Ita/585/2016 Of Nitesh Bera (Huf) v. The Deputy Commissioner Of Income Tax

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 1/ DAY OF FEBRUARY 2071. PRESENT| THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’‘’BLE MR. JUSTICE NATARAJ RANGASW A BETWEEN: ILT.A. NO.585 OF 2016 NITESH BERA (HUF)REP. BY MANAGER|SMT. UMA BERA.#25/1, K.R. SHETTYPETAVENUE ROADBANGALORE-56000727 (BY SRI. S. ANNAMALAI, ADV., FORSRI. M. LAVA, ADV.,) ... APPELLAN| AND* THE DEPUTY COMMISSIONER OFINCOME TAX, CIRCLE 5(1)-BMTC BUILDING80 FEET ROAD, 6TH BLOCKKORAMANGALABANGALORE-560095., .., RESPONDENT (BY SRI. JEEVAN J. NEERALGI, ADV.) THIS I.T.A. IS FILED UNDER SEC. 260-A OF INCOME TAX|ACT 1961, ARISING OUT OF ORDER DATED 24.06.2016 PASSEDIN ITA NO.1350/BANG/2014 FOR THE ASSESSMENT YEAR 2008-09, PRAYING TO: (1) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW AS.STATED ABOVE AND ANSWER THE SAME IN FAVOUR OF THE.APPELLAN!. | (ii) ALLOW THE APPEAL AND SET ASIDE THE FINDINGS TO.THE EXTENT AGAINST THE APPELLANT IN THE ORDER PASSED BY.THE ITAT, BENGALURU “A BENCH IN ITA NO.1350/BANG/2014RELATING TO ASSESSMENT YEAR 2008-09 VIDE ITS ORDER.DATED 24.06.720L6. (iil) PASS SUCH OTHER ORDERS AS THIS HON'BLE COURT|DEEMS FIT AND PROPER TO MEET THE ENDS OF JUSTICE. THIS ILT.A. COMING ON FOR’ HEARING, THIS DAY, |ALOK ARADHE J.,DELIVERED THE FOLLOWING: | JUDGMENT This appeal under Section 260A of the Income TaxAct, 1961 (hereinafter referred to as the Act for short)nas been preferred by tne assessee against tne orderdated 24.06.2016 passed by the Income Tax AppellateTribunal (hereinafter referred to as the tribunal’ forShort). The subject matter of the appeal pertains to the|Assessment year 2008-09. The appeal was admitted bya pencn of tnis Court vide order dated 30.08.201/7 onthe following substantial questions of law: “(1)WhethertheTribunalWasjustified in law, in rejecting the contentionoftheAppellant:thatthefirst.re- assessment order made u/s 143(3) r.w.s.14/7 of the Act dated 17.02.2014 getseffaced when a subsequent re-assessmentorder was made U/s 143(3) r.w.s. 147 ofthe Act, on 22.03.2016, in respect of thesame Assessment Year and on same facts,on the facts and circumstances of theCase?| (il)Whether the Tribunal wes|justified in law, to hold that the re-openingof assessment under section 14/7 wasproper, when the issue was not argued bye/itherpartiesand|withoutprejudice,recordedFea@sonsdonotconstitutereasons to believe on the facts andcircumstances of the case? (111)Whether the Tribunel wedsjustified in law, in holding that the re-assessment proceedings initiated undersection 148 Is valid, and further held thatthe provisions of section 153C of the Act isnot applicable and more so when the AO.has provided the appellant the seizedmaterial,andconsequentlyDaSSeda perverseorderOf)thefactsand|circumstances of the case?" 2 |Facts leading to filing of this appeal brieflystated are that the appellant is a HUF, which is currentlyrepresented by Smt.Uma Bera who is the Manager of.HUF. During the Assessment Year 2008-09, the HUF|consisted of Karta viz., Sri.Nitesh Bera, his wife Uma.Bera and two minor children. The Karta of the familyviz., Sri.Nitesh Bera passed away leaving behind his wife|and children. The assessee HUF filed its return of income|for Assessment Year 2008-09 declaring total income of Rs.27,35,317/- comprisingOT interestincomeOT Rs.1,30,385/- and in Short Term Capital Gains on sale of.securities to the extent of Rs.26,04,932/-. The case ofthe assessee was selected for scrutiny and the return.was accepted by an order dated 19.11.2010 passedunder Section 143(3) of tne Act. 3.)Tnereafter, the file of the assessee was re- 3.)Tnereafter, the file of the assessee was re- opened under Section 14/7 of the Act and neither anynotice under Section 148 of the Act was issued nor.served on the assessee. The notice under Section|142(1) of the Act was served on the assessee on.05.07.2013 and the assessment was concluded by theAssessing Officer vide order dated 17.02.2014 on the|basis of the material available by the revenue, withoutconsidering the documents furnished by the assessee|and tne total Income of the assessee was determined at!Rs.30,59,475/- by considering the Short Term Capital|Gains under Other Sources and making additions of the|Same. | 4Tne assessee thereupon filed tne appealbefore the Commissioner of Income Tax (Appeals) who.by an order dated 12.08.2014 dismissed the appealpreferred by the assessee. The assessee thereuponapproacned the tribunal by filing an appeal. During thependency of the appeal before the tribunal, the case ofthe assessee for Assessment Year 2008-09 was once| again re-opened and a notice under Section 148 of the|Act was issued for the second time to the assessee on!20.03.2015. Thereafter, the Assessing Officer passed anorder of assessment on 27.03.2016 and the _ totaturnover of the income of the assessee was assessed. Itis the case of the assessee that the appeal against the|aforesaid order is pending before the Commissioner of |Income Tax (Appeals). The tribunal by an order dated24.06.2016 inter alia hneld that re-opening of theassessment was valid even though the aforesaid legal|issued was not argued Dy either of the parties at the|time of hearing. In the aforesaid factual background,|this appeal has been filed. 5.|Learned counsel for tne assessee submittedthat the tribunal ought to have appreciated that the first|order of assessment was passed on 17.02.2014 and theSame got effaced as the second order was passed on.22.03.2016 in respect of the same Assessment Year I.e.,.2008-09. In support of aforesaid submission, learned. counsel for the assessee has placed reliance on thedecision of this court in."INCOME TAX OFFICER VS.|K.L.SRIHARI (HUF), (1992) 197 ITR 694 (KAR)On the other hand, learned counsel for the revenuefairly did not dispute the aforesaid well settled legal|position. — 6.|We have considered the submissions made.by learned counsel for the parties and have perused therecord. It is well settled in law that when a subsequent.order is passed in respect of the same assessment, theprevious order of assessment passed by the Assessing|Officer gets effaced. In the instant case, in view of the.orderdated22.03.2016,theDreviousOrderOT assessment passed by the Assessing Officer dated17.02.2014 got effaced and therefore, the subsequent|order passed by the Assessing Officer dated 22.03.2016prevails. Tnerefore, the first substantial question of law.is answered in favour of the assessee and against the.revenue. 7We are informed that against the subsequentorder of assessment, the appeal is pending before theCommissioner of Income Tax (Appeals). Therefore, in.the facts of the case, it is not necessary for us to answer.the remaining substantial questions of law and the|appeal is disposed of with liberty to the parties to raiseall legal contentions as are admissible to them in law in|the appeal, which is pending adjudication before the|Commissioner of Income Tax (Appeals). With the aforesaid direction, the appeal is disposed of— Sd/-—JUDGE. Sd/-—JUDGE.