NITESH BERA (HUF) vs. THE ASST. COMMISSIONER OF INCOME TAX

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ITA/56/2021HC KarnatakaKAHC01047647201920 February 2023Bench: P.S.DINESH KUMAR,RAMACHANDRA D. HUDDAR7 pages
AI SummaryRemanded

What did the High Court hold?

The High Court considered the rival submissions and perused the records. The primary point of contention was the issuance of a notice under Section 143(2) of the Act. The assessee relied on the High Court's judgment in CIT Vs. C.Ramaiah Reddy, stating that reassessment is invalid if notice under Section 143(2) is not issued within twelve months before the expiry of the time limit, and Section 292BB would not apply in such cases. The Court noted that the AO's order disposing of objections on 04.03.2016 did not mention the assessment year or the correct date of objections, and the AO's finding that the issue was covered by Section 292B was contrary to the law laid down in the C.Ramaiah Reddy case. However, due to factual discrepancies regarding the date of objections, the Court found no ground to interfere with the appeal on this specific point. Regarding AY 2010-11, the Court observed that the ITAT had not recorded a finding on whether the AO had disposed of the assessee's objections. In view of the assessee's prayer that the CIT(A) be directed to consider all grounds urged before the ITAT, and the Revenue having no objection, the appeal was disposed of with a direction to the CIT(A) to consider all questions raised before the ITAT. The Court explicitly stated that since the appeal was against a remand order, it was not disturbing the remand, and the questions of law were not answered.

What were the facts?

This Indian Income Tax Appellate Tribunal (ITAT) judgment concerns an appeal filed by the assessee, Nitesh Bera (HUF), against an order dated 21.06.2019 passed by the ITAT, Bengaluru Bench. The appeal pertains to Assessment Years (AY) 2008-2009 and 2010-2011. The assessee is challenging the ITAT's decision to adjudicate only one ground of appeal and to remand the matter to the Commissioner of Income Tax (Appeals) [CIT(A)] for fresh consideration on specific issues. The core dispute revolves around the issuance of a notice under Section 143(2) of the Income Tax Act, 1961, and the proper disposal of objections filed by the assessee against reassessment proceedings under Section 147.

What were the issues?

The High Court had to decide the following substantial questions of law: 1. Whether the Tribunal ought to have adjudicated all grounds of appeal raised by the Appellant, and if it was justified in adjudicating only one ground by holding others as not argued, leading to a perverse order. 2. Whether, for AY 2008-09, the Tribunal ought to have held that the assessment order was bad in law due to the non-issuance of a notice under Section 143(2), resulting in a perverse order. 3. Whether, for AY 2010-11, the Tribunal ought to have cancelled the assessment due to the Assessing Officer's (AO) failure to dispose of the assessee's objections against invoking Section 147, which would be detrimental to the validity of the proceedings. 4. Whether the Tribunal ought to have held that the invocation of Section 147 was unwarranted as the assessee had duly declared share transactions in its return of income, leading to a perverse order. Assessee's contentions: - The AO admitted that notice under Section 143(2) was not issued. - The ITAT failed to adjudicate all grounds and remanded the matter only on the issue of notice under Section 143(2) and disposal of objections. - The AO's finding regarding Section 292B was contrary to the High Court's judgment in CIT Vs. C.Ramaiah Reddy. - The CIT(A) should be directed to consider all grounds raised before the ITAT. Revenue's contentions: - The date of the assessee's objections was unclear due to overwriting, and the AO's order did not contain the assessment year, making it impossible to confirm if the objections specifically pertained to AY 2008-09. - The appeal should be dismissed.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 147,Section 148,Section 292BB,Section 292B

AI-generated summary — verify with the full judgment below

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ITA No. 56 of 2021

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 20TH DAY OF FEBRUARY, 2023 PRESENT THE HON'BLE MR. JUSTICE P.S.DINESH KUMAR AND THE HON'BLE MR. JUSTICE RAMACHANDRA D. HUDDAR INCOME TAX APPEAL NO. 56 OF 2021 BETWEEN: NITESH BERA (HUF) REP. BY ITS MANAGER SMT. UMA BERA AGED ABOUT 37 YEARS NO.25/1, 3RD FLOOR K.R.SHETTYPET, ANANDAPPA LANE AVENUE ROAD BENGALURU-560 002 PAN:AADHN428M …APPELLANT

(BY SHRI. S. ANNAMALAI, ADVOCATE) AND: THE ASST. COMMISSIONER OF INCOME TAX CIRCLE-5(2)(1), BMTC BUILDING 80 FT ROAD, KORAMANGALA BENGALURU-560 040 …RESPONDENT

(BY SHRI. M. DILIP, STANDING COUNSEL FOR SHRI. K.V. ARAVIND, SENIOR STANDING COUNSEL)

THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 21.06.2019 PASSED IN ITA NOS. 897-898/BANG/2018, FOR THE ASSESSMENT YEAR 2008-2009 AND

Digitally signed by YASHODHA N Location: HIGH COURT OF KARNATAKA

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2010-2011 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW AS STATED THEREIN AND ANSWER THE SAME IN FAVOUR OF THE APPELLANT AND TO ALLOW THE APPEAL AND SET ASIDE THE FINDINGS TO THE EXTENT AGAINST THE APPELLANT IN THE COMMON ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU C BENCH IN ITA NOS. 897-898/BANG/2018 DATED 21.06.2019 FOR THE ASSESSMENT YEARS 2008-2009 AND 2010-2011 VIDE ANNEXURE-A AND ETC. THIS ITA, COMING ON FOR FINAL HEARING, THIS DAY, P.S.DINESH KUMAR, J., DELIVERED THE FOLLOWING:

JUDGMENT

This appeal by the Assessee challenging the order dated 21.06.2019 in ITAs No.897 & 898/Bang/2018 passed by the ITAT1, "B" Bench, Bangalore, has been admitted to consider following questions of law: “1. Whether the Tribunal ought to have adjudicated all the grounds of appeal raised by the Appellant and is not justified in adjudicating only one ground by holding that the other grounds are not argued and consequently passed a perverse order on the facts and circumstances of the case.

2.

Whether the Tribunal ought to have held for the A.Y. 2008-09 that the notice under section 143(2) having not been issued, the same renders the assessment order bad in law and consequently passed a perverse order on the facts and circumstances of the case.

1 Income tax Appellate Tribunal, Bengaluru Bench

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3.

Whether the Tribunal ought to have held for the A.Y.2010-11 that the Assessing Officer having failed to dispose the objections filed by the Appellant against invoking the provisions of section 147 of the Act, the failure is detrimental to the very validity of the proceedings and consequently ought to have cancelled the assessment on the facts and circumstances of the case.

4.

Whether the Tribunal ought to have held that the Appellant having duly declared the share transactions in the return of income, the invocation of provisions of section 147 of the Act for the same is not warranted and consequently passed a perverse order on the facts and circumstances of the case.”

2.

Heard Shri.S.Annamalai, learned advocate for the appellant-Assessee and Shri.M.Dilip, learned Standing Counsel for the respondent-Revenue.

3.

Brief facts of the case are, a notice under Section 148 of the Act2 was issued to the assessee. Assessee filed its returns. According to the assessee, notice under Section 143(2) of the Act was not issued. The A.O.3 and the CIT(A)4 have not considered the said aspect. The ITAT has remanded the matter to the CIT(A) for fresh consideration. However, perusal of order disposing of objections dated 04.03.2016 by

2 Income Tax Act, 1961 3 Assessing Officer 4

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the A.O. shows that the notice under Section 143(2) of the Act was not issued and therefore, the A.O. could not have proceeded further. With this specific stand, the assessee has filed this appeal.

4.

Shri Annamalai, for the assessee adverting to the order dated 04.03.2016 disposing of the objections with regard to non-issuance of notice under Section 143(2) of the Act, submitted that the A.O. has admitted that said notice was not issued.

5.

Shri Dilip for the Revenue submitted that the A.O. was considering the objections filed by the assessee dated 23.02.2016 whereas the objections on which the reliance is placed by the assessee is dated 14.01.2016. He submitted that the order passed by the A.O. also does not contain the assessment year. In view of these discrepancies, this Court cannot record a finding that objections specifically pertain to assessment year 2008-09. Accordingly, he prayed for dismissal of this appeal.

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6.

We have carefully considered rival submissions and perused the records.

7.

The point involved in this appeal is, whether notice under Section 143(2) of the Act is issued or not. Shri Annamalai has placed reliance on the judgment of this Court in CIT Vs. C.Ramaiah Reddy5 and submitted that wherever notice under Section 143(2) of the Act is not issued within twelve months before completion of expiry of time limit, reassessment is not valid. He also contended that in case where notice under Section 143(2) of the Act is not issued, Section 292BB of the Act shall have no application. There is no dispute with regard to this position of law. However, in his order dated 14.03.2016, while disposing of the objections filed by the assessee, the A.O. has neither mentioned the year nor the correct date of assessment.

8.

Though Shri Annamalai pointed out that objections were indeed filed on 23.02.2016, it was objected by Shri Dilip

5 ITA No.192/2012 D.D. 24.06.2020

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stating that there is overwriting of the date. In his order dated 04.03.2016, the A.O. has noted as follows: “With regards to objection as non issuance of notice u/s 143(2) within the stipulated time is squarely covered by S.292B and hence not accepted”

9.

The above finding is also contrary to law laid down by this Court in the case of Shri C.Ramaiah Reddy. In view of the factual discrepancy with regard to date of objections, we do not see any ground to interfere in this appeal.

10.

With regard to assessment year 2010-11, in para 9 of it’s order, the ITAT has recorded the grounds urged by the assessee but not recorded a finding whether the objections filed by the assessee for the assessment year 2010-11 was disposed of by the A.O.

11.

Shri Annamalai contended that ITAT has not adjudicated other grounds raised by the assessee but remanded the matter to the CIT(A) only to consider the question as to whether notice under Section 143(2) was issued or not and disposal of objections by the A.O. He

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prayed that in the facts of this case, the CIT(A) may be directed to consider all the grounds urged before the ITAT.

12.

Shri Dilip has no objection.

13.

In view of the above, this appeal is disposed of directing the CIT(A) to consider all questions raised before the ITAT. Since the appeal is against the remand order, we are not disturbing the remand, questions of law are not answered in this appeal. No costs.

Sd/- JUDGE

Sd/- JUDGE

YN List No.: 1 Sl No.: 52

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