SRI. PALGHAT RAMANATHAN SESHADRI vs. THE INCOME TAX OFFICER

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ITA/776/2018HC KarnatakaKAHC01055530201816 January 2023Bench: P.S.DINESH KUMAR,G BASAVARAJA5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the assessee's cross-objection before the ITAT was not pressed and was accordingly dismissed. The Court noted that the undisputed fact was that the assessee did not press its appeal before the ITAT. Therefore, the authority cited by the assessee (Jhabua Power Ltd.) was not applicable to the facts of the case. In view of the assessee's conduct in not pressing its appeal before the ITAT, the Court concluded that no question of law arose for consideration. Consequently, the appeal was dismissed for wrong submission. No costs were awarded.

What were the facts?

The assessee, Sri. Palghat Ramanathan Seshadri, is challenging an order dated 01.06.2018 passed by the Income Tax Appellate Tribunal (ITAT), Bengaluru, in ITA No. 702/Bang/2018 for Assessment Year 2011-2012. The Assessing Officer (AO) had passed a rectification order under Section 154 of the Income Tax Act, 1961, on 27.10.2015, adding tax on four heads: write off of hotel equipment (capital expenditure), wrong claim of depreciation, lease rent, and STT paid/processing charges. The Commissioner of Income Tax (Appeals) granted partial relief, setting aside additions on three heads but confirming the addition regarding the wrong claim of depreciation. The Revenue appealed to the ITAT, and the assessee filed a cross-objection.

What were the issues?

1. Whether the Tribunal was justified in law in not holding that the rectification made under Section 154 of the Act was beyond its scope, and ought to have set aside the order as bad in law and without jurisdiction? (Question of law turning on Section 154 of the Income Tax Act, 1961). Assessee's Contentions: - The rectification order under Section 154 was without valid reason and went to the root of the matter, and the ITAT erred in rejecting this ground. - Relied on the Supreme Court's decision in Commissioner of Income-tax, Kolkata-III Vs. Jhabua Power Ltd, for the proposition that a question of law can be raised at any stage. Revenue's Contentions: - Opposed the assessee's arguments.

Which sections of the Income-tax Act were involved?

Section 154,Section 260-A,Section 143(1)

AI-generated summary — verify with the full judgment below

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ITA No. 776 of 2018 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 16TH DAY OF JANUARY, 2023 PRESENT THE HON'BLE MR JUSTICE P.S.DINESH KUMAR AND THE HON'BLE MR JUSTICE G BASAVARAJA INCOME TAX APPEAL NO. 776 OF 2018 BETWEEN: 1. SRI. PALGHAT RAMANATHAN SESHADRI TAPOVANA, #32, CLUB ROAD BIDARAHALLI, OPP:EAST POINT HOSPITAL BENGALURU-560049 …APPELLANT (BY SRI. ANNAMALI S,ADVOCATE) AND: 1. THE INCOME TAX OFFICER WARD-4(2)(1), BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK KORAMANGALA, BENGALURU 560 095. …RESPONDENT (BY SRI. DILIP M, STANDING COUNSEL)

THIS INCOME TAX APPEAL UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED01/06/2018 PASSED IN C.O.NO.37/BANG/2018 IN ITA NO.702/BANG/2018, FOR THE ASSESSMENT YEAR 2011-2012. PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW AS STATED ABOVE AND ANSWER THE SAME IN FAVOUR OF THE APPELLANT AND ETC. Digitally signed by RAMYA D Location: High Court of Karnataka

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ITA No. 776 of 2018

THIS APPEAL, COMING ON FOR HEARING, THIS DAY, P.S.DINESH KUMAR J., DELIVERED THE FOLLOWING: JUDGMENT

This appeal by the assessee, challenging the order dated 01.06.2018 in ITA No. 702/Bang/2018 passed by ITAT1, Bengaluru has been admitted to consider the following question of law:

"Whether the Tribunal was justified in law not holding that the rectification made was beyond the scope of Section- 154 of the Act, and ought to have set- aside the order under Section-154 of the Act as bad in law, and without jurisdiction on the facts and circumstances of the case?"

2.

Heard Shri. Annamalai, learned Advocate for the Assessee and Shri. M.Dilip, learned Standing Counsel for the Revenue.

3.

Brief facts of the case are, after passing order under Section 143(1) of the Income Tax Act, 19612, a 1 Income Tax Appellant Tribunal 2 'the Act' for short

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ITA No. 776 of 2018 recalling order under Section 154 of the Act was passed by AO3 on 27.10.2015, adding tax on the following four heads: Add Write off of hotel equipments" being capital expenditure 3,00,000 Add Wrong claim of depreciation 50% instead of 15% i.e., on WDV 3,70,378 Add Lease rent 8,90,135 Add STT paid and STT processing charges to be added back as not expended for the purpose of Business 2,83,091

4.

On appeal by the assessee, CIT(A)4 has granted partial relief by setting aside the additions made on three heads mentioned above and dismissed the appeal insofar as the addition with regard to wrong claim of depreciation of 15% namely, the second addition.

5.

Revenue challenged the order passed by CIT(A) before ITAT. Assessee filed Cross Objection contending interalia that: 2. “The learned CIT(A) ought to have annulled/cancelled the order passed under Section 154 of the Act, on the facts and circumstances of the case; and 3 Assessing Officer 4 Commissioner of Income Tax (Appeals)

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ITA No. 776 of 2018 3. The learned CIT(A) was not justified in law in confirming the rectification order in respect of depreciation, as there was no mistake apparent from record, on the facts and circumstances of the case.”

6.

It is recorded in para 4 of the impugned order that the assessee did not press the cross objection and accordingly, it was dismissed.

7.

Shri. Annamalai, for the assessee submitted that since the order passed under Section 154 of the Act was without any valid reason and goes to root of the matter, the ITAT erred in rejecting ground No.2 raised before it.

8.

In support of his contention, he placed reliance on Apex Court's decision in Commissioner of Income-tax, Kolkata-III Vs. Jhabua Power Ltd5 and submitted that a question of law can be raised at any stage.

9.

Shri. Dilip, for the Revenue argued opposing the same. 5 [2013] 37 taxmann.com 162 (SC)

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ITA No. 776 of 2018

10.

We have carefully considered rival contentions and perused the records.

11.

Undisputed facts of the case are, against the order passed by the CIT(A), Revenue filed an appeal before the ITAT. The assessee filed its cross objection and did not press the same and it has been dismissed. Therefore, the Authority in Jhabua Power Ltd. is not applicable to the facts of the case.

12.

In view of assessee’s own conduct, in not pressing the appeal before ITAT, no question of law arises for consideration. Accordingly, this appeal is dismissed for wrong submission.

No costs. Sd/- JUDGE Sd/- JUDGE BH

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