Ita/572/2007 Of The Commissioner Of Income Tax v. Venkatesha Education Society

IN THB HIGH COURT OF KARNATAKA AT BANGALORE DATEKED THIS THE 18[‘T]DAY OF FEBRUARY 2014 PRESENT THE HON'BLE MR.JUSTICE DILIP B.BHOSALE AN D THE HON'BLE MR.JUSTICE B.MANOHAR ITA No.572/2007 BBRITWRE 1. The Commissioner of Income-Tax,Central Circle,C.R Building, Queens Road,Bangalore.2. The Assistant Director of Income-Tax (Exemptions)Circle -17(2),Bangalore... Appellant(By Sri.K.V.Aravind, Advocate)AND:Venkatesha Education Society,No. 125,Armstrong Road,ohivaji Nagar,Bangalore....Respondent (By Sri.S.Parthasarathi, Advocate) This ITA is filed u/Sec.260-A of I.T.Act, 1961,arising out of order dated 03-02-2006 passed in ITANo.1778/Bang/2004, for the Assessment Year 1998-99,praying this Hon’ble Court to:| 1.formulate the substantial questions of law|stated therein.stated therein. 11.allow the appeal and set aside the orders|passedby theITAT,Bangalore|1nITA.No.1778/Bang/2004 dated 03/02/2006.and confirm the order of the AppellateCommissioner confirming the order passedby the Assistant Director of Income Tax(Exemptions), Circle -17(2), Bangalore.passedby theITAT,Bangalore|1nITA.No.1778/Bang/2004 dated 03/02/2006.and confirm the order of the AppellateCommissioner confirming the order passedby the Assistant Director of Income Tax(Exemptions), Circle -17(2), Bangalore. This appeal is coming on for Hearing this day,DILIP B. BHOSALE J.,delivered the following: P.C. This income tax appeal is directed against the.order dated 3[$.]February 2006 passed by Income Tax| Appellate Tribunal (for shortSthe Tribunal’) in ITA)No.1778/Bang/04 for the assessment year 1998-99. Bythis order, the Tribunal allowed the appeal which was.directed against the order dated 21-02-2003 passed inexercise of the revisional power conferred under Section 263 of the Income Tax Act, 1961 (for short‘the Act’), bythe Director of Income Tax (Exemptions), Bangalore (forshort‘the Revisional Authority’). By this order, the)revisionalauthority,SeTasidetheorder.24-11-2000 passed by the Deputy Commissioner ofIncome Tax (for short‘the Assessing Officer’) holdingthat the order under Section 143(3) of the Act iserroneous and prejudicial to the interest of the Revenueand remanded the matter to the Assessing Officer with adirection to make further enquiries on the basis of theobservations made therein. In the order, the revisionalauthority, made detailed reference to the points, onwhich>showcausenotice|WaSissued.by theCommissioner dated 08-01-2003. The concludingparagraph in the order of the revisional authority readsthus: dated | “In view of the aforesaid the orderu/s.143(3) dated 24.11.2000 being erroneousand prejudicial to the interest of Revenue is|hereby set aside with a direction to the|present AO to make further enquiries on the. lines directed aqhove earlier and also to takenote of the fact of diversion offunds, and lack|of existence of a genuine society as laid down|under the Memorandum of Association etc.,|into account and pass a fresh order on the|claimof|theaASsSSCSSforexemptionu/s.10(22) and determine the total income|accordingly ‘. 2 |After the order of revisional authority dated 21-02-2003, it appears that the Assessing Officerpassed a detailed order, aiter having taken intoconsideration the observations made by the revisional authority in the order dated 21-02-2003 and disposed ofthe matter vide order dated 30-03-2004. At the same|§time, the order of the revisional authority dated21-02-2003 was also challenged by the assessee beforethe Tribunal and the Tribunal, after the order of the.revisional authority was acted upon, set aside the sameby the impugned order holding that the points onwhich, the revisional authority had set aside the orderdated 24-11-2000 passed by the Assessing Officer andremanded the matter to hold fresh enquiry were already 2 |After the order of revisional authority dated 21-02-2003, it appears that the Assessing Officerpassed a detailed order, aiter having taken intoconsideration the observations made by the revisional authority in the order dated 21-02-2003 and disposed ofthe matter vide order dated 30-03-2004. At the same|§time, the order of the revisional authority dated21-02-2003 was also challenged by the assessee beforethe Tribunal and the Tribunal, after the order of the.revisional authority was acted upon, set aside the sameby the impugned order holding that the points onwhich, the revisional authority had set aside the orderdated 24-11-2000 passed by the Assessing Officer andremanded the matter to hold fresh enquiry were already considered and enquired by the Assessing Officer whilepassing the said order (24-11-2000). This observation,in our opinion, was factually incorrect. More over, itwas not proper on the part of the Tribunal to decide thematter on merits and set aside the order passed in therevision dated 21-02-2003, despite the fact that the saidorder had already been acted upon and the AssessingOfficer had decided the matter vide order dated |30-03-2004. 3.|It is pertinent to note that the assessee did notseek stay of the proceedings pending before theAssessing Officer, after filing of the appeal before theTribunal, against the order passed by the revisionalauthority dated 21-02-2003. As a result thereof, theAssessing Officer proceeded to hear and decide thematter on merits in the light of the observations madeby therevisionalauthorityin.hisorder30-03-2004. That apart, the assessee then had filed an dated appeal before the CIT (A) against the order dated30-03-2004 and the appeal was also pending when theTribunal decided the appeal vide order dated 3[$.]February 2006. However, in view of the order passed bythe Tribunal, CIT (A) instead of deciding the appeal onmerits disposed it of vide order dated 16-02-2006 asinfructuous. 4We have perused the order dated 24-11-2000 andfind that the order passed by the Assessing Officer was_cryptic and running into hardly one page and he hadnot considered the particulars furnished by theassessee in pursuance of the notice issued undersection 143(2) of the Act. In the circumstances, we aresatisfied that no prejudice whatsoever will be caused tothe assessee if the order of the Tribunal is set aside andthe appeal that was filed by the assessee against theorder dated 30-03-2004 bearing ITA No.14/Trust/CIT (A)-V /O3-04 is restored to file with a direction to decideit on merits. 5We deem it appropriate to adopt this course inview of the fact that after the order of remand passed bytherevisionalauthoritydated|2 1-02-2008,the.Assessing Officer passed a detailed order taking intoconsideration the directions issued and the observationsmade by the revisional authority in the said order(dated 21-02-2003). It is pertinent to note that theassessee also participated in the said proceedings withfull vigor and seems to have contested the matterseriously. The order of the Assessing Officer dated _30-03-2004, in our opinion, is reasoned order whichwas the subject matter of the appeal before the CIT (A)filed by the assessee. Since the appeal was disposed ofas infructuous, we deem it appropriate that this appealcan be conveniently disposed of by the following order: (a)The order dated 03-02-2006|passed by the Tribunal is set aside|and.theorderdated91-02-2003passed by the revisional authority 1s restored to file.| 1A3The order dated 30-03-2004|passed by the Assessing Officer in|view of the order of remand vide orderdated 21-02-2003, passed by therevisionalauthority,alsostandsrestored to file. Similarly the appealfiled by the assessee against the said|order(30-05-2004)bearingITANo.14/ Trust/ CIT (A)-V/ 03-04 is alrestored to file. The Commissioner ofIncome Tax (Appeals) is directed todecide the said appeal on merits in)accordance with law after giving anopportunity of being heard to theparties, in particular, the assessee. (a)The order dated 03-02-2006|passed by the Tribunal is set aside|and.theorderdated91-02-2003passed by the revisional authority 1s restored to file.| 1A3The order dated 30-03-2004|passed by the Assessing Officer in|view of the order of remand vide orderdated 21-02-2003, passed by therevisionalauthority,alsostandsrestored to file. Similarly the appealfiled by the assessee against the said|order(30-05-2004)bearingITANo.14/ Trust/ CIT (A)-V/ 03-04 is alrestored to file. The Commissioner ofIncome Tax (Appeals) is directed todecide the said appeal on merits in)accordance with law after giving anopportunity of being heard to theparties, in particular, the assessee. All contentions of the parties on merits, insofar asthat appeal is concerned are kept open.| The Appellate Authority shall endeavor to decidethe said appeal as expeditiously as possible, preferablywithin a period of 8 months from the date of receipt ofthis order. It 18 needless to mention that since the orderdated 30-03-2004 is the subject matter of the appealbefore the CIT (A), the Assessing Officer shall not take It 18 needless to mention that since the order any coercive steps to recover the amount, till the appealis disposed of. With these observations, the appeal is disposed olf. Sd/-. JUDGE Sd/-. JUDGE| _* | mp