THE PR. COMMISSIONER OF INCOME TAX vs. M/S SRI JAYA PRAKASH

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ITA/508/2022HC KarnatakaKAHC01048266202224 September 2024Bench: S.G.PANDIT,C.M. POONACHA5 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court disposed of the appeal by noting that the tax effect was less than Rs. 2 Crores, making the appeal not maintainable at the instance of the Revenue in view of CBDT Circular No. 09/2024 dated 17.09.2024, which binds the Revenue. The Revenue's counsel sought liberty to revive the appeal if the matter fell within the exceptions of the aforementioned circulars. The Court granted this liberty and disposed of the appeal accordingly. The substantial questions of law were kept open to be adjudicated in an appropriate proceeding. No decision was made on the merits of the case.

What were the facts?

The Revenue, comprising the Principal Commissioner of Income Tax and the Income Tax Officer, filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order dated 11.10.2021 passed by the Income Tax Appellate Tribunal (ITAT), C Bench, Bengaluru. This order was in Miscellaneous Petition (M.P.) No. 91/Bang/2021, arising from ITA No. 1374/Bang/2018, concerning Assessment Year 2014-2015. The Revenue challenged the ITAT's decision to admit and allow the assessee's Miscellaneous Petition, which they contended was beyond the scope of Section 254(2) of the Act and not a mistake apparent from the record. The dispute revolves around the ITAT's earlier order dated 16.04.2021, which the Revenue argues was misinterpreted by the Tribunal.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the Tribunal's order allowing the assessee's Miscellaneous Petition was perverse, as it was allegedly beyond the scope of Section 254(2) and dealt with a debatable issue rather than a mistake apparent from the record. 2. Whether the Tribunal was justified in allowing relief to the assessee. 3. Whether the Tribunal was justified in allowing the Miscellaneous Petition by holding that its order dated 16.04.2021 had quashed the Assessing Officer's assessment order without a direction for fresh assessment, despite the earlier order containing observations for examination of a sale deed and completion of assessment afresh. 4. Alternatively, whether the ITAT was justified in quashing the Assessment Order. 5. Alternatively, whether the Tribunal's order quashing the Assessment Order, without setting it aside as per the decision in Kapurchand Shrimal, was perverse and prevented correct income from being brought to tax. The Revenue argued that the Miscellaneous Petition was wrongly admitted and allowed, as it sought to re-argue the case or correct a debatable issue, not a mistake apparent from the record. They contended that the ITAT's interpretation of its earlier order was incorrect and that the assessment should have been completed afresh. The assessee's contentions are not recorded in the provided text.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 254(2)

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:39690-DB ITA No. 508 of 2022

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH 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. 508 OF 2022 BETWEEN:

1.

THE PR. COMMISSIONER OF INCOME TAX BMTC COMPLEX KORAMANGALA BANGALORE.

2.

THE INCOME TAX OFFICER WARD 4(3)(5) KORAMANGALA BANGALORE. …APPELLANTS (BY SRI. SANMATHI E. I., ADV.)

AND:

M/S. SRI JAYA PRAKASH NO.26, NARAYANAGHATTA VILLAGE SARJAPUR HOBLI, ANEKAL BENGALURU- 560099 PAN: AETPJ8946B. …RESPONDENT

THIS APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 11/10/2021 PASSED IN MP NO. 91/BANG/2021 (IN ITA NO. 1374/BANG/2018), FOR THE ASSESSMENT YEAR 2014-2015, PRAYING TO (1) DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE COURT AS DEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED

Digitally signed by MARIGANGAIAH PREMAKUMARI Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:39690-DB ITA No. 508 of 2022

11/10/2021 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, BENGALURU, AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEE’S CASE, IN M.P.NO.91/BANG/2021 (IN ITA NO. 1374/BANG/2018) FOR ASSESSMENT YEAR 2014-2015 (ANNEXURE-A) AND GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE.

THIS APPEAL, COMING ON FOR 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

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

Heard the learned counsel Sri.E.I.Sanmathi., for appellants/Revenue.

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 11.10.2021 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, ‘Appellate Authority’) in M.P.No.91/Bang/2021 (in ITA.No.1374/Bang/2018) for the assessment year 2014-15, raising the following substantial questions of law:

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NC: 2024:KHC:39690-DB ITA No. 508 of 2022

“1. Whether on the facts and circumstances of the case and in law, the Tribunal’s order can be said as perverse in nature in admitting and allowing the Misc. Petition filed by the assessee even through this was beyond the scope of Section 254(2), particularly as this was not a mistake apparent from record and was a debatable issue?

2.

Whether on the facts and circumstances of the case and in law, the Tribunal was justified in allowing relief to the assessee?

3.

Whether on the facts and circumstance of the case and in law, the Tribunal was justified in allowing the Misc. Petition holding that the Tribunal in their order dated 16.04.2021 had quashed the assessment order passed by the A.O., without a direction to do any fresh assessment even though it is clear from the ITAT’s order dated 16.04.2021 that they had set-aside the assessment with the direction that the set-aside assessment was to be completed afresh, particularly as the ITAT had observed that “if the revenue

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NC: 2024:KHC:39690-DB ITA No. 508 of 2022

finds that there was a transferable land by the assessee in favour of the deductor of TDS i.e., Nambiars Pvt. Ltd., in the A.Y. by executing a proper sale deed towards transfer of the impugned property, the same may be examined in accordance with law?

4.

Whether alternatively and without prejudice, in the facts and circumstances of the case and in law, the Hon’ble ITAT was justified in quashing the Assessment Order?

5.

Whether alternatively and without prejudice, in the facts and circumstances of the case and in law, the Tribunal’s order can be said as perverse in nature in quashing the Assessment Order and in not setting aside the assessment, following the Hon’ble Supreme Court decision in Kapurchand Shrimal (131 ITR 451), so that the correct income is brought to tax?”

3.

It is noticed that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal would not be maintainable at the instance of the revenue in view of

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NC: 2024:KHC:39690-DB ITA No. 508 of 2022

the Circular No.09/2024 dated 17.09.2024 issued by the Central Board of Direct 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

MPK CT:bms: List No.: 2 Sl No.: 1

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