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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 13TH DAY OF DECEMBER, 2021
PRESENT
THE HON’BLE MRS.JUSTICE S.SUJATHA
AND
THE HON’BLE MR. JUSTICE S.VISHWAJITH SHETTY
I.T.A.No.29/2018
BETWEEN :
SHRI G.VENKATESH # 199, 16TH MAIN, 4TH T BLOCK, JAYANAGAR, BENGALURU-560041, PAN: AFEPG1125R
...APPELLANT
(BY SRI S.ANNAMALAI A/W SRI BHAIRAV KUTTAIAH, ADVS.)
AND :
THE INCOME TAX OFFICER WARD 4(1), BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, KORAMANGALA, BENGALURU-560095 …RESPONDENT
(BY SRI DILEEP M., ADV. FOR SRI K.V.ARAVIND, ADV.)
THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 22.09.2017 PASSED IN ITA Nos.1075/BANG/2012 AND 1432/BANG/2012, FOR THE ASSESSMENT YEAR 2005-2006, PRAYING (A) TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE AND ANSWER THE SAME IN FAVOUR OF THE APPELLANT. (B) TO ALLOW THE APPEAL AND SET ASIDE THE FINDINGS THEREIN TO THE EXTENT AGAINST THE APPELLANT IN THE ORDER PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, "B" BENCH, BANGALORE IN ITA Nos.1075/BANG/2012 AND 1432/BANG/2012 DATED
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22.09.2017 FOR THE ASSESSMENT YEAR 2005-2006 [VIDE ANNEXURE-A].
THIS APPEAL COMING ON FOR HEARING, THIS DAY, S. SUJATHA, J., DELIVERED THE FOLLOWING:
J U D G M E N T
This appeal is filed by the assessee under Section 260A of the Income Tax Act, 1961 (‘Act’ for short) challenging the order dated 22.09.2017 passed in ITA Nos.1075/Bang/2012 and 1432/Bang/2012 by the Income Tax Appellate Tribunal, “B” Bench, Bangalore (‘Tribunal’ for short) relating to the assessment year 2005-06.
The appellant - assessee is an individual. The return filed by the assessee for the assessment year under consideration was processed under Section 143(1) by the Assessing Officer. Thereafter, a notice under Section 148 of the Act dated 08.03.2010 was issued, to which the assessee sought for reasons recorded under Section 148(2) of the Act. The reasons recorded was furnished to the assessee, pursuant to
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which, the assessee filed objections/reply. The Assessing Officer has passed the assessment order dated 28.12.2010 under Section 144 read with Section 147 of the Act. Being aggrieved by the said order, the appellant - assessee preferred an appeal before the CIT (Appeals) mainly on the ground that no separate order dealing with the objections raised was passed before passing the assessment order dated 28.12.2010. The said appeal came to be partly allowed. The rectification petition filed by the appellant – assessee, however, came to be rejected.
Being aggrieved by the said orders of the CIT (Appeals), two separate appeals were filed by the assessee before the Tribunal. The Tribunal, after hearing the parties has directed the Assessing Officer to pass a separate speaking and reasoned order disposing of the objections raised by the assessee holding that if the Assessing Officer arrives at a finding that the re-
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assessment proceedings are valid then it should complete the assessment proceedings denovo after providing reasonable opportunity of being heard to the assessee. Aggrieved by the same, the assessee has filed this appeal.
The appeal has been admitted by this Court to consider the following substantial questions of law:- 1) Whether the Tribunal erred in law in not annulling the assessment when the Assessing Officer has not passed a separate speaking order in disposing of the objections to the notice under section 148 of the Act before passing the Assessment order on the facts and circumstances of the case? 2) Whether the Tribunal erred in law in not holding that the mandatory conditions for issue of notice under section 148 did not exist and have not been complied and consequently ought to have held that the entire assessment is devoid of jurisdiction and further ought to have cancelled the
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assessment on the facts and circumstance of the case? 3) Whether the Tribunal erred in law in not holding that the assessing officer who had issued the notice under section 148 of the Act had no jurisdiction to issue such notice on the facts and circumstance of the case? 4) Whether the notice issued under section 148 of the Act, is itself bad in law in as much as the notice is very vague as the notice is very vague as the notice does not specify whether to ‘assess’ or ‘reassess’ the income of the Appellant and consequently the order passed under section 144 r/w section 147 of the Act on an invalid notice is bad in law and void ab initio on the facts and circumstances of the case?
Learned counsel for the assessee argued that any assessment order sans considering the objections is void ab initio. In the absence of separate speaking order passed by the Assessing Officer considering the objections, the Tribunal ought to have set aside the
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assessment order. In support of his contentions, learned counsel has placed reliance on the following judgments: 1. Deepak Extrusions (P) Ltd., vs. Deputy Commissioner of Income-tax, Bangalore [(2017) 80 taxmann.com 77 (Karnataka)]; 2. Standard Chartered Finance Ltd., vs. Commissioner of Income-tax, Bangalore [(2016) 381 ITR 453 (SC)]; 3. GKN Driveshafts (India) Ltd., vs. Income-tax Officer [(2003) 259 ITR 19 (SC)]. 6. Learned counsel for the Revenue justifying the impugned order submitted that the Tribunal indeed has directed the Assessing Officer to pass a speaking order on the objections said to have been filed by the appellant – assessee, thereafter to initiate denovo proceedings after providing reasonable opportunity of being heard to the parties. Learned counsel further submitted that the appellant – assessee has preferred Miscellaneous Petition Nos.81 and 126/Bang/2018 contending that the assessment order should have been
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quashed as bad in law that the Tribunal has restored back the matter to the Assessing Officer for fresh decision, which is not line with the judgment of Hon'ble Apex Court rendered in the case of GKN Driveshafts (India) Ltd., supra, and the judgment of this Court rendered in the case of Deepak Extrusions (P) Ltd., supra. The Tribunal having considered the said arguments advanced by the appellant dismissed the Miscellaneous Petitions, however the same is not challenged before this Court. On this ground alone, the appeal deserves to be dismissed. 7. We have bestowed our anxious consideration to the arguments advanced by the learned counsel for the parties and perused the material on record.
In Deepak Extrusions (P) Ltd., supra, the Co-ordinate Bench of this Court held that the Assessing Officer, not disposing of the objections prior to proceeding with the assessment and further passing the
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order would indicate that the mandatory procedure of disposal of the objections by the Assessing Officer before proceeding with the assessment has not been followed and exercise of power can be said as not only vitiated, but order of assessment cannot be sustained. Setting aside the said assessment order, it has been observed that the Assessing Officer shall be at liberty to proceed in the matter in accordance with law.
In Standard Chartered Finance Ltd., supra, the Hon'ble Apex Court considering the contention of the assessee that when there was no assessment order even passed in the original proceedings, held that the ratio laid down in Trustees of H.E.H., The Nizam’s Supplemental Family Trust’s case [(2000) 242 ITR 381] would be applicable. It has been held that where there is no assessment order passed, there cannot be a notice for re-assessment inasmuch as
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the question of re-assessment arises only when there is an assessment in the first instance.
There is no cavil on the legal proposition canvassed by the learned counsel for the appellant - assessee based on the aforesaid dictums laid down by the Hon’ble Courts. The grounds urged before the Tribunal was exclusively relating to the Assessing Officer not passing a separate speaking order dealing with the objections filed by the assessee. The order passed in the Miscellaneous Petitions would disclose that the assessee has not co-operated with the Assessing Officer in assessment proceedings, which resulted in passing of ex-parte order under Section 144 of the Act. In this background, the Tribunal has restored the matter to the file of the Assessing Officer for fresh decision. Further, it is forthcoming from the said order that albeit the appellant - assessee has referred to the ruling of this Court in Deepak
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Extrusions (P) Ltd., supra, no judgment copy was made available before the Tribunal. Mere citing of a judgment is not suffice, copies of the same must be made available before the Tribunal/Court.
The circumstances which forced the Assessing Officer to pass the ex-parte assessment order under Section 144 as narrated in the Assessment order is quoted hereunder:- “The notice under Section 148 was issued on 08.03.2010 and served on the assessee on 09.03.2010 requesting the assessee to file return within 16 days. The assessee further sought time to file return of income. Despite granting reasonable opportunity, the assessee has neither filed return of income nor filed any reply.”
Hence, Assessing Officer has issued a notice under Section 142(1) and further notices were also
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issued. But the assessee has not filed the return nor adopted the return filed earlier as the return filed subsequent to issue of notice under Section 148 of the Act.
Considering the law enunciated by the Hon'ble Apex Court in GKN Driveshafts (India) Ltd., supra, the Tribunal has observed that the Assessing Officer has provided the reasons and also disposed of the objections though not by way of separate order but in the body of the assessment order, hence dismissed the Miscellaneous Petitions. The assessee has suppressed these material facts before this Court. Even assuming that the Miscellaneous Petitions were filed subsequent to filing of the present appeal, it was obligatory on the part of the assessee to bring it to the notice of this Court at the time of hearing inasmuch as the disposal of the Miscellaneous Petitions in the manner as aforesaid. In the absence of challenge to the
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order passed in Miscellaneous Petitions, the arguments now advanced by the learned counsel for the assessee is wholly untenable. Moreover, no prejudice is caused to the assessee in restoring the matter back to the file of Assessing Officer to pass a speaking order on the objections and then to conclude the assessment. With great respect, the judgments relied upon by the learned counsel for the appellant - assessee are distinguishable and not applicable to the facts and circumstances of the case.
In GKN Driveshafts (India) Ltd., supra, the Hon'ble Apex Court has held that the assessee can seek reasons recorded by the Assessing Officer only after filing of the return of income. Objections could be raised thereafter which requires to be disposed of by Assessing Officer. But the assessee herein has not filed the return subsequent to issuance of notice under Section 148 of the Act nor adopted the return filed earlier. Hence,
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alleging non-disposal of the objections by a speaking order has been rightly considered by the Tribunal and the matter has been restored back to the file of the Assessing Officer. Hence, we find no perversity or infirmity in the order impugned.
For the reasons aforesaid, the substantial questions of law are answered in favour of the Revenue and against the assessee.
Resultantly, the appeal stands dismissed.
Sd/- JUDGE
Sd/- JUDGE
PMR