PR COMMISSIONER OF INCOME TAX vs. SMT BHAGYA NAGARAJ

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ITA/337/2018HC KarnatakaKAHC01054965201814 November 2022Bench: P.S.DINESH KUMAR,T.G. SHIVASHANKARE GOWDA5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court noted that the ITAT had set aside the assessment orders and that the related company had settled the undisclosed income. Therefore, nothing survived in the appeals.

What were the facts?

Search in a third party's premises led to reopening of assessment for the assessee under Section 148. The ITAT held that proceedings should have been under Section 153C as the assessee was an 'other person'. The assessee's case was settled by a related company before the Settlement Commission.

What were the issues?

Whether proceedings under Section 147 could be initiated against an 'other person' when Section 153C was applicable, and if a settlement by a related entity impacts the assessment of the 'other person'.

Which sections of the Income-tax Act were involved?

Section 148,Section 153C,Section 147

AI-generated summary — verify with the full judgment below

- 1 - ITA No.336/2018 C/W ITA No.337/2018 ITA No.338/2018

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 14TH DAY OF NOVEMBER, 2022 PRESENT THE HON'BLE MR JUSTICE P.S.DINESH KUMAR AND THE HON'BLE MR JUSTICE T G SHIVASHANKARE GOWDA INCOME TAX APPEAL NO. 336/2018 C/W INCOME TAX APPEAL NO. 337/2018 INCOME TAX APPEAL NO. 338/2018

BETWEEN:

1.

PR. COMMISSIONER OF INCOME TAX CENTRAL, QUEENS ROAD BANGALORE – 560 052

2.

THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 2(2) BANGALORE

…APPELLANTS (COMMON)

(BY SRI E.I.SANMATHI, STANDING COUNSEL)

AND:

SMT.BHAGYA NAGARAJ NO.6 & 7, 5TH CROSS CHUNCHAGHATTA MAIN ROAD NEW BANK COLONY KONANAKUNTE, BENGALURU – 560 062

…RESPONDENT (COMMON)

(BY SRI M.V.SESHACHALA, SENIOR ADVOCATE FOR SRI.ARAVIND V CHAVAN, ADVOCATE)

Digitally signed by K S RENUKAMBA Location: High Court of Karnataka

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THESE INCOME TAX APPEALS ARE FILED UNDER SECTION 260A OF INCOME TAX ACT 1961 PRAYING TO SET ASIDE THE APPELLATE ORDER DATED 25.10.2017 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH, BENGALURU IN APPEAL PROCEEDINGS NOS.ITA NO.93/BANG/2017 FOR ASSESSMENT YEAR 2005-2006, ITA NO.94/BANG/2017 FOR ASSESSMENT YEAR 2006-2007, ITA NO.95/BANG/2017 FOR ASSESSMENT YEAR 2007-2008 RESPECTIVELY.

THESE INCOME TAX APPEALS, COMING ON FOR HEARING, THIS DAY, P.S.DINESH KUMAR J,

DELIVERED THE FOLLOWING:

JUDGMENT

These three appeals by the Revenue directed against the common order dated 25.10.2017 in ITA Nos.93 to 95/Bang/2017 have been admitted to consider the following question of law: “Whether on the facts and in the circumstances of the case, the Tribunal were justified in law in allowing appeal preferred by assessee by relying on the decision of Gujurath High Court in the case of Cargo Clearing Agency v/s. JCIT (reported in 307 ITR page 1) holding that proceedings under section 147 cannot be initiated in respect of block assessments?”

2.

At the outset, Shri M.V.Seshachala, learned Senior Advocate for the assessee submitted that search was conducted in the premises of one Ms.Adlene Kagoo who was working as Secretary to Sri Dayanand Pai. During the search, a pen drive

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was recovered. Based on the search, notices dated 29.03.2012 were issued to the assessee under Section 148 of the Income Tax Act, 1961 Act (‘IT Act’ for short) to reopen the assessment based on the material detected in the premises of Ms.Adlene Kagoo for the A.Y.1.2005-06, A.Y.2006-07 and A.Y.2007-08.

3.

The assessment proceedings were completed and separate assessment orders were passed for the said years. CIT(A)2 confirmed the orders of assessment. The ITAT3 by the impugned common order has held that since the assessee is the ‘other person’, the assessment ought to have been conducted under Section 153C of the IT Act.

4.

Feeling aggrieved, the Revenue has preferred these appeals.

5.

Shri Seshachala, further submitted that in the meanwhile, Sri Dayananda Pai has admitted undisclosed income in respect of Canara Housing Development Company and the matter has been settled before the Settlement Commission Bench vide order dated 19.10.2015. Since the Canara Housing Development Company had owned the undisclosed income and

1 Assessment Year 2 Commissioner of Income Tax (Appeals) 3 Income Tax Appellate Tribunal

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paid the taxes in terms of the order passed by the Settlement Commission, no tax can be imposed so far as ‘other person’ is concerned. In any event, the ITAT has allowed appeals of the assessee and the assessment orders passed after search have been set aside.

6.

Submission made by learned Senior Advocate was not disputed by Sri E.I.Sanmithi, learned Standing Advocate for the Revenue.

7.

In view of the above, we may record that the assessment orders passed against the assessee have been set aside by ITAT. Further Canara Housing Development Company has accepted the undisclosed income and paid taxes in terms of the orders passed by the Settlement Commission. Therefore nothing survives in these appeals and they are accordingly disposed of.

8.

As prayed for by Sri E.I.Sanmathi, it is made clear that if taxes are not paid in terms of the orders passed by the Settlement Commission, the Revenue shall be at liberty to file appropriate application to reopen of the case.

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9.

In view of the above, question raised in these appeals do not require any answer and accordingly they are not answered. No costs.

Sd/- JUDGE

Sd/- JUDGE KSR List No.: 1 Sl No.: 40

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