THE COMMISSIONER OF INCOME TAX vs. M/S IBIDEN SINGAPOR

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ITA/442/2023HC KarnatakaKAHC01031802202327 September 2024Bench: S.G.PANDIT,C.M. POONACHA5 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court disposed of the appeal based on the submissions made by both parties. The assessee contended that the tax effect was below the threshold stipulated in CBDT Circular No. 09/2024, making the appeal not maintainable. The Revenue sought liberty to revive the appeal if it fell under exceptions mentioned in the circulars. The Court granted the liberty as prayed for by the Revenue. The substantial questions of law were kept open to be adjudicated in an appropriate proceeding. No decision was made on the merits of the substantial questions of law raised by the Revenue regarding the validity of re-assessment orders passed without a Section 143(2) notice.

What were the facts?

The Revenue, comprising the Commissioner of Income-Tax and the Assistant Commissioner of Income-Tax, International Taxation, filed an appeal under Section 260-A of the Income Tax Act, 1961, before the High Court of Karnataka. The appeal challenges an order dated 06.12.2022 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru. The Tribunal's order pertained to assessment year 2018-19 and had quashed re-assessment orders for assessment years 2016-17, 2017-18, and 2018-19. The assessee is M/s. Ibiden Singapore Pvt. Ltd., India Branch Office. The dispute centers on the validity of re-assessment orders passed without issuing a notice under Section 143(2) of the Act.

What were the issues?

1. Whether on the facts and in the circumstances of the case, the Tribunal's order is perverse in quashing re-assessment orders for AY 2016-17, 2017-18, and 2018-19 on the ground that they were passed without issuing a notice under Section 143(2) of the Act, ignoring that such notice is not mandatory for the proceedings to be valid? 2. Whether on the facts and in the circumstances of the case, the Tribunal's order is perverse in quashing re-assessment orders for AY 2016-17, 2017-18, and 2018-19 on the ground that they were passed without issuing a notice under Section 143(2) of the Act, ignoring that re-assessment orders cannot be held invalid as the assessee contested the merits and did not object at an earlier stage? Assessee's Contention: The assessee argued that the tax effect in this appeal is less than Rs. 2 Crores, and therefore, the appeal should not be entertained by the Revenue in view of Circular No. 09/2024 dated 17.09.2024 issued by the Central Board of Direct Taxes, which binds the Revenue. Revenue's Contention: The Revenue sought liberty to revive the appeal if the matter falls within the exceptions provided under Circular No. 09/2024 dated 17.09.2024 and Circular No. 5/2024 dated 15.03.2024.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 143(2)

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:40394-DB ITA No. 442 of 2023

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF SEPTEMBER, 2024 PRESENT THE HON'BLE MR JUSTICE S.G.PANDIT AND THE HON'BLE MR JUSTICE C.M. POONACHA INCOME TAX APPEAL NO. 442 OF 2023 BETWEEN:

1.

THE COMMISSIONER OF INCOME-TAX, INTERNATIONAL TAXATION, 4TH FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU 560 095.

2.

THE ASSISTANT COMMISSIONER OF INCOME-TAX, INTERNATIONAL TAXATION, CIRCLE 1(2), 4TH FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA, BENGALURU 560 095. …APPELLANTS

(BY SRI. DILIP M., A/W SRI. RAVIRAJ Y.V., ADVOCATES)

Digitally signed by B LAVANYA Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:40394-DB ITA No. 442 of 2023

AND:

M/S. IBIDEN SINGAPORE PVT. LTD., INDIA BRANCH OFFICE, NO. 8, GROUND FLOOR, NITESH TIMES SQUARE, M.G. ROAD, BENGALURU 560 001 PAN AABCI 8919E …RESPONDENT

(BY SMT. TANMAYEE RAJKUMAR, ADVOCATE)

THIS ITA / INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF THE INCOME TAX ACT, 1961, PRAYING TO I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE AND ETC.

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

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

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NC: 2024:KHC:40394-DB ITA No. 442 of 2023

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

Heard the learned counsel Sri.Dilip.M., along with Sri. Raviraj.Y.V., learned counsel for appellants/Revenue and Smt. Tanmayee Rajkumar, learned counsel for the respondent/assessee.

2.

The Revenue is in appeal under Section 260-A of the Income Tax Act, 1961 (for short ‘the Act’) questioning the correctness and legality of order dated 06.12.2022 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short ‘Appellate Authority’) in IT(IT)A.No.784/Bang/2022 for the assessment year 2018-19, raising the following substantial questions of law: 1. "Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in nature in quashing re-assessment orders passed by assessing officer for A.Υ. 2016-17, 2017- 18 and 2018-19 on the ground that said orders are

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NC: 2024:KHC:40394-DB ITA No. 442 of 2023

passed without issuing notice under section 143(2) of the Act ignoring that even if same is not issued, the proceeding cannot be held as invalid as issuance of notice under section 143(2) is not mandatory"?

2.

"Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in nature in quashing re-assessment orders passed by assessing officer for Α.Υ. 2016-17, 2017- 18 and 2018-19 on the ground that said orders are passed without issuing notice under section 143(2) of the Act ignoring that even if same is not issued, re-assessment orders cannot be held as invalid as assesse has contested the on merits and not objected to same at earlier stage"?

3.

Learned counsel for the assessee submits that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal should not be entertained at the instance of the revenue in view of the Circular No.09/2024 dated 17.09.2024 issued by the Central Board of Direct

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NC: 2024:KHC:40394-DB ITA No. 442 of 2023

Taxes. It is also submitted that the aforesaid Circular binds the revenue.

4.

On the other hand, learned counsel for the revenue submits that he be granted liberty to revive the appeal in case the matter falls within the exceptions under the aforesaid Circular dated 17.09.2024 and Circular No.5/2024 dated 15.03.2024.

5.

In view of the aforesaid submissions, the appeal is disposed of with liberty as prayed for by the learned counsel for the revenue. However, the question of law is kept open to be adjudicated in an appropriate proceeding.

Sd/- (S.G.PANDIT) JUDGE

Sd/- (C.M. POONACHA) JUDGE

SMJ List No.: 4 Sl No.: 5

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