M/S MABA CORPORATE SERVICES PVT LTD vs. THE DEPUTY COMMISSIONER OF INCOME TAX

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WP/6004/2021HC KarnatakaKAHC01010236202130 March 2021Bench: S SUNIL DUTT YADAV4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court disposed of the writ petition by directing the respondent No. 1 (Deputy Commissioner of Income Tax) to pass appropriate orders in accordance with law to give effect to the ITAT's order dated 12.05.2017 within a period of two months from the date of the order's release. The Court also directed the respondent to consider passing an order for refund, provided the order under Section 154 is passed simultaneously. The reasoning was based on the ITAT's decision which had already set aside the disallowance of bad debts and affirmed the assessee's claim. The principle established is that tax authorities are bound to give effect to the orders of higher appellate authorities like the ITAT and pass consequential orders for rectification and refund as mandated by the Act.

What were the facts?

The petitioner, M/s. MABA Corporate Services Pvt. Ltd., filed a writ petition seeking a direction to the respondents, the Deputy Commissioner of Income Tax and the Commissioner of Income Tax, to refund tax and interest collected for Assessment Year 2013-14. The petitioner's claim for writing off bad debts of Rs. 51,87,360/- was disallowed by the Assessing Officer in an order dated 30.03.2015. The Commissioner of Income Tax (Appeals) affirmed this order on 30.04.2015. However, the Income Tax Appellate Tribunal (ITAT), by its order dated 12.05.2017, set aside the orders of the lower authorities and allowed the assessee's appeal regarding the bad debts claim. The petitioner contended that consequential orders under Section 154 and refund under Section 240 of the Income Tax Act should be passed.

What were the issues?

1. Whether the respondents are liable to pass consequential orders under Section 154 of the Income Tax Act, 1961, to give effect to the ITAT's order dated 12.05.2017, which set aside the assessment order and the appellate commissioner's order concerning the writing off of bad debts amounting to Rs. 51,87,360/- for Assessment Year 2013-14? Assessee's Contention: The assessee argued that the ITAT's order allowing the appeal necessitates consequential action under Section 154 to rectify the assessment and consequently, a refund of tax and interest collected should be granted under Section 240 of the IT Act. Revenue's Contention: The Revenue submitted that in light of the prayer sought, the authorities would consider passing an order under Section 154 of the IT Act consequent to the ITAT's order and also a further consequential order under Section 240 as per law.

Which sections of the Income-tax Act were involved?

Section 154,Section 240

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 30TH DAY OF MARCH 2021

BEFORE

THE HON'BLE MR.JUSTICE S. SUNIL DUTT YADAV

WRIT PETITION No.6004/2021 (T-IT)

Between:

M/s. MABA Corporate Services Pvt. Ltd., No.186/1, J.C. Complex Annexe, Sirur Park Road, Seshadripuram, Bangalore - 560 020 Rep. by its Managing Director, Sri C.M. Narayana.

… Petitioner

(By Sri M.V. Seshachala, Senior Advocate for Sri Aravind V. Chavan, Advocate)

And:

1.

The Deputy Commissioner of Income Tax,

Central Circle - 2(3),

C.R. Building,

Queens Road,

Bengaluru - 560 001.

2.

Commissioner of Income Tax,

Central Circle,

C.R. Building,

Queens Road,

Bengaluru - 560 001.

… Respondents

(By Sri E.I. Sanmathi, Advocate)

2 This Writ Petition is filed under Articles 226 & 227 of the Constitution of India, praying to direct the respondents to refund the tax and interest collected after the Assessment Order for the Assessment Year 2013-14 together with interest entitled to the petitioner by passing consequential order under Section 154 of the IT Act and Section 240 of the IT Act in view of the Assessment Order dated 30.03.2015 Annexure-A and Appellate Commissioner Order Dated 29.07.2016 Annexure-B having been set aside by the Tribunal under Order dated 12.05.2017 vide Annexure-C.

This Writ Petition coming on for preliminary hearing this day, the Court made the following:

ORDER

The petitioner-assessee has sought for issuance of a writ of mandamus to direct the respondents to pass orders under Section 154 of the Income Tax Act, 1961 [for short 'I.T.Act] pursuant to the order of Income Tax Appellate Tribunal ['ITAT' for short] dated 12.05.2017 at Annexure-C setting aside the assessment order dated 30.03.2015 (Annexure-A) and that of the Commissioner of Income Tax (Appeals)-11 dated 29.07.2016 (Annexure-B) and has further sought for necessary direction to the respondents to refund their tax and interest collected pursuant to the assessment order for the Assessment Year 2013-2014.

2.

The petitioner submits that the Assessing Officer has passed an order on 30.03.2015 disallowing the petitioner's writing off bad debts with respect to Rs.51,87,360/-. The said order was taken up in appeal before the Commissioner of Income Tax (Appeals)-11, who affirmed the order of Assessing Officer by his order dated 30.04.2015 which again was carried up in appeal before the ITAT, which however has allowed the appeal by order dated 12.05.2017.

3.

It is submitted that the ITAT while allowing the appeal as regards the Assessment Year 2013-2014 has specifically observed that the claim for writing off bad debts with respect to Rs.51,87,360/- as claimed by the assessee has been affirmed while setting aside the order of Commissioner of Income Tax (Appeals)-11. Accordingly, it is submitted that pursuant to the order of ITAT, the respondent Authorities are required to give effect to the said order by passing necessary order under Section 154 and if that were to be so, consequently, the petitioner's

4 request for refund ought to be ordered in terms of Section 240 of I.T. Act.

4.

Learned counsel appearing for the Revenue submits that in light of the prayer sought for, the Authorities would consider passing an order under Section 154 of I.T.Act consequent to the order of ITAT and also further consequential order under Section 240 as per law.

5.

Taking note of the same, the petition is disposed off. The respondent No.1 is to pass appropriate orders in accordance with law to give effect to the order of ITAT dated 12.05.2017 within a period of two months from the date of release of this order.

6.

The respondent is also directed to consider passing an order for refund, in the event, the order under Section 154 is passed simultaneously.

Sd/- JUDGE

VGR

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