NITESH BERA (HUF) vs. THE DEPUTY COMMISSIONER OF INCOME TAX

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 17TH DAY OF FEBRUARY 2021 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE NATARAJ RANGASWAMY I.T.A. NO.585 OF 2016 BETWEEN: NITESH BERA (HUF) REP. BY MANAGER SMT. UMA BERA #25/1, K.R. SHETTYPET AVENUE ROAD BANGALORE-560002. ... APPELLANT (BY SRI. S. ANNAMALAI, ADV., FOR SRI. M. LAVA, ADV.,) AND: THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 5(1) BMTC BUILDING 80 FEET ROAD, 6TH BLOCK KORAMANGALA BANGALORE-560095. ... RESPONDENT (BY SRI. JEEVAN J. NEERALGI, ADV.) - - - THIS I.T.A. IS FILED UNDER SEC. 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 24.06.2016 PASSED IN ITA NO.1350/BANG/2014 FOR THE ASSESSMENT YEAR 2008- 09, PRAYING TO:

2 (i) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW AS STATED ABOVE AND ANSWER THE SAME IN FAVOUR OF THE APPELLANT. (ii) ALLOW THE APPEAL AND SET ASIDE THE FINDINGS TO THE EXTENT AGAINST THE APPELLANT IN THE ORDER PASSED BY THE ITAT, BENGALURU 'A' BENCH IN ITA NO.1350/BANG/2014 RELATING TO ASSESSMENT YEAR 2008-09 VIDE ITS ORDER DATED 24.06.2016. (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 against the order dated 24.06.2016 passed by the Income Tax Appellate Tribunal (hereinafter referred to as 'the tribunal' for short). The subject matter of the appeal pertains to the Assessment year 2008-09. The appeal was admitted by a bench of this Court vide order dated 30.08.2017 on the following substantial questions of law: "(i) Whether the Tribunal was justified in law, in rejecting the contention of the Appellant that the first re-

3 assessment order made u/s 143(3) r.w.s. 147 of the Act dated 17.02.2014 gets effaced when a subsequent re-assessment order was made u/s 143(3) r.w.s. 147 of the Act, on 22.03.2016, in respect of the same Assessment Year and on same facts, on the facts and circumstances of the case? (ii) Whether the Tribunal was justified in law, to hold that the re-opening of assessment under section 147 was proper, when the issue was not argued by either parties and without prejudice, recorded reasons do not constitute reasons to believe on the facts and circumstances of the case? (iii) Whether the Tribunal was justified in law, in holding that the re- assessment proceedings initiated under section 148 is valid, and further held that the provisions of section 153C of the Act is not applicable and more so when the AO has provided the appellant the seized material, and consequently passed a

4 perverse order on the facts and circumstances of the case?" 2. Facts leading to filing of this appeal briefly stated are that the appellant is a HUF, which is currently represented by Smt.Uma Bera who is the Manager of HUF. During the Assessment Year 2008-09, the HUF consisted of Karta viz., Sri.Nitesh Bera, his wife Uma Bera and two minor children. The Karta of the family viz., Sri.Nitesh Bera passed away leaving behind his wife and children. The assessee HUF filed its return of income for Assessment Year 2008-09 declaring total income of Rs.27,35,317/- comprising of interest income of Rs.1,30,385/- and in Short Term Capital Gains on sale of securities to the extent of Rs.26,04,932/-. The case of the assessee was selected for scrutiny and the return was accepted by an order dated 19.11.2010 passed under Section 143(3) of the Act. 3. Thereafter, the file of the assessee was re-

5 opened under Section 147 of the Act and neither any notice under Section 148 of the Act was issued nor served on the assessee. The notice under Section 142(1) of the Act was served on the assessee on 05.07.2013 and the assessment was concluded by the Assessing Officer vide order dated 17.02.2014 on the basis of the material available by the revenue, without considering the documents furnished by the assessee and the total income of the assessee was determined at Rs.30,59,475/- by considering the Short Term Capital Gains under Other Sources and making additions of the same. 4. The assessee thereupon filed the appeal before the Commissioner of Income Tax (Appeals) who by an order dated 12.08.2014 dismissed the appeal preferred by the assessee. The assessee thereupon approached the tribunal by filing an appeal. During the pendency of the appeal before the tribunal, the case of the assessee for Assessment Year 2008-09 was once

6 again re-opened and a notice under Section 148 of the Act was issued for the second time to the assessee on 20.03.2015. Thereafter, the Assessing Officer passed an order of assessment on 22.03.2016 and the total turnover of the income of the assessee was assessed. It is the case of the assessee that the appeal against the aforesaid order is pending before the Commissioner of Income Tax (Appeals). The tribunal by an order dated 24.06.2016 inter alia held that re-opening of the assessment was valid even though the aforesaid legal issued was not argued by either of the parties at the time of hearing. In the aforesaid factual background, this appeal has been filed. 5. Learned counsel for the assessee submitted that the tribunal ought to have appreciated that the first order of assessment was passed on 17.02.2014 and the same got effaced as the second order was passed on 22.03.2016 in respect of the same Assessment Year i.e., 2008-09. In support of aforesaid submission, learned

7 counsel for the assessee has placed reliance on the decision of this court in 'INCOME TAX OFFICER VS. K.L.SRIHARI (HUF)', (1992) 197 ITR 694 (KAR). On the other hand, learned counsel for the revenue fairly did not dispute the aforesaid well settled legal position. 6. We have considered the submissions made by learned counsel for the parties and have perused the record. It is well settled in law that when a subsequent order is passed in respect of the same assessment, the previous order of assessment passed by the Assessing Officer gets effaced. In the instant case, in view of the order dated 22.03.2016, the previous order of assessment passed by the Assessing Officer dated 17.02.2014 got effaced and therefore, the subsequent order passed by the Assessing Officer dated 22.03.2016 prevails. Therefore, the first substantial question of law is answered in favour of the assessee and against the revenue.

8 7. We are informed that against the subsequent order of assessment, the appeal is pending before the Commissioner of Income Tax (Appeals). Therefore, in the facts of the case, it is not necessary for us to answer the remaining substantial questions of law and the appeal is disposed of with liberty to the parties to raise all legal contentions as are admissible to them in law in the appeal, which is pending adjudication before the Commissioner of Income Tax (Appeals). With the aforesaid direction, the appeal is disposed of Sd/- JUDGE Sd/- JUDGE ss