Assess-ment year Opening Stock (in Qty) Produced during the year (in Qty) Sold during the year (in Qty) Closing Stock (in Qty) 2009-10 20,11,416 61,000 79556 19,92,860 2010-11 19,92,860 - - 19,92,860 2011-12 19,92,860 80,000 3,49,056 17,23,804 2012-13 17,23,804 - 31,132 16,92,672 2013-14 16,92,672 - 5,88,689 11,03,983 - 7 - HC-KAR NC: 2025:KHC:52383-DB ITA No. 147 of 2025 Assessment Year Opening balance of sub grade iron ore (in Metric Tons) Sold during the AY (in Metric Tons) Closing balance of sub grade iron ore (in Metric Tons) 2013 - 14 1692676 588689 1103983 2014-15 1103983 688754 415229 2015-16 415229 166453 248776 2016-17 248776 89264.799 159511.201 2017-18 159511.201 65675.890 93835.311 2018-19 93835.311 46324.060 47511.251 [b] The assessments are closed based on the stock details so offered and the value of the stock as of the relevant date/sale value. [c] The assessment orders have not been called in question to create any doubt about the quantities declared. [d] The quantities found during the search on 19.11.2018 and as mentioned in the Mahazar/s are as stated above. The quantity is accounted for in the financial year 2019-20, and the price received at e-auction is offered to taxes. 4. Sri A. Shankar emphasizes that if the quantities offered during the subsequent assessment years are assessed to tax and the quantity that is found at the time of search is sold during the - 8 - HC-KAR NC: 2025:KHC:52383-DB ITA No. 147 of 2025 subsequent financial year and offered to tax there cannot be any justification to make addition based on the quantities that are already assessed. Sri.Y.V.Raviraj is heard in the afore circumstances, which vindicate the Tribunal's finding that the assessee did not acquire any stock but has sold from the existing stock during the impugned assessment period. Further, the Revenue cannot point out particular circumstance which can persuade this Court to opine that the Tribunal's findings are perverse justifying interference on the proposed questions. In the light of afore, the appeal stands rejected. Sd/- (B M SHYAM PRASAD) JUDGE Sd/- (T.M.NADAF) JUDGE SA ct:sr