Ita/318/2009 Of The Commissioner Of Income Tax v. Sri.pradeep Kar

® IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 19 DAY OF MARCH 2015 PRESHBNT THE HON’BLE MR.JUSTICE VINEET SARAN| AND THE HON’BLE MRS.JUSTICE S SUJATHAITA NO.318/2009 C/w ITA NO.317/2009 BETWEEN 1. THR COMMISSIONBR OF INCOMBE-TAXC R BUILDING, QUEENS ROADBANGALORE. 2. THK ASSISTANT COMMISSIONER OFINCOM E-TAXCENTRAL CIRCLE 2(3)C R BUILDING, QUEENS ROADBANGALORE.... COMMON APPELLANTS| (BY SRI K V ARAVIND, ADVOCATE) AND SRI PRADEEP KAR98, 80 FT. ROADKORAMANGALA BLOCK VILBANGALORE.COMMON RBSPONDENT| (BY SMT S R ANURADHA, ADV.) ITA No.318/09 IS FILED UNDER SECTION 260-A|OF LT.ACT, 1961 ARISING OUT OF ORDER DATED 27-01-2009 PASSED IN C.O.NO.103/BANG/2008 (IN ITANO.1006/BANG/2008), FOR THE ASSESSMENT YEAR2002-03 PRAYING TO ALLOW THER APPEAL AND SETASIDE.THRORDERSPASSEDBY|THRITAT, BANGALOREIN.C.O.NO.103/BANG/2008(INITANO.1006/BANG/2008)DATHD2¢/O1/2009|CONFIRMINGTHEORDEROFTHEAPPBLLA THCOMMISSIONBR AND CONFIRM THR ORDER PASSEDBY THE ASSISTANT COMMISSIONER OF INCOME-TAX,CENTRAL CIRCLE-2(3), BANGALORE IN THE INTERESTOF 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 THEASSEHKSSMENT YBAR 2002-03 PRAYING TO ALLOW THAPPEAL AND SE T-ASIDE THE ORDERS PASSED BY THEITAT, BANGALORE IN ITA NO.1006/BANG/2008) DATED2//O01/2009CONFIRMINGTHERORDEROFTHERAPPBHRLLATCOMMISSIONER.ANT)CONFIRM|THRORDER PASSED BY THE ASSISTANT COMMISSIONEROF INCOME-TAX, CENTRAL CIRCLE-2(3), BANGALOREIN THE INTEREST OF JUSTICE AND EQUITY. THRESK APPKEALS HAVING BEBEEN HBARD RBSBERVBD FOR JUDGMENT AND COMING ON FORPRONOUNCBMBEBNTHISDAY,SUJATHAJ.,DELIVERED THR 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 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 94 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 inthe order of assessment and/filed ae revisedcomputation, claiming benefit under Section 54F and04 E C of the Act. The AO allowed the proportionateinvestment and the remaining sale consideration wasbrought 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| Appellate Commissioner, on considering the appeal|filed against the regular assessment, granted relief tothe assessee. As regards the appeal against the orderu/s 104 of the Act, the Appellate Commissioner failedto consider the issue on merits and recorded aifinding that the appeal becomes consequential in|nature in view of the order passed by him against theoriginal assessment considering issue u/s O/¢ (ill) oTthe Act. Appellate Commissioner, on considering the appeal|filed against the regular assessment, granted relief tothe assessee. As regards the appeal against the orderu/s 104 of the Act, the Appellate Commissioner failedto consider the issue on merits and recorded aifinding that the appeal becomes consequential in|nature in view of the order passed by him against theoriginal assessment considering issue u/s O/¢ (ill) oTthe 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 passedu/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 194 of the Act, the|appeal filed by the revenue was rejected and the|cross-appeal filed by the assessee on the jurisdiction|oi Assessing Officer u/s. 1o4 came to be allowed by a| 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 inholding that the finding of the AssessingOfficer under section 154 of the Act thatassessee is not entitled for benefit undersection 54 and is entitled only undersection 54F and 54BKC of the Act asaccepted by the assessee is a debatableissue and hence proceedings under section154areincorrect.andconsequentlyrecorded a perverse finding?| (2) Whether the Tribunal was correct inrecording a finding considering the validityof proceedings under section 194 of theAct, when the Appellate Commissioner hasnot adjudicated the said issue thoughseparate appeal was preferred by theassessee and exceeded the jurisdiction? (3) Whether the Tribunal committed anerror in recording a finding with respect tothe proceedings under section 154 of theAct when the issue was not adjudicated bythe Appellate Commissioner and withoutremanding the matter to the AppellateCommissioner for adjudication on the1iSSUe? o. Heard the learned Counsel appearing for theparties and perused the records. The Appellate|Commissioner has considered the appeal filed by the|assessee against the disallowance of interest claimed| on the loans borrowed from the Banks and other|institutions and allowed the interest as claimed by the assessee after assigning reasons. With regard tothe appeal, tiled u/s 104 of the Act, no reasons are|assigned by the Appellate Commissioner. On this|issue, appeal was allowed with an observation that inview of the finding given in the main appellate order itbecomes consequential in nature and accordingly,|the appeal as regards Section 1594 of the Actsucceeds, against which appeals were filed by the|revenue before the Tribunal including the grounds ofappeal on the issue of Section 194 of the Act. Cross|Objections’ were filed by the assessee on this issue. 6. The Tribunal proceeded on a misconceptionthat 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|eround of appeal filed by the revenue. ¢/. Thus, it 18S manifest that the AppellateCommissioner 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 aiter 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. JT/brn Sd/- JUDGE. Sd/-. JUDGE