SRI. M.R.ANANDARAM (HUF) vs. THE ASSISTANT COMMISSIONER OF INCOME TAX

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF JANUARY 2021 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE NATARAJ RANGASWAMY I.T.A. NO.452 OF 2016 BETWEEN: SRI. M.R. ANANDARAM (HUF) REP. BY KARTHA SRI. M.R. ANANDARAM GOKULA HOUSE GOKULA, MATHIKERE BANGALORE-560054. ... APPELLANT (BY SRI. A. SHANKAR, SR. COUNESL FOR SRI. M. LAVA, ADV.,) AND: THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 6 (3)(1), BMTC BUILDING 80 FEET ROAD, KORAMANGALA BANGALORE-560095. ... RESPONDENT (BY SRI. E.I. SANMATHI, ADV.) - - - THIS I.T.A. IS FILED UNDER SEC. 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 27.05.2016 PASSED IN C.O. NO.220/BANG/2015 (IN ITA NO.1169/BANG/2015) FOR THE ASSESSMENT YEAR 2007-08, PRAYING TO: (i) FORMULATE THE SUBSTANTIAL QUESTION OF LAW AS STATED ABOVE AND ANSWER THE SAME IN FAVOUR OF THE APPELLANT.

2 (ii) ALLOW THE APPEAL AND SET ASIDE THE FINDINGS TO THE EXTENT AGAINST THE APPELLANT IN THE ORDER PASSED BY THE ITAT IN CO NO.220/BANG/2015 (IN ITA 1169/BANG/2015) DATED 27.05.2016 FOR THE ASSESSMENT YEAR 2007-08 VIDE ANNEXURE-A. (iii) PASS SUCH OTHER ORDERS, AS THIS HON'BLE COURT DEEMS FIT AND PROPER TO MEET THE ENDS OF JUSTICE. THIS I.T.A. COMING ON FOR HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING: JUDGMENT This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the assessee. The subject matter of the appeal pertains to the Assessment year 2007-08. The appeal was admitted by a bench of this Court vide order dated 22.11.2017 on the following substantial questions of law: (i) Whether the Tribunal was justified in law in stating that there are no effective grounds other than supporting the order of the CIT(A) in the cross objection filed by the appellant which is contrary to the and grounds raised before the Tribunal and consequently perverse on the facts and circumstances of the case.

3 (ii) Whether the Tribunal ought to have held that the mandatory conditions to assume jurisdiction under section 148 does not exist and consequently ought to have also quashed the reassessment proceedings on the facts of the case. (iii) Whether the Tribunal was justified in law in not adjudicating the legal ground of reopening which goes to the root of the matter on the facts and circumstances of the case. (iv) Whether the Tribunal in law ought to have held that as no notice under section 143(2) of the act has been issued in time, consequently the order of assessment is bad in law and without jurisdiction and liable to be cancelled on the facts of the case. 2. Facts leading to filing of this appeal briefly stated are that an assessee is an individual (HUF) and had filed his original return of income for the

4 Assessment Year 2007-08 on 01.11.2007 declaring an income of Rs.5,26,710/-. The assessee subsequently filed a revised return of income on 31.03.2009 declaring the agricultural income of Rs.15,00,000/- in addition to the income already declared in the original return of income. Thereafter, a notice under Section 148 dated 28.11.2011 was issued. The appellant thereupon filed a detailed response on 23.12.2011 stating that return of income filed on 01.11.2007 and 31.03.2009 in response to the notice issued under Section 148 of the Act be treated as response. The Assessing Officer passed an order under Section 143(3) read with Section 147 of the Act on 28.03.2013. 2. The assessee thereupon filed an appeal before the Commissioner of Income Tax (Appeals), who by an order dated 26.05.2015 partly allowed the appeal. The revenue thereupon filed an appeal before the Income Tax Appellate Tribunal (hereinafter referred to as 'the

5 Tribunal' for short). The assessee filed cross-objection against the findings contained in the order passed by the Commissioner of Income Tax (Appeals). The Tribunal, by common order dated 27.05.2016, dismissed the appeal preferred by the revenue as well as the cross-objection filed by the assessee. In the aforesaid factual background, this appeal has been filed. 3. Learned Senior counsel for the assessee submitted that an order of assessment was passed on 27.11.2009 under Section 143(3) of the Act. Thereafter, a notice under Section 148 of the Act was issued on 28.11.2011. The reasons were communicated by the Assessing Officer to the assessee on 31.01.2012. Thereafter, notice under Section 143(2) of the Act was issued on 28.02.2013 which was barred by limitation and the same ought to have been issued before 30.09.2012. However, the aforesaid aspect of the matter has neither been considered by the

6 Commissioner of Income Tax (Appeals) nor by the Tribunal. 4. Learned counsel for the revenue was unable to point out from the order passed either by the Commissioner of Income Tax (Appeals) or by the Tribunal that the issue whether the notice under Section 143(2) of the Act issued to the assessee was barred by limitation was adjudicated. 5. In view of the aforesaid submission and taking into account the fact that the issue with regard to the fact whether the notice under Section 143(2) of the Act to the assessee was barred by limitation and the same ought to have been issued before 30.09.2012, has not been adjudicated either by the Commissioner of Income Tax (Appeals) or by the Tribunal, in the facts and circumstances of the case, it is not necessary for us to deal with the substantial questions of law framed in this appeal. The impugned order passed by the Tribunal

7 dated 27.05.2016, is hereby quashed and the matter is remitted to the Tribunal to adjudicate the issue whether the notice issued under Section 143(2) of the Act dated 28.02.2013, to the assessee is barred by limitation and is contrary to provisions of the Act. Needless to state that the Tribunal itself shall decide the issue within a period of two months from the date of receipt of certified copy of the order passed today. The parties shall be at liberty to raise all legal contentions with regard to the aforesaid issue. In the result, the appeal is disposed of. Sd/- JUDGE Sd/- JUDGE ss

8 AAJ & NRJ:

05.03.2021 ITA No.452/2016 ORDER

Sri.Shankar A. learned Senior Counsel along with Sri.Narendra Sharma for the appellant.

Sri.E.I. Sanmathi, learned counsel for the respondent through Video conference.

Heard on IA No.1/2021, an application seeking clarification of the judgment dated 27.1.2021 passed by this Court in this appeal ITA No.452/2016, the learned Senior Counsel for the assessee submitted that assessee has addressed several grounds in the cross- objections which was filed by the assessee. However, liberty has not been given to the assessee to raise the aforesaid contentions while this Court remanded the matter to the Tribunal.

The aforesaid submission has not been fairly disputed by the learned counsel for the Revenue.

In view of the aforesaid submissions and taking into account the fact that the grounds raised in cross-

9 objections have not been permitted to urge before the Tribunal, we make it clear that it will be open for the assessee to raise the grounds raised in the cross objections as well before the Tribunal.

With the aforesaid clarification, this order shall be read in conjunction with the judgment dated 27.1.2021 passed by this Court in ITA No.452/2016.

Accordingly, IA No.1/2021 is disposed of. Sd/- JUDGE Sd/-

JUDGE ap