PRINCIPAL COMMISSIONER OF INCOME TAX-5 vs. SRI SHAILESH HARAN

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ITA/188/2020HC KarnatakaKAHC01049587201905 June 2023Bench: P.S.DINESH KUMAR,T.G. SHIVASHANKARE GOWDA4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court perused the ITAT's order and noted that the AO had used third-party documents. Therefore, 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 remitted the matter to the AO. The Court found no prejudice caused to the Revenue by the remand order and therefore, saw no grounds to interfere. The Court noted that the ITAT had also recorded that the assessee was not permitted to cross-examine, and in any event, the matter having been remitted to the AO for fresh consideration, the assessee would be provided an opportunity to rebut any evidence. The questions of law were not answered as the matter was remanded. The appeal was dismissed.

What were the facts?

The appeal is filed by the Principal Commissioner of Income Tax-5 (Revenue) against an order dated 28.06.2019 passed by the Income Tax Appellate Tribunal (ITAT) in ITA No. 2632/Bang/2017. The ITAT had remitted the matter back to the Assessing Officer (AO) for fresh consideration for the Assessment Year 2014-2015. The Revenue's grievance is that the ITAT, instead of deciding the appeal on merits, has remanded the case. The assessee, Sri. Shailesh Haran, contends that the AO relied on third-party information, and the ITAT should not have remanded the matter. The High Court has admitted the appeal to consider specific questions of law.

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, particularly when the Assessing Officer had presented clear facts regarding the modus operandi of persons involved in bogus long-term capital gains, with the assessee being the beneficiary? 2. Whether on the facts and circumstances of the case and in law, the Tribunal's direction for reconsideration of the case can be considered perverse, even though the Assessing Authority made an addition under Section 68 of the Income Tax Act, 1961, after considering the materials on record and affording the assessee a reasonable opportunity of hearing? Contentions of the Revenue: The ITAT should have examined the appeal on merits as it is the last fact-finding authority. The order of remand is not sustainable in law. The Revenue also argued that it had not examined any witness, so the question of cross-examination by the assessee did not arise. Contentions of the Assessee: The Assessing Officer had used third-party information to arrive at his conclusions. The ITAT ought not to have remanded the matter to the Assessing Officer.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

- 1 - ITA No. 188/2020

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. 188 OF 2020

BETWEEN :

PRINCIPAL COMMISSIONER OF INCOME TAX-5 BMTC COMPLEX KORAMANGALA BENGALURU …APPELLANT

(BY SHRI. E.I. SANMATHI, STANDING COUNSEL)

AND :

SRI. SHAILESH HARAN NO.47, S.B.ROAD V.V. PURAM BANGALORE-560 004. PAN NO. ABYPJ6916D …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 28.06.2019 PASSED IN ITA NO. 2632/BANG/2017, FOR THE ASSESSMENT YEAR 2014-2015, PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED 28.06.2019 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, ‘C’ BENCH, BENGALURU, IN APPEAL PROCEEDINGS No. ITA No. 2632/BANG/2017 (ANNEXURE-A) FOR THE ASSESSMENT YEAR 2014-2015 AS SOUGHT FOR IN THIS APPEAL AND ETC.

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

Digitally signed by ANUSHA V Location: HIGH COURT OF KARNATAKA

- 2 - ITA No. 188/2020

JUDGMENT

This appeal directed against the order dated 28.06.2019 in ITA No.2632/Bang/2017 passed by the ITAT remitting the matter to the file of Assessing Officer for fresh consideration in accordance with law, has been admitted to consider the following questions: 1. Whether on the facts and circumstances of the case 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 gains 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?

2.

We have heard Shri. E.I. Sanmathi, learned Advocate 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

- 3 - ITA No. 188/2020

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 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.

- 4 - ITA No. 188/2020

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.

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 Sl No.: 41

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