SRI. M L VENKATESH vs. THE DEPUTY COMMISSIONER OF INCOME TAX

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ITA/121/2010HC KarnatakaKAHC01033035201020 November 2018Bench: RAVI MALIMATH,K.NATARAJAN7 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the Tribunal was not justified in refusing to remit the matter to the Assessing Officer. The assessee was granted liberty to present their case and supporting material before the Assessing Officer.

What were the facts?

The assessee failed to respond to notices issued under Section 142 and a show-cause notice for assessment under Section 144. Consequently, an ex-parte assessment was made, treating savings bank deposits as unexplained investment. The assessee's appeal to the CIT(A) and ITAT were dismissed.

What were the issues?

Whether the Tribunal was right in refusing to remit the matter to the Assessing Authority despite potential violation of natural justice and without considering the filed return.

Which sections of the Income-tax Act were involved?

Section 144,Section 139(4),Section 142,Section 260A

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

ON THE 20th DAY OF NOVEMBER, 2018

BEFORE

THE HON'BLE MR. JUSTICE RAVI MALIMATH

AND

THE HON’BLE MR.JUSTICE K.NATARAJAN

INCOME TAX APPEAL NO.121 OF 2010

BETWEEN:

SRI M.L.VENKATESH NO.252, 13TH MAIN, I STAGE, I PHASE, GOKUL, BENGALURU. ... APPELLANT

(BY SRI KASHINATH KALMATH, ADVOCATE FOR SRI R.RAMAMURTHY, ADVOCATE)

AND:

THE DEPUTY COMMISSIONER OF INCOME TAX (TDS), CIRCLE – 18(1), BENGALURU. ... RESPONDENT

(BY SRI K.V.ARAVIND, ADVOCATE)

THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260A OF THE INCOME TAX ACT, 1961 ARISING OUT OF ORDER DATED 20.11.2009 PASSED IN ITA NO.803/BNG/2009, FOR THE ASSSESSMENT YEAR 2005-

2 2006, PRAYING THAT THIS HON’BLE COURT MAY BE PLEASED TO; FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATE THEREIN; ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE ITAT BENGALURU IN ITA NO.803/BNG/2009, DATED 20.11.2009, IN THE INTEREST OF JUSTICE AND EQUITY.

*****

THIS INCOME TAX APPEAL COMING ON FOR HEARING THIS DAY, RAVI MALIMATH J., DELIVERED THE FOLLOWING:

ORDER

By the order dated 12.04.2010, the appeal was admitted to consider the following substantial questions of law: a) Whether the Tribunal is right in refusing to remit the matter to the files of the Assessing Authority notwithstanding there is violation of Principles of natural justice?

b) Whether, on the facts and in the circumstances, the Tribunal is right in upholding the order of the Commissioner of Income Tax (Appeals), who has upheld the exparte assessment made under Section-144 of the Act, without considering the return filed under Section – 139(4) of the Act?

c) Whether, the Tribunal without considering the explanation of the appellant for his failure is right in its conclusion that the appellant has not co-operated with the department?

d) Whether, the Tribunal is right in upholding assessment made in pursuance notice under Section – 142 of the Act, which called upon the appellant to file return of income, ignoring a valid return filed under Section – 139(4) of the Act by the appellant?

e) Whether the order of the Tribunal is sustainable in law?”

2.

The learned counsel for the appellant submits that the question of law that arises for consideration in this appeal, requires to be reframed and that the appeal is to be considered only so far as the first substantial question of law is concerned. Hence, we have heard the learned counsels insofar as the first substantial question of law is concerned.

4 3. Based on certain information pertaining to the Savings Bank Account of the assessee, a notice under Section–142, dated 13.09.2007, was issued to the assessee. He failed to reply to the notice inspite of repeated reminders. Thereafter, a show-cause notice was issued in the form of a proposal to assess the income of the assessee, as to why assessment should not be completed under Section–144 of Income tax Act, on the basis of the information available on record. Even then, the assessee failed to reply. Thereafter, an order was passed under Section-144 of I.T.Act., treating the deposit in the Savings Bank Account of the assessee as ‘unexplained investment’ and assessed tax in a sum of Rs.48,23,925/-.

4.

Aggrieved by the same, the appellant preferred an appeal before the Commissioner of Income tax (Appeals) [hereinafter referred to as ‘CIT(A)’] and contended that the assessee had filed a return of income on 31.03.2006, declaring income of Rs.97,870/-. The CIT(A) dismissed the appeal. Aggrieved by the same, the

appellant approached the Income tax Appellate Tribunal (hereinafter referred to as ‘ITAT’). He made a request to remand the matter. The same was rejected by the Tribunal. Hence, this appeal.

5.

The learned counsel for the appellant contends that there are substantial material that he proposes to place before the Assessing Officer. That he would only request for reconsideration of the said material.

6.

The learned counsel for the Revenue disputes the said contention.

7.

The plea is one for remand, to enable the assessee to place the material in support of his case. Hence, an opportunity to the assessee is called for.

8.

On hearing learned counsels, we are of the view that in the given facts and circumstances of the case, it is just and appropriate that liberty be granted to the

assessee to make out his case before the Assessing Officer. Therefore, we are of the view that the matter requires to be remanded to the Assessing Officer for reconsideration.

9.

For the aforesaid reasons and under the facts and circumstances of the case, the substantial question of law is answered in favour of the assessee and against the Revenue by holding that the Tribunal was not justified in rejecting the request of the assessee to remand the matter to the Assessing Officer for reconsideration.

10.

Consequently, the order of the ITAT dated 20.11.2009, passed in ITA No.803/Bang/2009, the order of the CIT(A) dated 24.06.2009, passed in ITA No.120/23/C.6(4)/CIT(A)-V/08-09, and the order of the Assessing Officer dated 31.12.2007, are set-aside. The matter is remanded to the Assessing Officer for a fresh consideration of the matter.

All contentions are kept open.

SD/- SD/- JUDGE

JUDGE

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