COMMISSIONER OF INCOME TAX vs SRI P SHYAMARAJU

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 20TH DAY OF OCTOBER 2020

PRESENT

THE HON’BLE MR. JUSTICE ALOK ARADHE

AND

THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD

I.T.A. NO.132 OF 2012

BETWEEN:

COMMISSIONER OF INCOME-TAX

CENTRAL, C.R. BUILDING,

BANGALORE.

DEPUTY COMMISSIONER OF INCOME-TAX

CIRCLE-(2)2,

BANGALORE.

... APPELLANTS (BY MR. E.I.SANMATHI, ADV.)

AND:

SRI P.SHYAMARAJU IV MAIN, NO.343, UPPER PALACE ORCHARDS, SADASHIVNAGAR, BANGALORE-80. ... RESPONDENT (MR. V.CHANDRASHEKAR, ADV.)

- - -

THIS I.T.A. IS FILED UNDER SECTION 260-A OF I.T.ACT, 1961, ARISING OUT OF ORDER DATED 06/01/2012

PASSED IN ITA NO.440/BANG/2010 AND ITA.504/BANG/2010, FOR THE ASSESSMENT YEAR 2004-05, PRAYING TO: I. DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED THEREIN. II. SET ASIDE THE APPELLATE ORDER DATED 06/01/2012 PASSED BY THE ITAT, ‘B’ BENCH, BANGALORE, IN APPEAL PROCEEDINGS ITA NO.440/BANG/2010 AND ITA.504/BANG/2010 AS SOUGHT FOR IN THIS APPEAL.

THIS I.T.A. COMING ON FOR FINAL HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING:

JUDGMENT

Mr. E.I.Sanmathi, learned counsel for the revenue.

Mr.V.Chandrashekar, learned counsel for the assessee.

This appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’, for short) has been preferred by the revenue. The subject matter of the appeal pertains to the Assessment Year 2004-05. The appeal was admitted by a Bench of this Court vide order dated 22.09.2012 on the following substantial questions of law:

“1. Whether, on the facts and in the circumstances of the case, the tribunal was justified in annulling the assessments even when the said assessments were done in accordance with provisions Section 158-BC r.w.s 143(3) of I.T.Act?

Whether, on the facts and in the circumstances of the case, the tribunal was justified on facts and law to annulling block assessment order passed by the assessing authority even the rulings of this Hon’ble High Court in ITA NO.6005 of 2010 and 6006 of 2010 has not reached finality as SLP preferred against said order being SLP No.17132- 17133/2011 are pending before Supreme Court?

2(A). Whether, the appellate order passed by the tribunal annulling the assessment concluded in the respondent assessee’s case on account of issuance of joint- warrant is sustainable in terms of the subsequent Amendment involving

insertion of Sec.292CC in the Income Tax Act by the Finance Act 2012 with retrospective effect from 1-4-1976?

Whether, on the facts and in the circumstances of the case, the tribunal was justified on facts and law to annulling block assessment order?”

The facts giving rise to filing of this appeal briefly stated are that Search was conducted in the premises of the Assessee on 01.03.2007 and a Notice under Section 153A of the Act was issued on 14.11.2007. The assessee filed return of income under protest on 14.12.2008. The Assessing Officer called various details through various communications. The assessee challenged the issue of Notice under Section 153A of the Act before the Assessing Officer on the ground that the proceedings initiated under Section 153A of the Act are illegal as the Search was illegal and prayed for dismissal of the proceedings. The Assessing Officer, however, did not find any merit in the

submissions made by the assessee and thereafter, framed the Assessment vide Order dated 31.12.2008 under Section 143(3) read with Section 153A of the Act and total income of the assessee was assessed at Rs.18,98,47,383/-. The assessee thereupon, approached the Commissioner of Income Tax (Appeals) by filing an appeal. The Commissioner of Income Tax (Appeals) by the Order dated 11.02.2010 dismissed the appeal preferred by the assessee. The assessee thereupon approached the Income Tax Appellate Tribunal (hereinafter referred to as ‘the Tribunal’, for short). The Tribunal vide order dated 06.01.2012 inter alia by placing reliance on the decision of the Hon’ble Allahabad High Court in ‘Commissioner of Income Tax vs. Smt. Vandana Verma’, (2011) 330 ITR 533 (ALL) held that Warrant of Authorization was issued jointly, however, the assessment has been made in individual capacity. The Tribunal, therefore, held that the Assessment framed under Section 153A of the Act is not

maintainable. Accordingly, the order of assessment under Section 153A of the Act was annulled and the appeal preferred by the assessee was allowed. Being aggrieved, the revenue is in appeal before this Court.

Learned counsel for the revenue invited the attention of this Court to provisions of Section 292CC of the Act and submitted that the view taken by the Tribunal is erroneous and reliance placed by the Tribunal on the decision of the Hon’ble Allahabad High Court in the case of CIT vs. Smt. Vandana Verma (supra) is misconceived as the Full Bench of Allahabad High Court in ‘Commissioner of Income Tax vs. Devesh Singh’, 76 DTR 0403 (FB) has remanded the matter after taking note of the amendment in the light of the provisions contained in Section 292CC of the Act. It is also submitted that the decision of this Court in ITA No.5005/2012 dated 27.11.2019 does not apply to the fact situation of the case as in the aforesaid case,

the revenue has failed to produce the Warrant of Authorization. 5. On the other hand, learned counsel for the assessee while inviting the attention of the Court to paragraph No.12 of the Order passed by the Tribunal submitted that in fact a discrepancy has crept in the Order of the Tribunal inasmuch as the assessee had never produced the Warrant of Authorization before the Tribunal but had produced a copy of the Panchanama, which has been described as Warrant of Authorization. It is further submitted that the assesse is not in possession of the Warrant of Authorisation and is not in a position to produce the same. However, the Tribunal has proceeded on an incorrect factual premise.

We have considered the submissions made on both sides and have perused the records.

The relevant portion of the order passed by the Tribunal reads as under:-

“12. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is noticed from the record that the warrant of authorization dated 02.02.2007 was in the joint names of Divyashree Developers (P) Ltd., Chatur Realtors (P) Ltd., P. Shyamaraju, Umesh S. Raju, Bhaskar Raju and Smt. Arathi Raju. A copy of the said document i.e., warrant of authorization dated 02.02.2007 is available at page No.3 of the assessee’s paperbook, therefore there is no doubt to this fact that the warrant of authorization was in the joint names, but the assessment has been framed in the individual name of the assessee….”

The fact whether the assessee had produced the Warrant of Authorization or the Panchanama can only be ascertained by the Tribunal. Therefore, in the facts and circumstances of the case, we deem it appropriate to quash the Order dated 06.01.2012 passed by the Tribunal and to remit the matter to the Tribunal for decision afresh in accordance with law.

Needless to state that all contentions of both the parties are kept open on merits of the matter.

10.

In view of the fact that we have remitted the matter to the Tribunal, it is not necessary for us to answer the substantial questions of law framed in this appeal.

11.

The Tribunal shall make an endeavor to dispose of the appeal within a period of six months from the date of receipt of copy of this order.

In the result, the appeal is disposed of.

Sd/- JUDGE

dn/- CT-HR

COMMISSIONER OF INCOME TAX vs. SRI P SHYAMARAJU