Wp/25553/2018 Of Sri Muninaga Reddy v. The Assistant Commissioner Of Income Tax

IN THB HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 12 DAY OF JULY, 2018. BEKORE, THE HON’BLE MR.JUSTICE B. VEERAPPA ;WRIT PETITION NO.25553/2018 (TIT) Between ori. Muninaga Reddyo/o. Muniswamy ReddyAged about 68 yearsResiding at No.49, 3[ra]B Malin|/[-2]Cross, 3[rd]Block, Kalyan NagarBengaluru-560043. ...Petitioner (By Smt. Vani. H, Advocate) And The Assistant Commissioner of Income TaxCircle 6(1), Room No.732BMTC Building, 80 Feet Road,.[-2]Block, KoramanagalaBengaluru-S60095. ...Respondent (By Sri.K.V.Aravind, Advocate) This writ petition is filed under Articles 226 and 227 ofthe Constitution of India to set aside the impugned orderdated 21.6.2017 relating to assessment year 2007-08 by theappellate tribunal vide Annex-E and etc.,. This writ petition coming on for|preliminary hearing in|‘B’ groupthis day, the court made the following: ORDER The present writ petition is filed for a writ ofcertiorari to quash the order dated 21.60.2017 made inMisc.Petition No.24/Bang/2017 arising out of ITANo.860/Bang/2012 dated 13.01.2015 relating to theassessment year 2007-08 passed by the Income TaxAppellate Tribunal and for a writ of mandamus directingthe respondent-Income Tax Appellate Tribunal toconsider the Misc. Petition on merits. oD It is the case of the petitioner that on24.12.2009 the respondent concluded the assessmentunder the provisions of Section 143(3) of Income Tax.Act, 1961(for short “Act”) assessing the income of thepetitioner at Rs.1,14,93,987/- by taking the entireincome of the petitioner as the income from businessthough a part of it was declared as income from othersource, thereby the income was assessed at a higherrate. On 28.4.2009, the petitioner was served demand notice under a printed form I.T.N.S.29 indicating theissue of notice under Section 274 read with Section 271of the Act and also issued intimation of penaltyproceedings under the provisions of Section 271 of theAct. Therefore, the petitioner filed an appeal before theCommissioner of Income Tax(Appeals) raising variouscontentions. The Income-Tax Authority(Appeals) by anorder dated 2.3.2012 dismissed the appeal confirminglevy of penalty without appreciating the explanationoffered by the petitioner. | 3.|Therefore, the petitioner was forced to file an|appeal in ITA.No.860/12 before the Income TaxAppellate Tribunal, Bengaluru Bench “B”. The Tribunalconsidering the entire material on record by an orderdated 13.1.2015 allowed the appeal in part for the year2007-08 for statistical purposes and dismissed theappeal for the year 2006-07. Therefore, the petitionerwas constrained to file Misc.Petition under Section| 294(2) of the Act on 30.12.2016. The Income TaxAppellate Tribunal by the impugned order dated21.6.2017 dismissed the Misc. Petition as barred bylimitation. Hence, the present petition is filed. 4I have heard the learned counsel for the'parties. 5 |omt.Vani, learned counsel for the petitioner|contended that the impugned order passed by theAppellate Tribunal dismissing the petition on theesround of limitation is illegal, arbitrary and liable to bequashed. She further contended that the Tribunalought to have applied the law laid down by this Court inthe case otCommiuisstioner of Income Tax and anothUS. |ManjunathaCottonandGinningFactoryreported in (2013) 359 ITR 565wherein the DivisionBench of this Court has specifically held that noticeunder Section 274 should specifically state the grounds.mentioned in Section 271(1)(c) 1.e. whether it is for the concealment of income or furnishing of inaccurateparticulars of income. The notice sent in a printed formwithout mentioning the grounds would not satisfy therequirement of law and as such the Tribunal ought tohave decided the miscellaneous petition on meritsinstead of dismissing only on technicality. Therefore,she sought to allow the writ petition. 6.|In support of her contention, she has soughtto rely on the dictum of this Court in the case ofPractice Strategic Communications India Private concealment of income or furnishing of inaccurateparticulars of income. The notice sent in a printed formwithout mentioning the grounds would not satisfy therequirement of law and as such the Tribunal ought tohave decided the miscellaneous petition on meritsinstead of dismissing only on technicality. Therefore,she sought to allow the writ petition. 6.|In support of her contention, she has soughtto rely on the dictum of this Court in the case ofPractice Strategic Communications India Private Limited .vs. C.S.T., Domlur, reported in 2016(45)S.T.R. 47(Kar.)wherein this Court while consideringthe appeal under the provisions of Section 89 of theFinance Act, has condoned the delay and directed theauthorities concerned to decide the case on merits. [|Per contra, Sri.K.V. Aravind, learned counselfor respondent sought to justify the impugned orderpassed by the Tribunal holding that the Misc.petition is barred by limitation and contended that in view of theprovisions of Section 294(2) of Act, the Tribunal may atany time within six months from the end of month inwhich the order was passed with a view to rectify anymistake apparent from the record amend any orderpassed by it under sub-section(1) and shall make suchamendment if the mistake is brought to its notice by theassessee or the assessing officer, aifter atfordingreasonable opportunity of hearing to the assessee.Admittedly, in the present case, the mis.petition was—filed after 11 months 17 days. Therefore, the Tribunalhas no jurisdiction to go beyond six months and assuch sought to dismiss the writ petition. 3.|Having given my anxious consideration tothe arguments advanced by the learned counsel for theparties, it is an undisputed fact that the respondentexercising powers under Section 143 sub-section(3) ofthe Act by an order dated 24.2.2009 determined the income of the assessee at Rs.1,14,93,587/-. Thereafter,the said order was subject-mater of appeal before theCommissioner of Income Tax who after considering thearguments of both the parties, by an order dated2.3.2012 dismissed the appeal on merits. The samewas reaffirmed by the Income Tax Appellate Tribunal on13.1.2015. The petitioner filed Misc.Petition inITA.No.860/Bang/2012 on 30.12.2016 to review theorder passed by the ITAT mainly on the ground that thepetitioner was under the impression that the appeal was.partly allowed by the Appellate Tribunal; the petitionerdid not realize that substantial relief was not grated bythe Tribunal and only a consequential order was passedfollowing the order of the respondent herein. The|petitioner having realized that he is entitled forsubstantial relief especially in view of the dictum of theDivisionBenchOT thisCourt1ntheCASEoT Commisstoner of Income Tax and another .vus.Manjunatha Cotton and Ginning Factory reported in (2013) 359 ITR 565°of this Court to the eftect that.the notice under Section 274 should specifically statethe grounds mentioned in Section 271(1)(c) i.e. whetherit is for the concealment of income or furnishing ofinaccurate particulars of income and mere notice sentin a printed form without mentioning the grounds wouldnot satisfy the requirement of law, filed the Misc.Petition under Section 254(2) of the Act before theTribunal to rectify the mistake by reviewing the orderdated 13.1.2015 made in ITA.No.860/Bang/2012. — OQ It is also not in dispute that the Tribunal|proceeded to dismiss the misc.petition mainly on theeround that the Tribunal cannot condone the delay ofmore than six months in view of the provisions ofsection 294(2) of the Act and proceeded to dismiss theapplication. It is also not in dispute that during theprocess, there was a delay of 11 months 17 days. Afterdeducting the time stipulated under Section 254(2) of -9QO - OQ It is also not in dispute that the Tribunal|proceeded to dismiss the misc.petition mainly on theeround that the Tribunal cannot condone the delay ofmore than six months in view of the provisions ofsection 294(2) of the Act and proceeded to dismiss theapplication. It is also not in dispute that during theprocess, there was a delay of 11 months 17 days. Afterdeducting the time stipulated under Section 254(2) of -9QO - the Act about 4 months 10 days would be the delay. —The appellant has explained the delay in filing the Misc.Petition. Though under the provisions of Section 254.the Tribunal cannot go beyond the provisions of the saidsection, the fact remains that the petitioner hassubstantiated that injustice is being done by notfollowing the Division Bench decision of this Court.Therefore, in order to do substantial justice, this Courtexercising the power under Articles 226 and 227 of theConstitution of India can condone the delay as held bythe Division Bench oft this Court in the case otPracticeStrategic Communications India Private Limited.vs. C.S.T., Domlur, reported in 2016(45) S.T.R.47(Kar.)wherein this Court at Paragraph (11) has heldas under:-| 11.In view of the above referred decisionof this Court, tf this Court finds that the|authorityhaspassedtheorderwithoutjurisdiction or has exercised the power in)excess of the jurisdiction or by over-stepping or|crossing the limit ofJurisdiction or that there tsfailure of justice, or it has resulted in gross|injustice, it would be a case falling under the|exceptional category of exercising the power| under Article 226 of the Constitution and to'interfere with the order of the original authority|or the appellate authority, as the case may be.In order to find out as to whether the case ts fit|for exercising of the power under Article 226 of|the Constitution, we may record that as per the|decision of the Delhi High Court, Rule 5, on the)basis of which the original authority haspassed the orderfor levying of tax is held to be|ultra vires to Section 67 of the Act. Further, the|matter may fall in the realm of correct'interpretation of Section 67 as to whether the|expenses reimbursed by the consumer to the|service provider, can be included for the|purpose of computation of the service tax or not.We do not propose to express any further viewon the said aspects in view of the order which|we may pass herein after, but suffice it toobserve that in view of the decision of the Delht|High Court, there was a strong case on merits|on the part of the petitioner to be considered by|the taxing authority. Unfortunately the decision|of the Delhi High Court though was specifically|brought to the notice of the original authority inthe reply to the show cause notice, in the|impugned order of the original authority, there|is no reference whatsoever. Under thesecircumstances, we find that the case may fall in|the exceptional category for exercise of thepower under Article 226 of the Constitution. | LQ.|In view of the dictum of the Division Bench|of this Court stated supra, the petitioner has made outa case that his case falls under exceptional category forexercising power under Articles 226 and 227 of theConstitution of India to interfere with the order passed by the Tribunal dismissing the Misc. Petition only onthe ground of delay. 11.)In view of the aforesaid reasons, the writpetition is allowed. The impugned order passed by theIncome Tax Appellate Tribunal dismissing the Misc.Petition on the ground of delay is hereby quashed. Thedelay occurred in filing the Misc. Petition is condonedand the matter is remanded to the Income Tax AppellateTribunal, Bengaluru, to decide the Misc. Petition.No.24/Bang/2017 on merits strictly in accordance withobservations made by the Division Bench of this Courtstated supra and in accordance with law. S%f-JUDGE *alb/-