M/S CONSULATE CONSTRUCTIONS vs. THE COMMISSIONER OF INCOME TAX

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ITA/469/2008HC KarnatakaKAHC01026013200813 June 2014Bench: B.MANOHAR,N.KUMAR4 pages
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What did the High Court hold?

The High Court of Karnataka noted that subsequent to the ITAT's order, which is under challenge in the present appeal, the Assessing Authority had passed a fresh order on 31.12.2009 after a remand. The assessee submitted that this new order was adverse and that an appeal had been filed before the Commissioner of Income Tax (Appeals) against it. In light of these subsequent developments, the High Court found that the present appeal had become infructuous as the entire matter was being pursued before the appellate authority. Therefore, the appeal was disposed of, reserving liberty to both parties to contest and keeping all contentions open. No decision was made on the merits of the Section 263 order.

What were the facts?

The assessee, M/s. Consulate Constructions, filed an appeal before the High Court of Karnataka against an order of the Income Tax Appellate Tribunal (ITAT). The ITAT had dismissed the assessee's appeal against an order passed by the Commissioner of Income Tax (CIT) under Section 263 of the Income Tax Act, 1961. The assessment year in question is 2002-03. The Assessing Authority had initially passed an order on 29.10.2004. The CIT initiated proceedings under Section 263, considering the Assessing Authority's order erroneous and prejudicial to the revenue, directing the Assessing Authority to consider an income of Rs. 20.00 lakhs. The assessee appealed this order to the ITAT, which dismissed the appeal. Subsequently, the Assessing Authority passed a fresh order on 31.12.2009 after a remand, which the assessee found adverse. The assessee then filed a fresh appeal before the CIT(Appeals) against this latest order.

What were the issues?

1. Whether the order passed by the Commissioner of Income Tax under Section 263 of the Income Tax Act, 1961, directing the Assessing Authority to consider an income of Rs. 20.00 lakhs, was erroneous and prejudicial to the revenue, thereby warranting intervention. Assessee's Contention: The assessee argued that the subsequent events, specifically the passing of a fresh assessment order on 31.12.2009 after a remand and the filing of a further appeal before the CIT(Appeals) against this order, rendered the present appeal before the High Court infructuous. The assessee stated that the entire matter was being agitated before the appellate authority. Revenue's Contention: The judgment does not record any specific contentions from the revenue regarding the merits of the Section 263 order. The revenue's participation is indicated by the presence of their counsel.

Which sections of the Income-tax Act were involved?

Section 263,Section 260-A

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE

DATED THIS THE 13TH DAY OF JUNE, 2014

PRESENT

THE HON’BLE Mr. JUSTICE N. KUMAR

AND

THE HON’BLE Mr. JUSTICE B. MANOHAR

I.T.A. No. 469/2008

BETWEEN : --------------

M/S. CONSULATE CONSTRUCTIONS REP. BY ITS PARTNER Sri. FAZAL-UR-RAHAMAN UNIT No. 102, CONSULATE-1 No.1, RICHMOND ROAD BANGALORE – 560 025.

… APPELLANT

(BY Sri. A SHANKAR & M. LAVA, ADVS.)

AND : -------

THE COMMISSIOENR OF INCOME TAX, BANGALORE – I C.R. BUILDINGS QUEEN’S ROAD BANGALORE – 560 001.

… RESPONDENT

(BY Sri. K.V. ARAVIND, ADV.)

THIS I.T.A. IS FILED UNDER SECTION 260-A OF I.T. ACT, 1961 AGAINST THE ORDER DATED 20.12.2007 PASSED IN I.T.A. No. 664/BANG/2007 FOR THE ASSESSMENT YEAR 2002-03 AND ETC.

THIS I.T.A. COMING ON FOR HEARING THIS DAY, N. KUMAR, J, DELIVERED THE FOLLOWING;

J U D G M E N T

This is an assessee’s appeal against the order passed by the Tribunal confirming the order passed by the Commissioner of Income Tax (Appeals) under Section 263 of the Income Tax Act, 1961 (for short `the Act’). The relevant assessment year is 2002-03.

2.

The Assessing Authority passed an order of assessment on 29.10.2004. Aggrieved by the said order the assessee preferred an appeal to the Commissioner of Income Tax (Appeals) who dismissed the appeal. Against the said order the assessee preferred an appeal to the Tribunal in I.T.A. No. 1292/2007. The Tribunal allowed the appeal by its order dated

3 24.10.2008 setting aside the orders of the lower authorities and remanded the matter back to the Assessing Authority for fresh consideration in accordance with law. It was an open remand. However the Commissioner of Income Tax, by virtue of the power conferred under Section 263 of the Act, had initiated proceedings in pursuance of the order dated 29.10.2004 on the ground that the said order is erroneous and prejudicial to the revenue. After contest an order came to be passed directing the Assessing Authority to consider an income of Rs.20.00 lakhs which had not been taken note by the Assessing Authority. It is against the said order the assessee had preferred an appeal before the Tribunal in I.T.A. No. 644/2007 which came to be dismissed. It is against this order the present appeal is preferred.

3.

In the meanwhile, after remand the Assessing Authority has passed an order on 31.12.2009. The learned counsel for the assessee submits that in that order he has complied with the direction issued in the proceedings under Section 263 of the Act

4 and the said order is adverse to the interest of the assessee and therefore now the assessee has preferred an appeal before the Commissioner of Income Tax (Appeals). In the light of these subsequent events it is submitted that this appeal has become infructuous as the entire matter is being agitated before the Appellate Authority. Reserving liberty to both the parties to contest and keeping open all contentions urged herein, this appeal is disposed off. Ordered accordingly.

Sd/-

JUDGE.

Sd/-

JUDGE.

LRS.

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