THE COMMISSIONER OF INCOME TAX vs SMT SHAKUNTHALA HEGDE

1 IN THE HIGH COURT OF KARNATAKA, BANGALORE

DATED THIS THE 8TH DAY OF OCTOBER, 2012

PRESENT

THE HON'BLE MR. JUSTICE K.SREEDHAR RAO

AND

THE HON'BLE MR. JUSTICE B.V. PINTO

I.T.A. No.1358 OF 2006

BETWEEN:-

The Commissioner of Income Tax, C.R. Building, Queens Road, Bangalore.

The Assistant Commissioner of Income Tax, Salary Circle-3(1), (Inv) C.R. Building, Queens Road, Bangalore. Appellants (By Sri M.Thirumalesh, Advocate)

AND:-

Smt. Shakunthala Hegde, L/r of Late Ramakrishna Hegde, No.229, Krithika, RMV Extension, Bangalore. Respondent (By Sri A. Shankar & Sri M. Lava, Advocates)

This I.T.A. is filed U/s.260-A of I.T. Act, 1961 arising out of order dated 21.04.2006 passed in I.T.A.No.2785/Bang/2004 for the Assessment Year 1993-94, praying that this Hon’ble Court may be pleased to (i) formulate the substantial questions of law stated therein and (ii) allow the appeal and set-aside the order of the ITAT, Bangalore in ITA No.2785/Bang/2004 dated 21.04.2005 and confirm the order passed by the Appellate Commissioner confirming the order of the Assistant Commissioner of Income Tax, Salary Circle-3(1)(Inv), Bangalore, in the interest of justice and equity.

This appeal is coming on for final hearing this day, SREEDHAR RAO, J., delivered the following:

J U D G M E N T

The Revenue is in appeal both on the decision rendered on merits by the Tribunal and as well on the question of condonation of delay. The appeal is filed with delay of 3 years 8 months by the LR of assessee. The assessee during lifetime had filed an appeal before the Tribunal against the order of Commissioner of Income Tax (Appeals) on merits, but on the question of jurisdiction, the Commissioner of Income Tax (Appeals) held against the assessee. The assessee had not preferred appeal against the said finding. The LR of the assessee has filed appeal stating that they were all through guided by the advice of the counsel in preferring the appeal. The respondent - LR of the

3 assessee has stated that non filing of the appeal on the question of jurisdiction, was not tainted with any malafides and they were not properly guided by legal counsel. The Tribunal had condoned the delay and allowed the appeals on merits. The Revenue aggrieved by the said order, has filed this appeal.

Sri A.Shankar, learned counsel for the respondent relied upon the decision of the Supreme Court in the case of Concord of India Ins. Co. Ltd. Vs. Smt. Nirmala Devi reported in 118 ITR 1979, wherein at page 511 the following observations are made.

“I am of the view that legal advice given by the members of the legal profession may sometimes be wrong even as pronouncement on questions of law by courts are sometimes wrong. An amount of latitude is expected in such cases for, to err is human and layman, as litigants are, may legitimately lean on expert counsel in legal as in other departments, without probing the professional competence of the advice. The court must, of course, see whether, in such cases there is any taint of mala fides or element of

4 recklessness or ruse. If neither is present, legal advice honestly sought and actually given, must be treated as sufficient cause when an application under section 5 of the Limitation Act is being considered. The State has not acted improperly in relying on its legal advisers.”

He submitted that assessee being a lay person she is necessarily guided by the legal counsel. If on account of wrong legal advice, the appeal is not filed, the assessee need not be condemned because there is no malafides, recklessness or latches on the part of the assessee. In the instant case, the record disclose that assessee had filed appeals against the order before the Tribunal.

Sri M.Thirumalesh, learned counsel for the Revenue submitted that the order in appeal is one filed belatedly. The Commissioner of Income Tax (Appeals) at the earliest passed an order holding that the Assessing Officer had jurisdiction to reopen the assessment U/s.148 of I.T. Act. But on merits remanded the matter. The assessee has accepted the order of remand. The Assessing Officer after

5 remand passed the assessment order which was challenged before the Commissioner of Income Tax (Appeals). The said appeal was dismissed. Against the said order, the appeal was filed before the Tribunal. When the said appeal was pending, belatedly, the LR of assessee is trying to challenge the order of the Commissioner of Income Tax (Appeals) dated 30.11.2000 which remanded the matter for fresh assessment holding that the Assessing Officer has jurisdiction to reopen the assessment. But the finding with regard to jurisdiction to reopen the assessment, this appeal is filed belatedly when other appeal which was filed by the assessee during his lifetime against the order of the Assessing Officer and Commissioner of Income Tax (Appeals) after remand, was pending. The assessee did not bring to the notice the pendency of the appeal No.1094-B/2003 filed on 21.09.2004, disposed of on 21.04.2006 by the Tribunal. The other appeal on merits came to be disposed of by the Tribunal with reference to the impugned order in question in I.T.A.No.2785/2004, disposed of on 07.01.2005. It is submitted the assessee should have got both the appeals

6 argued and got disposed of simultaneously by a common order. In stead of the assessee had suppressed the pendency of I.T.A.No.2785/2004. The order of reopening the assessment U/s.148 of the I.T. Act is a rigorous procedure with penal consequences. The fact that the assessee has not filed appeal against the finding of the Commissioner of Income Tax (Appeals) with regard to reopening of assessment U/s.148 of the I.T. Act, need not be viewed seriously to consider that he had consentedly suffered the order. The assessee and his LR being lay man normally they are guided by the advice of the legal counsel. It was stated before the Tribunal that because of the improper legal advice, the appeal could not be filed and cannot be considered as one with malafides or latches. The discretionary order of the Tribunal need not be interfered with. Accordingly, the condonation of delay by the Tribunal requires to be upheld. On the question of merits, this Court in I.T.A.No.2429/2005 disposed of on 01.03.2010 for the same assessment year has remanded the matter for fresh assessment to the Assessing Officer. In that view of the matter, this appeal is also partly

7 allowed, the orders of the Tribunal and authorities below are set aside and the matter is remanded to the Assessing Officer for fresh assessment. All legal questions are kept open for consideration by the Assessing Officer.

Sd/- JUDGE

Sd/- JUDGE NM*

8 KSRJ & BVPJ:

ITA.No.1358/2006 18.10.2012

ORDERS ON ‘BEING SPOKEN TO’

Before correction of the judgment dated 08.10.2012, the learned counsel for the appellant filed a memo dated 16.10.2012 requesting this court to post this matter for ‘Being Spoken to’ to bring certain facts on record.

Heard.

The observations in the judgment disposed of on 08.10.2012, in page No.5, para No.4, the last four lines in bottom of the page is to the effect that ‘We find that revenue has also got scope and opportunity to bring to the notice of the pendency of the impugned proceedings before the Tribunal while arguing appeal No.1094-B/2003’ is deleted.

Sd/-

JUDGE

Sd/- JUDGE nvj

THE COMMISSIONER OF INCOME TAX vs. SMT SHAKUNTHALA HEGDE