THE PR. COMMISSIONER OF INCOME TAX, CENTRAL vs. M/S BARBEQUE NATION HOSPITALITY LTD

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ITA/390/2023HC KarnatakaKAHC01027225202319 August 2024Bench: S.G.PANDIT,C.M. POONACHA4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court did not decide the substantial questions of law on merits. Instead, it noted that the monetary value involved in the appeal was ₹64,40,611, which was less than the prescribed monetary limit of rupees one crore for preferring an appeal before the High Court, as stipulated by Circular No. 5/2024 dated March 15, 2024. Consequently, the Court held that the appeal was not maintainable and would not survive for consideration. The substantial questions of law were kept open to be considered in an appropriate case. Therefore, no findings were made on the correctness of the ITAT's order regarding incriminating material, the applicability of Section 263, or the interpretation of Sections 153A and 263.

What were the facts?

The Revenue, comprising the Principal Commissioner of Income Tax and the Deputy Commissioner of Income Tax, filed an appeal before the High Court of Karnataka against an order passed by the Income Tax Appellate Tribunal (ITAT) dated December 19, 2022. This ITAT order pertained to assessment year 2015-16 and had allowed an appeal filed by the assessee, M/s. Barbeque Nation Hospitality Ltd. The Revenue's appeal was filed on June 2, 2023, and the monetary value involved was ₹64,40,611. Subsequent to the filing of the appeal, Circular No. 5/2024 dated March 15, 2024, was issued, prescribing a monetary limit for preferring appeals before the High Court.

What were the issues?

The High Court was called upon to decide the following substantial questions of law: 1. Whether the Tribunal was correct in holding that the issues involved in the assessment order passed under Section 143(3) read with Section 153A of the Income Tax Act, 1961, were not based on incriminating materials found during the search, and therefore, the assessment order was not erroneous and prejudicial to the interest of the Revenue, despite Section 153A not stipulating a requirement for incriminating material? (Assessee's contention: The Tribunal's finding that no incriminating material was found during the search, rendering the assessment under Section 153A invalid, was correct. Revenue's contention: Section 153A does not mandate incriminating material for passing an assessment order.) 2. Whether the Tribunal's order was perverse in not appreciating that the conditions set out in Section 263 read with Explanation 2 of the Act were fully satisfied to take up the assessment order for revision proceedings? (Revenue's contention: The conditions for revision under Section 263 were met.) 3. Whether the Tribunal's order was perverse in ignoring the mandate of Section 263 as well as Section 153A of the Act? (Revenue's contention: The Tribunal failed to adhere to the provisions of Sections 263 and 153A.)

Which sections of the Income-tax Act were involved?

Section 143(3),Section 153A,Section 263,Section 265(A)

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:33044-DB ITA No. 390 of 2023

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 19TH DAY OF AUGUST, 2024 PRESENT THE HON'BLE MR JUSTICE S.G.PANDIT AND THE HON'BLE MR JUSTICE C.M. POONACHA INCOME TAX APPEAL No. 390 OF 2023 BETWEEN:

1.

THE PR. COMMISSIONER OF INCOME - TAX CENTRAL 3RD FLOOR, C R BUILDING, QUEENS ROAD BENGALURU – 560 001.

2.

THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 2 (2) 3RD FLOOR, C R BUILDING QUEEN’S ROAD BENGALURU – 560 001. …APPELLANTS

(BY SRI DILIP M, ADVOCATE)

AND:

M/s. BARBEQUE NATION HOSPITALITY LTD., No. 62, SITE No.13, 16TH CROSS N S PALYA, BTM LAYOUT BENGALURU -560 076. PAN:AAKCS 3053N. …RESPONDENT

(BY SRI MADHUSUDHAN U A, ADVOCATE)

THIS ITA IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT, 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE AND

Digitally signed by NIRMALA DEVI Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:33044-DB ITA No. 390 of 2023

ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BENGALURU IN ITA No.488/BANG/2022 DATED 19.12.2022 FOR ASSESSMENT YEAR 2015-2016 ANNEXURE-C AND CONFIRM THE ORDER OF THE U/S 263 CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE - 2(2), BENGALURU AND ETC.,

THIS APPEAL COMING ON FOR HEARING THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

CORAM: HON'BLE MR JUSTICE S.G.PANDIT and HON'BLE MR JUSTICE C.M. POONACHA

ORAL JUDGMENT (PER: HON'BLE MR JUSTICE S.G.PANDIT)

1.

This appeal is filed by the Revenue questioning the order passed by the Income Tax Appellate Tribunal, Bengaluru1 in ITA No.488/Bang/2022 dated 19.12.2022 for the assessment year 2015-16 at Annexure-C to the appeal. 2. The Revenue has raised the following substantial questions of law:

1 Hereinafter referred to as the ‘Tribunal’

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NC: 2024:KHC:33044-DB ITA No. 390 of 2023

1.

"Whether, on the facts and in the circumstances of the case and law, the Tribunal is right in law in allowing appeal filed by assesse by holding that issues involved in the order passed under Section 143(3) r/w/s 153A are not based on incriminating materials found during course of search and as such assessment order cannot be said as erroneous and prejudical to interest of Revenue ignoring that Section 153A do not stipulate that there must be incriminating material to pass order under said section and as such there was no such requirement in law”? 2. "Whether, on the facts and in the circumstances of the case, Tribunal's order can be said as perverse in nature in not appreciating that conditions set out in Section 263 r/w Explanation 2 were fully satisfied to take up assessment order for revision proceedings”?

3.

"Whether on the facts and in the circumstances of the case, the Tribunal’s order can be said as perverse in nature in ignoring mandate of Section 263 as well as Section 153A of the Act”?

3.

Appeal was filed on 02.06.2023. Monetary value involved in this appeal is `64,40,611/- . Subsequent to filing of the appeal, Circular bearing No.5/2024 [F.No.279/Misc.142/2007-ITJ(PT.)] dated 15.3.2024 is issued under Section 265(A) of the Income Tax Act, 1961 prescribing monetary limit to prefer an appeal before the High Court.

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NC: 2024:KHC:33044-DB ITA No. 390 of 2023

4.

In view of the above Circular, the appeal would not be maintainable since monetary value involved in this appeal is less than rupees one crore. Therefore, the above appeal would not survive for consideration and it is dismissed. 5. In view of the above, the substantial questions of law raised in the present appeal are kept open to be considered in an appropriate case.

Sd/- (S.G.PANDIT) JUDGE

Sd/- (C.M. POONACHA) JUDGE

BS List No.: 1 Sl No.: 45

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