Ita/404/2007 Of The Commissioner Of Income Tax v. Sri R Jayavelu

IN THB HIGH COURT OF KARNATAKA AT BANGALORE DATRBRD THIS THE 3 DAY OF FEBRUARY 2014 PRESENT THR HON BLE MR.JUSTICE DILIP B.BHOSALE AN D THR HON'BLBE MR..JUSTICBK B.MANOHA ITA No.404/2007 & ITA.No.405/2007 ITA.NO.404/2007BBRITWRE 1. The Commissioner of Income-Tax,Central Circle,C.R.Building, Queens Road,Bangalore. 2. The Assistant Commissioner of Income-Tax,Cricle-10(1), C.R.Building, Queens Road,Bangalore.... Appellan(By Sri.K.V.Aravind, Advocate)|AN):ori.R.Jayavelu,No.6Y/36, 59[2%]Cross,III Main, Rajajinagar, Bangalore....Responden (By Sri.K.S.Hanumanth Rao, Advocate) This ITA 1s filed under Section J6OO-A ot [.T.Act1961, arising out of order dated 21/12/2006 passed inITA No.3972/Bang/2004, for the Assessment year1998-99, praying that this Hon’ble Court may bepleased to: 1.formulate the substantial questions of lawstated there in.11.allow the appeal and set aside the orderspassedby theITAT,Bangalore|in.ITA.No.3972/Bang/2004 dated 21/12/2006.and confirm the order of the AppellateCommissioner confirming the order passedby the Assistant Commissioner of IncomeTax, Circle-10(1), Bangalore, in the interestof justice and equity. ITA.NO.405/2007 BBRITWRE 1. The Commissioner of Income-Tax,Central Circle,C.R.Building, Queens Road,Bangalore. 2. The Assistant Commissioner of Income-Tax,Cricle-10(1), C.R.Building, Queens Road,Bangalore.... Appellan (By Sri.K.V.Aravind, Advocate)|AN): ori.R.Jayavelu,No.6Y/36, 59[2%]Cross, III Main, Rajajinagar, Bangalore. ... Responde (By Sri.K.S.Hanumanth Rao, Advocate) This ITA 1s filed under Section J6OO-A ot [.T.Act1961, arising out of order dated 21/12/2006 passed inITA No.3970/Bang/2004, for the Assessment year1998-99, praying that this Hon’ble Court may bepleased to: 1.formulate the substantial questions of lawstated there in.stated there in. 11.allow the appeal and set aside the orders|passedby theITAT,Bangalore|1nITA.No.39/70/Bang/2004 dated 21/12/2006and confirm the order of the Appellate|Commissioner confirming the order passedby the Assistant Commissioner of IncomeTax, Circle-10(1), Bangalore, in the interestof justice and equity.passedby theITAT,Bangalore|1nITA.No.39/70/Bang/2004 dated 21/12/2006and confirm the order of the Appellate|Commissioner confirming the order passedby the Assistant Commissioner of IncomeTax, Circle-10(1), Bangalore, in the interestof justice and equity. These appeals are coming on for Hearing this day,DILIP B. BHOSALE J.,delivered the following: P.C. These two income tax appeals are directed against the common order dated 21-12-2006 passed by theIncome Tax Appellate Tribunal, Bangalore Bench ‘A’ (for short‘the Tribunal’)in ITA Nos.3570 & 3572 of 2004, pertaining to the assessment years 1998-99 and 1999-2000. By this order the Tribunal allowed the appealsfiled by the assesses. The appeals before the Tribunalwere directed against the order dated 2/-10-2004.rendered by the Commissioner of Income Tax (Appeals)-IV, Bangalore (for short‘the First Appellate Authority’|or ‘FAA')in ITA Nos.1 and 2/R-10/CIT(A)IV/04-05. By.this Order, the FAA dismissed the appeals filed by therespondent-assessee, confirming the assessment orderdated26-O2-J2JOOpassedby|the.AssistantCommissioner of Income Tax, Circle-10(1), Bangalore(for short }the Assessing Officer or AO) pertaining tothe assessment years 1998-99 and 1999-2000.| 2 |Intheseappeals,|thefollowing.substantialquestions of law are raised for our consideration:questions of law are raised for our consideration: 8(9Whether the Tribunal was correct inholding that the assessment ordersdated26-O2-20O04passedunder|section 143(3) read with Section 147 ofthe Income Tax Act, 1961 (for short‘the Act?) areab initio voidas there wasno valid returns filed by the assessee inholding that the assessment ordersdated26-O2-20O04passedunder|section 143(3) read with Section 147 ofthe Income Tax Act, 1961 (for short‘the Act?) areab initio voidas there wasno valid returns filed by the assessee in 2 |Intheseappeals,|thefollowing.substantialquestions of law are raised for our consideration:questions of law are raised for our consideration: 8(9Whether the Tribunal was correct inholding that the assessment ordersdated26-O2-20O04passedunder|section 143(3) read with Section 147 ofthe Income Tax Act, 1961 (for short‘the Act?) areab initio voidas there wasno valid returns filed by the assessee inholding that the assessment ordersdated26-O2-20O04passedunder|section 143(3) read with Section 147 ofthe Income Tax Act, 1961 (for short‘the Act?) areab initio voidas there wasno valid returns filed by the assessee in response to the notice issued undersection 148 of the Act pertaining to theassessment|year1998-997-11-2003 and that the assessmentshould have been completed underSection 144 of the Act? dated | 8((9The second notice dated 6-5-2003issued under Section 148 of the Act,which according to the assessee wasissuedwithoutrecordingTEAaAsoO!would constitute a valid notice and itnot what is the consequence of theproceedings|pursuant|TO thesaidnotice?issued under Section 148 of the Act,which according to the assessee wasissuedwithoutrecordingTEAaAsoO!would constitute a valid notice and itnot what is the consequence of theproceedings|pursuant|TO thesaidnotice? 8(((9Whether the returns filed by theassessee are nullity in law on theeround that they were filed belatedlyand whether the assessment orderpassed on the basis of the belatedreturns is legal?assessee are nullity in law on theeround that they were filed belatedlyand whether the assessment orderpassed on the basis of the belatedreturns is legal? 3.|Learned counsel for the parties submit that these are the only questions arise for consideration in thepresent appeals. We have perused the order dated |18-07-2012 passed by this Court and so also the substantial questions of law formulated by the Revenuein the memorandum of appeals. 4These appeals are arising from the proceedingsinitiated by issuing notice under Section 148 of theIncome Tax Act (for short|Sthe Act’). There does notappear to be any dispute that initially a notice undersection 148 was issued without specifying the period inthe notice within which the assessee was suppose tofurnish return of income. Since the notice was'inconsistent with the provisions contained in Section148, it was dropped. Then again a notice under Section148|WaS|1Ssuedandthat.noticeWaS|alsodropped/withdrawn since the sanction as contemplatedunder Section 151 was not obtained. In this backdrop,the third notice under Section 148 was issued from|which, these proceedings arise. 5We have heard this appeal for some time and withthe assistance of learned counsel for the Revenue|perused the original record placed before us, inparticular, the memorandum of appeals filed before the FAA and the Tribunal. He submitted that the assessee|not only participated in the proceedings but acceptedhis return filed in response to the first notice undersection 148 of the Income Tax Act, as return filed inresponse to the third notice and proceeded on meritsbefore the AO and FAA. In short, he submitted havingparticipated and proceeded on the basis of the returnfiled in response to the first notice, that was withdrawn,he cannot turn around and contend that there was no/return and hence the entire proceedings are illegal andvoid ab initio. AS a matter of fact, the Tribunal decided|the appeal on this technical ground raised by theassessee and did not enter into merits of the case. 6. In the course of hearing, when we expressed ourprima facie opinion on the questions raised, learnedcounsel appearing for the respondent-assessee fairlystated that we need not address and answer the'questions raised in the present appeals and he 6. In the course of hearing, when we expressed ourprima facie opinion on the questions raised, learnedcounsel appearing for the respondent-assessee fairlystated that we need not address and answer the'questions raised in the present appeals and he submitted that the respondent-assessee will be satisfiedif the Tribunal is directed to decide the matter on meritskeeping the questions raised in the present appealsopen to be raised in appeal filed by the assessee in theevent, the Tribunal decides the appeals against theassessee on merits. He so submitted, because the.Tribunal did not address on merits and decided the'appeal against the revenue on technical/legal ground,as reflected in the submission recorded in paragraphnumber five in this order. TS|Mr.K.V.Aravind, learned counsel appearing for therevenue also agrees for adopting this course fordisposing of these two appeals. In view thereof, we aresatisfied that the following order shall meet the ends ofjustice. In other words, we allow these appeals partlyand dispose them of by the following order: (a) The common order of the Tribunaldated 21-12-2006 passed in ITA Nos.3970 &3572 of 2004, pertaining to the assessment| years 1998-99 and 1999-2000, is set aside|and the said appeals are restored to file. The.Tribunal shall decide the appeals on merits in|accordance with law, as expeditiously as|possible and preferably within a period of oneyear from the date of receipt of this order. Allcontentions of the parties on merits are kept|Oope?n). (b) It 1s needless to mention that theTribunal shall not deal with the questions as.formulated by us in the present judgment|and shall consider the case on merits, as.aforementioned. The Tribunal shall proceed|and decide the appeals, as if the returns filed|by the assessee in response to the first noticeare the returns in response to the third noticeissued after dropping of the first two notices. (c) If the order passed by the Tribunaldisposing of both the appeals is adverse to|the assessee, it would be open to the assesseeto challenge the same in an appeal under|section 260A of the Act and that eventuality|it would be open to the assessee to raise the| substantial questions of law, as framed by usin the present judgment. It is made clear|that we have not expressed any opinion on|the questions framed and reproduced in this|judgment. All contentions of the parties are kept open to beconsidered in the appeal, if filed, under Section 260A ofthe Act.. In view of the peculiar facts and circumstances ofthe case, there shall be no order as to costs.od/-JUDGEsd/-|JUDGE. _* | mp