THE COMMISSIONER OF INCOME TAX, KOTTAYAM vs. THE MALAYALA MANORAMA CO. LTD., KOTTAYAM

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ITA/221/2009HC KeralaKLHC01024982200922 January 2019Bench: HONOURABLE MR.JUSTICE K.VINOD CHANDRAN,HONOURABLE MR. JUSTICE ASHOK MENON4 pages
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What did the High Court hold?

The High Court held that its prior decision in Commissioner of Income Tax v. Malayala Manorama Co. Ltd. (2018) 405 ITR 249 (Ker), which allowed the Revenue's appeal and found two grounds under Section 263 to be sustainable, meant that the consequential orders passed by the Assessing Officer would survive on those two counts. The Court reasoned that since the Section 263 order was now upheld on specific grounds by the High Court, the consequential actions taken by the AO based on those grounds were validated. Therefore, the ITAT's finding that the appeal before it had become infructuous was effectively overturned by the High Court's subsequent ruling. The High Court allowed the appeal, upholding the AO's consequential order on the two counts found in favour of the Revenue.

What were the facts?

This appeal concerns an order of the Income Tax Appellate Tribunal (ITAT) that set aside an order passed by the Commissioner of Income Tax (CIT) under Section 263 of the Income Tax Act, 1961, and consequential orders of the Assessing Officer (AO). The Revenue appealed the ITAT's decision. The High Court had previously allowed the Revenue's appeal in a reported decision (2018) 405 ITR 249 (Ker), finding two grounds in favour of the Revenue to be sustainable under Section 263. Consequently, the AO's consequential order on those two counts was upheld. The present appeal before the High Court is from the ITAT's order which found the appeal before it to be infructuous because the Section 263 order was set aside.

What were the issues?

1. Whether the High Court's prior decision allowing the Revenue's appeal under Section 263 of the Income Tax Act, 1961, and upholding two grounds in favour of the Revenue, has the effect of reviving the consequential orders passed by the Assessing Officer. Assessee's Contention: The ITAT had found the appeal before it to be infructuous because the Section 263 order was set aside, implying no consequential order could survive. Revenue's Contention: The Revenue argued that the High Court's subsequent decision, allowing their appeal against the ITAT's order and upholding two grounds under Section 263, validated the AO's consequential orders. The Revenue relied on the High Court's own prior judgment in Commissioner of Income Tax v. Malayala Manorama Co. Ltd. (2018) 405 ITR 249 (Ker).

Which sections of the Income-tax Act were involved?

Section 263

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON TUESDAY ,THE 22ND DAY OF JANUARY 2019 / 2ND MAGHA, 1940 ITA.No. 221 of 2009 AGAINST THE ORDER/JUDGMENT IN ITA 293/COCH/1999 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 26-11-2003 APPELLANT/S:/RESPONDENT/REVENUE: THE COMMISSIONER OF INCOME TAX, KOTTAYAM. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/S:/APPELLANT/ASSESSEE: THE MALAYALA MANORAMA CO. LTD., KOTTAYAM BY ADVS. SRI.JOSON MANAVALAN SRI.K.JOHN MATHAI SRI.KURYAN THOMAS SRI.M.GOPIKRISHNAN NAMBIAR SRI.PAULOSE C. ABRAHAM SRI.P.GOPINATH (SR.) THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 22.01.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA 221/09 2 K.VINOD CHANDRAN & ASHOK MENON, JJ. ------------------------------------------- ITA No.221 of 2009 ------------------------------------------- Dated this the 22nd day of January, 2019 J U D G M E N T Vinod Chandran, J. This is an appeal filed from the order of the Income Tax Appellate Tribunal, which set aside the order under Section 263 of the Income Tax Act, 1961 and also set aside the consequential orders passed by the Assessing Officer. The present appeal before us is concerned with the order of the Tribunal which found that the appeal before the Tribunal had become infructuous for reason of the order under Section 263 having been set aside, and therefore, there could be no consequential order was the finding of the Tribunal. 2. The Revenue had filed an appeal from the order of the Tribunal setting aside the order under Section 263. We have allowed that on two grounds in a reported decision in (2018) 405 ITR 249 (Ker) [Commissioner of Income Tax v. Malayala Manorama Co. Ltd.]. In such circumstances, the consequential order

ITA 221/09 3 would survive on the two counts as permitted by us and found to be sustainable under Section 263. There is no question of any quantum appeal from that. Hence, the consequential order of the Assessing Officer on the two counts we found in favour of the Revenue is upheld. The Income Tax Appeal is allowed. No costs. Sd/- K.VINOD CHANDRAN JUDGE Sd/- ASHOK MENON JUDGE

ITA 221/09 4 APPENDIX APPELLANT'S/S EXHIBITS: ANNEXURE-A TRUE COPY OF THE ORDER OF THE ASSESSING OFFICER DATED 18/8/1997 GIVING EFFECT TO ORDER U/S.263. ANNEXURE-B TRUE COPY OF THE ORDER OF THE CIT (APPEALS) DATED 14/10/98 ANNEXURE-C TRUE COPY OF ORDER OF THE ITAT DATED 26/11/2003. [True Copy] jg

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