SOUTH INDIA STEEL INDUSTRIES LTD vs. ADDITIONAL /JOINT /DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER

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WP/13157/2024HC KarnatakaKAHC01026032202403 July 2024Bench: S SUNIL DUTT YADAV4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the order passed by the Revisional Authority was in violation of the principles of natural justice. The court noted that once a notice was issued extending the time for appearance until April 12, 2023, it was improper for the revisional authority to close the proceedings on March 29, 2023. This action prejudiced the petitioner's right to present their case. The court found that the merits of the matter required reconsideration. Therefore, the court set aside the orders at Annexures-E and H and remitted the matter back to the Revisional Authority for fresh consideration in accordance with law. The contentions of both sides were kept open for reconsideration. The operative direction was to remand the matter.

What were the facts?

The petitioner, South India Steel Industries Ltd., filed a writ petition before the High Court of Karnataka challenging an order dated March 29, 2023, passed by the Principal Commissioner of Income Tax-1 (Respondent No. 3) under Section 263 of the Income Tax Act, 1961. This order had set aside the assessment order concerning the exemption granted on compensation received by the petitioner for the Assessment Year 2018-19. The petitioner contended that the revisional authority issued a notice on March 28, 2023, requiring appearance by April 12, 2023, but proceeded to dispose of the revision proceedings suo motu on March 29, 2023, without waiting for the stipulated date. The petitioner argued this violated principles of natural justice.

What were the issues?

1. Whether the order passed by the Revisional Authority under Section 263 of the Income Tax Act, 1961, is liable to be quashed for violating the principles of natural justice, specifically by disposing of the revision proceedings before the date provided in the notice for appearance? Assessee's contentions: The petitioner argued that the notice issued by the Revisional Authority granted time until April 12, 2023, for appearance. However, the authority passed the revisional order on March 29, 2023, without waiting for the expiry of this period. This premature disposal, the petitioner contended, violated the principles of natural justice and prejudiced their right to present their case before the revisional authority, particularly concerning the exemption granted in the assessment proceedings. Revenue's contentions: The judgment does not record specific contentions from the revenue regarding the procedural violation. However, the revisional authority's action implies a belief that the assessment order was erroneous and prejudicial to the revenue.

Which sections of the Income-tax Act were involved?

Section 263

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:25045 WP No. 13157 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 3RD DAY OF JULY, 2024 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 13157 OF 2024 (T-IT) BETWEEN: 1. SOUTH INDIA STEEL INDUSTRIES LTD HAVING ITS OFFICE AT NO.54/28, K S GARDEN LALBAGH ROAD, 4TH CROSS, BANGALORE - 560 002 REPRESENTED BY ITS DIRECTOR MR PANKAJ GARG … PETITIONER (BY SRI. TANMAYEE RAJKUMAR., ADVOCATE) AND: 1. ADDITIONAL /JOINT /DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX/ INCOME TAX OFFICER NATIONAL FACELESS ASSESSMENT CENTRE, ASSESSMENT UNIT ROOM NO 401, II FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM DELHI - 110 003 2. INCOME TAX OFFICER WARD 7(2)(1) BANGALORE 80 FT ROAD, BMTC BUILDING, KORAMANGALA BENGALURU - 560 095 Digitally signed by VIJAYA P Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:25045 WP No. 13157 of 2024 3. PRINCIPAL COMMISSIONER OF INCOME TAX-1 80 FEET ROAD, BMTC BUILDING, KORAMANGALA, BENGALURU - 560 095 4. STATE OF KARNATAKA TO HOUSING AND URBAN DEVELOPMENT MS BUILDING, BANGALORE - 560 001 REPRESENTED BY ITS PRINCIPAL SECRETARY 5. THE KARNATAKA INDUSTRIAL AREA DEVELOPMENT BOARD NRUPATHUNGA ROAD, BANGALORE - 560 001 REPRESENTED BY ITS MANAGING DIRECTOR … RESPONDENTS (BY SRI. M. DILIP, JUNIOR STANDING COUNSEL)

THIS W.P. IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE ORDER DTD. 29.03.2023 BEARING NO. ITBA/REV/F/REV5/2022- 23/1051549581(1) (ANNEXURE-E) PASSED BY THE R-3 UNDER SECTION 263 OF THE ACT FOR THE ASSESSMENT YEAR 2018- 19 AND ETC.

THIS PETITION COMING ON FOR ORDERS THIS DAY, THE COURT MADE THE FOLLOWING: ORDER

Petitioner has sought for setting aside of the order at Annexure-E whereby the Revisional Authority in exercise of the power under Section 263 of the Income Tax Act, 1961 has set aside the order of the assessing authority

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NC: 2024:KHC:25045 WP No. 13157 of 2024 insofar as the exemption extended on the compensation received. 2. Learned counsel for the petitioner submits that the order passed by the Revisional Authority is in violation of the principles of natural justice insofar as the notice was issued on 28.03.2023 to appear by 12.04.2023 at 11.00 a.m. and take stand insofar as the proceedings of limited scrutiny assessment, while without waiting for 12.04.2023, on 29.03.2023 itself suo motu revision has been disposed off. 3. Taking note of the admitted facts, once notice was given extending time till 12.04.2023, question of closing the revision proceedings on 29.03.2023 would be in violation of the time prescribed in the notice at Annexure-D and accordingly the order passed in violation of the principles of natural justice prejudicing the right of the petitioner to put forth their case before the Revisional Authority in light of the benefit of exemption having been extended to the petitioner in the assessment proceedings.

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NC: 2024:KHC:25045 WP No. 13157 of 2024 Insofar as the merits of the matter, needless to state that though contentions have been advanced on both sides, that is a matter that requires reconsideration and once the petitioner is permitted to put forth their case, the Authority would be in a better position to appreciate the contentions and arrive at a conclusion in accordance with law. 4. Accordingly, the orders at Annexures-E and H are set aside and the matter is remitted to the Revisional Authority for fresh consideration in accordance with law. Contentions of both sides are kept open. 5. Petition is disposed off. Sd/- JUDGE VP

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