THE COMMISSIONER OF INCOME TAX vs. SHRI K M PRABHAKARA REDDY

1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE

DATED THIS THE 24th DAY OF MARCH 2014

PRESENT

THE HON’BLE MR. JUSTICE DILIP B BHOSALE

AND

THE HON’BLE MR. JUSTICE B MANOHAR

ITA.NO.767/2007 C/W ITA.NO.770/2007

BETWEEN

... COMMON APPELLANTS

(BY SRI KAMALADHAR, ADV., FOR SRI K V ARAVIND, ADV.,)

AND

SHRI K M PRABHAKAR REDDY NO.635/1, 5TH A MAIN 6TH BLOCK, KORAMANGALA BANGALORE-95

... COMMON RESPONDENT

(BY SRI A SHANKAR & SRI M LAVA, ADVS., FOR SRI H C SHIVARAMU, ADV.,)

2 I.T.A.NO.767/2007 IS FILED U/S. 260A OF THE INCOME TAX ACT, 1961 ARISING OUT OF ORDER DATED 23-8-2007 PASSED IN MP NO.74/BANG/2007 IN ITA NO. 274/BANG/2006 FOR THE ASSESSMENT YEAR 2002-2003, PRAYING TO: I.FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN II. ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE IN ITA NO. 274/BANG/2006 DT. 23-8-2007 AND CONFIRM THE ORDER PASSED BY THE ITAT IN ITA NO.274/BANG/2006 DATED 15-06-2007, BANGALORE.

I.T.A.NO.770/2007 IS FILED U/S. 260A OF THE INCOME TAX ACT, 1961 ARISING OUT OF ORDER DATED 31-5-2007 PASSED IN ITA NO. 297/BANG/2006 FOR THE ASSESSMENT YEAR 2002-2003, PRAYING TO: I.FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN II. ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE IN ITA NO. 297/BANG/2006 DT. 31-5-2007 (CORRIGENDUM, ASSESSEE'S APPEAL)& SETASIDE THE ORDER OF THE APPELLATE COMMISSIONER & CONFIRM THE ORDER PASSED BY THE DY.,COMMISSIONER OF INCOME TAX, CIRCLE- 7(1), BANGALORE.

THESE ITAs. COMING ON FOR HEARING, THIS DAY, THE COURT DELIVERED THE FOLLOWING:

3 ORAL JUDGMENT: (Dilip B. Bhosale J.)

ITA No.767/2007 filed under Section 260A of the Income Tax Act, 1961 (for short ‘Act’) is basically directed against the order dated 23.08.2007 passed by Income Tax Appellate Tribunal (for short ‘the Tribunal’), disposing of Misc.Petition No.74/Bang/2007 in ITA No.274/Bang/2006, pertaining to the Assessment Year 2002-03. While disposing of the Miscellaneous Petition, the Tribunal also disposed of ITA No.274/Bang/2006 filed by the revenue. ITA NO.770/2007 is directed against the order dated 31.05.2007 passed by the Tribunal in ITA No.297/Bang/2006, pertaining to the Assessment Year 2002-03 wherein the Tribunal allowed the appeal in part filed by the assessee.

The respondent-assessee had filed return of income declaring the income of `80,74,998/-. The return of income was processed by the Assessing Officer under

4 Section 143(1) of the Act. It appears that the return was selected for scrutiny. The Assessing Officer passed the Assessment Order dated 31.03.2005 determining the total income of the assessee at `1,68,15,230/- adding two amounts namely `5,33,589/- towards maintenance charges and `85,80,156/- as unexplained investment in the Hosur Road Property, Bangalore. Against this order, the assessee preferred an appeal on 28.04.2005 before the Commissioner of Income Tax (Appeals)-III (for short ‘CIT(A)’), Bangalore. The CIT(A) disposed of the appeal filed by the assessee bearing No.ITA 13/DCIT-7(1)/CIT(A)- III/05-06 vide order dated 16.01.2006, confirming the addition to the extent of `10,08,292/- out of the addition of `85,80,156/- made by the Assessing Officer and deleted the balance addition of `75,71,864/-.

2.1. Against the order of CIT(A) dated 16.1.2006, the assessee as well as the revenue filed appeals before the Tribunal bearing ITA No.297/B/2006 and ITA No.274/B/2006 respectively. The Tribunal disposed of

5 the appeal filed by the assessee allowing it partly and remanded the matter to the Assessing Officer to examine the issue of maintenance charges afresh. In the present case, we are not concerned with the issue of maintenance charges. Insofar as the challenge raised by the assessee to the addition of `10,08,292/- is concerned, the Tribunal, perhaps through inadvertence, did not adjudicate the issue. In view thereof, the assessee made oral application before the Tribunal seeking rectification of the order dated 27.04.2007. The Tribunal having, realized its mistake, passed order being a Corrigendum Order and disposed of the assessee’s appeal bearing ITA No.297/Bang/2006 answering the issue raised by the assessee in respect of addition to the extent of `10,08,292/-. Thereafter, it seems, the Tribunal allowed the appeal filed by the revenue bearing ITA No.274/Bang/2006 and remanded the matter to the Assessing Officer for fresh consideration vide order dated 15.06.2007. In the appeal filed by the Department, they had challenged the deletion of the balance addition of `75,71,864/- made by CIT(A).

6 2.2. Feeling aggrieved and dissatisfied with the order of the Tribunal, disposing of ITA No.274/2006, filed by the revenue, and remanding the matter to the Assessing Officer for its fresh consideration, the assessee filed a Miscellaneous Petition seeking rectification of the order dated 15.06.2007. The Miscellaneous Petition was considered on merits and disposed of by the Tribunal vide order dated 23.08.2007. It was brought to the notice of the Tribunal that when the order of remand dated 15.06.2007 was passed in ITA No.274/Bang/2006, filed by the revenue, the Corrigendum Order dated 31.05.2007 passed by the Tribunal was not taken into consideration at all. In view thereof, the Tribunal allowed the Miscellaneous Petition filed by the assessee vide order dated 23.08.2007, rectifying its order dated 15.06.2007, whereby the appeal filed by the revenue bearing ITA No.274/Bang/2006 itself came to be disposed of finally. It is against this order, the revenue has filed ITA No.767/2007 under Section 260A of the Act. The revenue formulated the following question of law in the memorandum of appeal:

“Whether the Tribunal was justified in exercising jurisdiction, not vested in it, by reviewing its order dated 15.06.2007, whereby it had remitted the matter to the Assessing Officer to reconsider the cost of construction in respect of the property bearing No.53/1, Madiwala, Hosur Road, Bangalore, in view of revised DVO report and additional evidence produced before the Commissioner of Income Tax(Appeals) and proceeding to reject the appeal filed by the revenue by replacing para 3 in the said order?”

8 basis of the valuation done by the DVO and the valuation disclosed by the assessee, an addition of `85,80,156/- was made by the Assessing Officer. According to the assessee, the amount that was expended by M/s. Wipro Limited over structural glazing and other works was `1,40,00,000/- and that the Wipro had issued certificate to that effect. The said certificate was placed on record for the first time before the CIT(A). The CIT(A) seem to have taken that into consideration and deducted the amount of `1,40,00,000/- from the amount of valuation done by the DVO of `6,45,89,571/-. The error in calculation made by the Assessing Officer and corrected by the CIT(A) was confirmed by the Tribunal in the order while disposing of Miscellaneous petition. The Tribunal also found that the order of remand of the Revenue’s appeal, would be futile exercise.

3.1. The facts as stated in the foregoing paragraph have not been disputed by the revenue in the present appeal and the challenge to the order passed by the

9 Tribunal is on technical ground. This being so and having satisfied that there was an error of calculation made by the Assessing Officer, we do not find any reason to interfere with the concurrent finding of facts recorded by the CIT(A) and the Tribunal. In any case it would not be correct to state that the Tribunal reviewed its order dated 15.06.2007 whereby the matter was remanded to the Assessing Officer. If, the error that was noticed by the Tribunal while deciding the Miscellaneous Petition is taken into consideration, we do not find any reason to interfere with the order passed by the Tribunal. We are also satisfied that the Tribunal has rightly rectified the error of calculation while considering the Miscellaneous Application for rectification under Section 254 of the Act. In the circumstances, no substantial question of law, in our opinion, arise for our consideration in the present appeal. Hence, ITA.No.767/2007 is dismissed. Similarly, the appeal bearing ITA No.770/2007, wherein the revenue had challenged the

10 Corrigendum Order dated 31.05.2007 also deserves to be dismissed in view of the peculiar facts and circumstances of the case. No costs.

Sd/-

JUDGE

Sd/- JUDGE