THE COMMISSIONER OF INCOME TAX,COCHIN vs. M/S.FRESH BAKES, ERNAKULAM

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ITA/1289/2009HC KeralaKLHC01026050200919 September 2016Bench: HONOURABLE MRS. JUSTICE ANU SIVARAMAN,HONOURABLE MR.JUSTICE THOTTATHIL B.RADHAKRISHNAN4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that it is a sine qua non in law that the officer who initiated proceedings under Section 158BD of the Income Tax Act, 1961, must have recorded their satisfaction as to the existence of grounds to invoke Section 158BD. The Court noted that on the facts of the case, it was not in dispute that the officer who concluded the proceedings under Section 158BC was different from the officer who initiated the proceedings under Section 158BD. The Court found no ground to interfere with the decision of the Tribunal, which presumably upheld the assessee's contention regarding the invalidity of the proceedings due to the lack of proper satisfaction recording by the initiating officer. The appeal filed by the revenue was accordingly dismissed.

What were the facts?

The appeal is filed by the Commissioner of Income Tax, Cochin, against the order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench, dated May 9, 2008. The ITAT's order was in relation to ITA No. 29/2006. The assessment order under challenge was dated July 14, 2005, for the block period from April 1, 1988, to March 10, 1999. The Commissioner of Income Tax (Appeals) had passed an order on February 20, 2006. The core of the dispute revolves around the initiation and conclusion of proceedings under Sections 158BC and 158BD of the Income Tax Act, 1961. It is noted that the officer who concluded the proceedings under Section 158BC was different from the officer who initiated proceedings under Section 158BD.

What were the issues?

1. Whether the proceedings initiated under Section 158BD of the Income Tax Act, 1961, were valid when the officer concluding proceedings under Section 158BC was different from the officer initiating proceedings under Section 158BD? Assessee's Contention: The assessee argued that for proceedings under Section 158BD to be valid, the officer initiating such proceedings must record their satisfaction regarding the existence of grounds to invoke Section 158BD. This is a prerequisite for the validity of the action taken. Revenue's Contention: The revenue's arguments are not explicitly detailed in the provided judgment excerpt. However, the appeal filed by the revenue suggests disagreement with the Tribunal's decision.

Which sections of the Income-tax Act were involved?

Section 158BD,Section 158BC

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE THOTTATHIL B.RADHAKRISHNAN & THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN MONDAY, THE 19TH DAY OF SEPTEMBER 2016/28TH BHADRA, 1938 ITA.No. 1289 of 2009 ------------------------- AGAINST THE ORDER IN ITA 29/2006 of INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH DATED 09-05-2008 APPELLANT/RESPONDENT: ---------------------- THE COMMISSIONER OF INCOME TAX, COCHIN.

BY ADVS.SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT: -------------- M/S.FRESH BAKES, ERNAKULAM

R BY ADV. SRI.T.M.SREEDHARAN (SR.) R BY ADV. SMT.NISHA JOHN R BY ADV. SRI.V.P.NARAYANAN R BY ADV. SMT.BOBY M.SEKHAR THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 19-09- 2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

APPENDIX: APPELLANTS' ANNEXURES: ANNEXURE A: COPY OF ASSESSMENT ORDER DATED 14.7.2005 FOR THE BLOCK PERIOD FROM 1.4.1988 TO 10.3.1999. ANNEXURE B: COPY OF ORDER DATED 20.2.2006 OF THE COMMISSIONER OF INCOME TAX (APPEALS) ANNEXURE C: CERTIFIED COPY OF THE ORDER DATED 9.5.2008 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH IN ITA NO. 29/COCH/2004. RESPONDENTS' ANNEXURES: R1(A) : TRUE COPY OF THE CBDT CIRCULAR NO. 21/2015 DATED 10.12.2015. R1(B): TRUE COPY OF THE CBDT CIRCULAR NO. 24/15 DATED 31.12.2005. R1(C): TRUE COPY OF THE LETTER DATED 10.8.2016 SUBMITTED TO THE PRINCIPAL COMMISSIONER OF INCOME TAX. ks. TRUE COPY P.S. TO JUDGE

THOTTATHIL B. RADHAKRISHNAN & ANU SIVARAMAN, JJ. =========================== I.T.A. No. 1289 of 2009 =========================== Dated this the 19th day of September, 2016 JUDGMENT Thottathil B. Radhakrishnan

, J. Heard the learned Senior counsel for the Department and the learned Senior counsel for the assessee. The issue that arises for decision relates to compatibility of proceedings under Section 158BD and 158BC of the Income Tax Act, 1961. On the facts of the case, it is not in dispute that the officer, who concluded the proceedings under Section 158BC of the Income Tax Act is different from the officer, who initiated the proceedings under Section 158BD of that Act. Therefore, it is sine quo non in law that the officer, who initiated the proceedings under Section 158BD ought to have recorded satisfaction as to the existence of grounds to invoke Section 158BD of the Income Tax Act. This is in conformity with the ratio of the decision of the Apex Court in Maheshwari v. Assistant Commissioner of Income Tax [289

ITA 1289/2009 2 (2007) ITR 341(SC)]. We do not find any ground to interfere with the decision of the Tribunal. Therefore, this appeal is dismissed. Sd/- THOTTATHIL B. RADHAKRISHNAN JUDGE Sd/-

ANU SIVARAMAN JUDGE ks True copy P.S. (Hr.Gr.)To Judge

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