Karnataka High Court
The Commissioner Of Income Tax vs Sri.Pradeep Kar on 19 March, 2015
Bench: Vineet Saran, S.Sujatha
1 ®
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 19TH DAY OF MARCH 2015
PRESENT
THE HON'BLE MR.JUSTICE VINEET SARAN
AND
THE HON'BLE MRS.JUSTICE S SUJATHA
ITA NO.318/2009 C/w ITA NO.317/2009
BETWEEN:
1. THE COMMISSIONER OF INCOME-TAX
C R BUILDING, QUEENS ROAD
BANGALORE.
2. THE ASSISTANT COMMISSIONER OF
INCOME-TAX
CENTRAL CIRCLE 2(3)
C R BUILDING, QUEENS ROAD
BANGALORE. ... COMMON APPELLANTS
(BY SRI K V ARAVIND, ADVOCATE)
AND:
SRI PRADEEP KAR
58, 80 FT. ROAD
KORAMANGALA BLOCK VII
BANGALORE. ...COMMON RESPONDENT
(BY SMT S R ANURADHA, ADV.)
ITA No.318/09 IS FILED UNDER SECTION 260-A
OF I.T.ACT, 1961 ARISING OUT OF ORDER DATED 27-
01-2009 PASSED IN C.O.NO.103/BANG/2008 (IN ITA
NO.1006/BANG/2008), FOR THE ASSESSMENT YEAR
2002-03 PRAYING TO ALLOW THE APPEAL AND SET-
ASIDE THE ORDERS PASSED BY THE ITAT,
2
BANGALORE IN C.O.NO.103/BANG/2008(IN ITA
NO.1006/BANG/2008) DATED 27/01/2009
CONFIRMING THE ORDER OF THE APPELLATE
COMMISSIONER AND CONFIRM THE ORDER PASSED
BY THE ASSISTANT COMMISSIONER OF INCOME-TAX,
CENTRAL CIRCLE-2(3), BANGALORE IN THE INTEREST
OF JUSTICE AND EQUITY.
ITA No.317/09 IS FILED UNDER SECTION 260-A
OF I.T.ACT, 1961 ARISING OUT OF ORDER DATED 27-
01-2009 PASSED IN ITA NO.1006/BANG/2008 FOR THE
ASSESSMENT YEAR 2002-03 PRAYING TO ALLOW THE
APPEAL AND SET-ASIDE THE ORDERS PASSED BY THE
ITAT, BANGALORE IN ITA NO.1006/BANG/2008) DATED
27/01/2009 CONFIRMING THE ORDER OF THE
APPELLATE COMMISSIONER AND CONFIRM THE
ORDER PASSED BY THE ASSISTANT COMMISSIONER
OF INCOME-TAX, CENTRAL CIRCLE-2(3), BANGALORE
IN THE INTEREST OF JUSTICE AND EQUITY.
THESE APPEALS HAVING BEEN HEARD AND
RESERVED FOR JUDGMENT AND COMING ON FOR
PRONOUNCEMENT THIS DAY, SUJATHA J.,
DELIVERED THE FOLLOWING:
JUDGMENT
The revenue has filed these appeals challenging the order dated 27.01.2009 passed by the Income Tax Appellate Tribunal, Bangalore Bench "B" for the assessment year 2002-03.
2. During the assessment year 2001-02, the assessee has sold certain shares and computed capital gains and claimed deduction u/s 54 of the Income Tax Act, 1961 (herein after referred to as "the 3 Act"). The Assessing Officer, without noticing that the capital asset which had been transferred on which capital gains is computed, is not a long term capital asset and being a residential house, allowed the claim of deduction under Section 54 of the Act by order dated 19.04.2004. On examination of the assessment records, it was found that the assessee had made a wrong claim under Section 54 of the Act, and the same had been wrongly allowed by the Assessing Officer. Consequently, the AO issued notice u/s 154 of the Act.
3. The assessee accepted the mistake crept in the order of assessment and filed a revised computation, claiming benefit under Section 54F and 54 E C of the Act. The AO allowed the proportionate investment and the remaining sale consideration was brought to tax by order dated 02.09.2004, against which the assessee preferred appeal before the Appellate Commissioner besides challenging the order passed under Section 154 of the Act. The 4 Appellate Commissioner, on considering the appeal filed against the regular assessment, granted relief to the assessee. As regards the appeal against the order u/s 154 of the Act, the Appellate Commissioner failed to consider the issue on merits and recorded a finding that the appeal becomes consequential in nature in view of the order passed by him against the original assessment considering issue u/s 57 (iii) of the Act.
4. Revenue preferred appeals against the order passed by the Appellate Commissioner before the ITAT. The assessee preferred cross-objections in the appeal with respect to the validity of the order passed u/s. 154 of the Act. The Tribunal recorded an independent finding and disposed of the appeal against the order of assessment under Section 143(3) of the Act. As regards order u/s 154 of the Act, the appeal filed by the revenue was rejected and the cross-appeal filed by the assessee on the jurisdiction of Assessing Officer u/s. 154 came to be allowed by a 5 common order dated 27.01.2009. Against the said impugned order, these appeals are filed by the Revenue on the following substantial questions of law (1) Whether the Tribunal was correct in holding that the finding of the Assessing Officer under section 154 of the Act that assessee is not entitled for benefit under section 54 and is entitled only under section 54F and 54EC of the Act as accepted by the assessee is a debatable issue and hence proceedings under section 154 are incorrect and consequently recorded a perverse finding?
(2) Whether the Tribunal was correct in recording a finding considering the validity of proceedings under section 154 of the Act, when the Appellate Commissioner has not adjudicated the said issue though separate appeal was preferred by the assessee and exceeded the jurisdiction? (3) Whether the Tribunal committed an error in recording a finding with respect to the proceedings under section 154 of the Act when the issue was not adjudicated by the Appellate Commissioner and without remanding the matter to the Appellate Commissioner for adjudication on the issue?
5. Heard the learned Counsel appearing for the parties and perused the records. The Appellate Commissioner has considered the appeal filed by the assessee against the disallowance of interest claimed 6 on the loans borrowed from the Banks and other institutions and allowed the interest as claimed by the assessee after assigning reasons. With regard to the appeal, filed u/s 154 of the Act, no reasons are assigned by the Appellate Commissioner. On this issue, appeal was allowed with an observation that in view of the finding given in the main appellate order it becomes consequential in nature and accordingly, the appeal as regards Section 154 of the Act succeeds, against which appeals were filed by the revenue before the Tribunal including the grounds of appeal on the issue of Section 154 of the Act. Cross Objections' were filed by the assessee on this issue.
6. The Tribunal proceeded on a misconception that no challenge was made by the revenue as regards the order of the Appellate Commissioner on the issue of Section 154 of the Act ignoring the ground of appeal filed by the revenue. 7
7. Thus, it is manifest that the Appellate Commissioner and the Tribunal failed to adjudicate the matter in right perspective. The order impugned is passed without the application of mind. The finding given on the proceedings under Section 154 of the Act is perverse and not sustainable.
8. However, in the circumstances we deem it proper to remand the matter back to the Appellate Commissioner to adjudicate on the issue of Section 154 of the Act in accordance with law after hearing the parties. Impugned order dated 27.01.2009 passed by the Tribunal is set-aside.
9. Substantial questions of law raised are answered in favour of the revenue and against the assessee. Consequently, appeals are allowed.
Sd/-
JUDGE Sd/-
JUDGE JT/brn