PRINCIPAL COMMISSIONER OF INCOME TAX - 5 vs. SMT. SUREKHA HARAN

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ITA/181/2021HC KarnatakaKAHC01049349201905 June 2023Bench: P.S.DINESH KUMAR,T.G. SHIVASHANKARE GOWDA5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court perused the order of the ITAT and noted that the Assessing Officer had used third-party documents. Consequently, it was necessary to provide an opportunity to the assessee to rebut this evidence. The Court acknowledged that the ITAT is the last fact-finding authority and, based on the material on record, had noticed the use of third-party documents and remitted the matter to the Assessing Officer. The Court found no prejudice caused to the Revenue by the remand order and therefore saw no ground to interfere. The Court also noted the submission that the assessee was not permitted to cross-examine, and in any event, the matter having been remitted, the Assessing Officer would reconsider it afresh, providing opportunities to both parties to present their case. The questions of law were not answered as the matter was remanded.

What were the facts?

The appeal is filed by the Principal Commissioner of Income Tax and the Income Tax Officer (Revenue) against an order dated 05.04.2019 passed by the Income Tax Appellate Tribunal (ITAT) in ITA No. 2784/BANG/2018. The ITAT had remitted the matter back to the Assessing Officer for fresh consideration. The assessment year in question is 2015-16. The Revenue is challenging the ITAT's decision to remand the case, arguing that the Assessing Officer had presented clear facts regarding a modus operandi of bogus long-term capital gains, and the assessee was the beneficiary. The Revenue contends that the ITAT, as the last fact-finding authority, should have decided the appeal on merits rather than remanding it.

What were the issues?

1. Whether on the facts and circumstances of the case and in law, the Tribunal was justified in not upholding the order of the Assessing Officer whereas the Assessing Officer has brought out clear facts of modus operandi of persons involved in bogus long term capital gain as per which the assessee is the beneficiary of the bogus long term capital gain? (Question of law and fact, concerning the assessment of bogus long-term capital gains under the Income Tax Act, 1961). 2. Whether on the facts and circumstances of the case and in law, the Tribunal’s direction for reconsideration of the case can be said as perverse even though the Assessing Authority made addition under Section 68 of the Act by considering the materials on record and after affording reasonable opportunity of hearing to the assessee? (Question of law and fact, concerning the validity of additions under Section 68 and the fairness of the opportunity provided). Assessee's Contentions: The assessee argued that the Assessing Officer relied on third-party information, and therefore, the ITAT ought not to have remanded the matter. The assessee also noted that the ITAT recorded that the assessee was not permitted to cross-examine. Revenue's Contentions: The Revenue argued that all documents relied upon by the Assessing Officer were furnished to the assessee. The ITAT, being the last fact-finding authority, should have examined the appeal on merits and the remand order is not sustainable. The Revenue also stated that they had not examined any witnesses, hence the question of cross-examination did not arise.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

- 1 - ITA No. 181/2021

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 5TH DAY OF JUNE, 2023 PRESENT THE HON'BLE MR JUSTICE P.S.DINESH KUMAR AND THE HON'BLE MR JUSTICE T.G. SHIVASHANKARE GOWDA INCOME TAX APPEAL NO. 181 OF 2021 BETWEEN :

1.

PRINCIPAL COMMISSIONER OF INCOME TAX - 5 BMTC COMPLEX KORAMANGALA BENGALURU. 2. INCOME TAX OFFICER WARD -5(2)(1) BENGALURU. …APPELLANTS (BY SHRI. E.I. SANMATHI, STANDING COUNSEL)

AND :

SMT. SUREKHA HARAN NO.3/4, BALAJI BUILDING H. SIDDAIAH ROAD BENGALURU-560 002. PAN NO. AAUPH3679J …RESPONDENT (BY SMT. R. PRATHIBA, ADVOCATE FOR SHRI. S. PARTHASARATHI, ADVOCATE) . . . .

THIS ITA IS FILED UNDER SEC. 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED: 05.04.2019, PASSED IN ITA No. 2784/BANG/2018 [ANNEXURE-A], FOR THE ASSESSMENT YEAR 2015-16, PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED

Digitally signed by ANUSHA V Location: HIGH COURT OF KARNATAKA

- 2 - ITA No. 181/2021

BY THE HON’BLE COURT AS DEEMED FIT, SET ASIDE THE APPELLATE ORDER DATED: 05.04.2019 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, ‘A’ BENCH, BANGALORE, IN APPEAL PROCEEDINGS No. ITA No. 2784/BANG/2018 [ANNEXURE-A] FOR THE ASSESSMENT YEAR 2015-16 AS SOUGHT FOR IN THIS APPEAL AND TO GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE.

THIS ITA, COMING ON FOR FINAL HEARING, THIS DAY, P.S.DINESH KUMAR, J., DELIVERED THE FOLLOWING:

JUDGMENT

This appeal directed against the order dated 05.04.2019 in ITA No.2784/Bang/2018 passed by the ITAT1 remitting the matter to the file of Assessing Officer for fresh consideration in accordance with law, is filed to consider the following questions: 1. Whether on the facts and circumstances of the case and in law, the Tribunal was justified in not upholding the order of the Assessing Officer whereas the Assessing Officer has brought out clear facts of modus operandi of persons involved in bogus long term capital gain as per which the assessee is the beneficiary of the bogus long term capital gain?

2.

Whether on the facts and circumstances of the case and in law, the Tribunal’s direction for reconsideration of the case can be said as perverse even though the Assessing Authority made addition under Section 68 of the Act by considering the materials on record and after affording reasonable opportunity of hearing to the assessee?

1 Income Tax Appellate Authority

- 3 - ITA No. 181/2021

2.

We have heard Shri. E.I. Sanmathi, learned Standing Counsel for the Revenue and Smt. R. Prathiba, for Shri. S. Parthasarathi, learned Advocate for the assessee.

3.

Shri. Sanmathi submitted that all the documents relied upon by the Assessing Officer were furnished to the assessee. The ITAT being the last fact finding authority was required to examine the appeal on merits. Instead, the ITAT has remitted the matter to the file of the Assessing Officer for fresh consideration. Therefore, the order of remand is not sustainable in law.

4.

Smt. Prathiba, for the assessee submitted that the Assessing Officer had used third party information to arrive at his conclusions. Having considered the entire matter in extenso, the ITAT ought not to have remanded the matter to the Assessing Officer.

5.

We have carefully perused the order passed by the ITAT. It is recorded therein that Assessing Officer has

- 4 - ITA No. 181/2021

used third party document. Therefore, it is necessary to provide an opportunity to the assessee to rebut the evidence used against him. We may further record that ITAT is the last fact finding authority and based on the material on record, it has noticed as aforesaid and remitted the matter to the Assessing Officer. Hence, no prejudice is caused to the Revenue by the remand order. Therefore, we find no ground to interfere in this appeal.

6.

At this stage, Shri. Sanmathi submitted that the ITAT has also recorded that the assessee was not permitted to cross-examine. He submitted that Revenue has not examined any witness. Therefore, the question of cross- examination does not arise.

7.

In any event, the matter has been remitted to the file of Assessing Officer. Assessing Officer shall reconsider the matter afresh, in accordance with law and if an opportunity is given to the Revenue, assessee shall also be provided an opportunity to rebut the same.

- 5 - ITA No. 181/2021

Appeal is dismissed.

Since the matter has been remanded to the Assessing Officer by the ITAT, questions of law are not answered.

No costs.

Sd/- JUDGE

Sd/- JUDGE

SPS List No.: 2

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