Wp/31935/2018 Of The Pr Commissioner Of Income Tax v. M/S Devi Enterprises

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 8[th]DAY OF AUGUST, 2018| BEFORE THE HON'BLE MR.JUSTICE B. VEERAPPA. ;.WRIT PETITION NOs.3193531936 OF 2018 (TRES) BETWEEN: 1.THE PR. COMMISSIONER OF INCOME TAXCENTRAL CIRCLE,CENTRAL CIRCLE, C.R.BUILDING,QUEEN'S ROAD,|BENGALURU-560 OOL.QUEEN'S ROAD,|BENGALURU-560 OOL. 2).THE DEPUTY COMMISSIONER OF INCOME TAX.CENTRAL CIRCLE-1(3),CENTRAL CIRCLE-1(3), C.R.BUILDING, QUEEN'S ROAD, BENGALURU-560 OO1. ... PETITIONERS (By Sri. ARAVIND K. V., ADVOCATE) M/S. DEVI ENTERPRISES,NO. 1050/H, RAILWAY GRAND TWIN,LANE TIMMANCHERLA, GUNTAKAL.AP-51L5801REP. BY ITS PARTNER.SRI. K. MEHFUZ ALI KHAN. ... RESPONDENT (By Sri. MAYANK JAIN, ADVOCATEFOR SRI. LAKSHMINARAYANA N, ADVOCATE) THESEWRITPETITIONSAREFILEDUNDER|ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA.PRAYING TO DIRECT THE INCOME TAX APPELLATE|TRIBUNAL, BENGALURU-A BENCH TO DEFER THE HEARINGOF|THE|APPEAL|IN|ITA.NO.954/BANG/201/7VIDE.ANNEXURE-F DATED 23.0/7.2018 TILL ADJUIDICATION OFAPPEAL AGAINST THE SUBSTANTIVE ASSESSMENT IN THE.CASE OF SRI GALI JANARDHAN REDDY FOR THE.ASSESSMENT YEAR JZJOLO-LL BY THE COMMISSIONER OINCOME TAX-APPEALS. THESE WRIT PETITIONS COMING ON FOR ORDERS,THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The petitioners have filed the present writ petitions|for a writ of mandamus to direct the Income Tax AppellateTribunal, Bengaluru, Bench-A to defer the hearing of theappeal in ITA No.954/BANG/2017 as per Annexure-F tilladjudication of appeal against the substantive assessment.in the case of Gali Janardhan Reddy for the assessmentYear2010-11DYtneCommissioner.Of|Income|Tax(Appeals). 2. This Court by an order dated 25.7.2018, after|nearing the learned counsel for the petitioners, granted| stay as prayed for staying further proceedings in ITANo.954/BANG/2017 as per Annexure-F dated 23.7.2018 tillthe next date of hearing. Hence, the present applicationI.A.1/18 is filed by the respondent for vacating tne interim order. 3. Ihave heard the learned counsel for the partiesto the lis. 4. Sri. Mayank Jain, learned counsel for the}respondent contended tnat the very writ petitions are not)maintainabie and the question of granting stay would not)arise. He further contended that pursuant to the searchconducted in the premises of the respondent, there was a.substantive assessment under Section 153-C of the!Income Tax Act (hereinafter referred to as ‘the Act’) in the)case of Gali Janardhan Reddy, and protective assessmentunder Section 153-A of the Act In the case of the’respondent. It is also an admitted position that the)substantive addition in the case of Gali Janardhan Reddy| nas been deleted by order dated 17.10.2016 vide.Annexure-C in the present writ petitions. Tne said order|passed by the Appellate Tribunal has reached finality. 5.Tnereafter,tnepetitionerspassedreassessment order exercising power under Section 14/7 ofthe Act in the case of Gali Janardnan Reddy on)29.12.2017. Against the said order, an appeal came to be)filed by the assessee before the Commissioner of Income.Tax( Appeals) and the same is pending. Against the)assessment order passed in the case of respondent on.2/.3.2013, the respondent filed an appeal before theCommissioner of Income Tax(Appeals) in ITA No.12 &)13/DCIT, CC-1(3)/CIT(A)-11/2014-15 as per Annexure-E.The.AppellateAuthority.by.order|dated20.11.7017dismissed the same on the ground of delay and laches.Hence, the respondent filed appeal before the Income TaxAppellate Tribunal, Bengaluru, in ITA No.954/BANG/201/7.Therefore, he would submit that after the reassessment.order passed on 29.12.2017, there was no protective assessment except substantive assessment whicn is)Subject to tne appeal pending before the Appellate)Authority. The appeal filed by the present respondentbefore tne Appellate Authority was dismissed on the.ground of delay was protective assessment. There was noreason for the Tribunal to wait till the substantive appeal|decided by the Commissioner of Appeals in the case of GaliJanardnan Reday. Therefore, ne sought to vacate theinterim order. 6. Sri. Aravind Kumar, learned Central Government|Counsel for the petitioners contended that the originalassessment order passed in the case of Gali Janardnan.Reddy on 31.3.2013 was set aside on technicality by tne|Income Tax Appellate Tribunal. Therefore, there was no.need to challenge further. As required under the provisions.of Section 14/7 of the Act, fresh assessment order came tobe passed wherein it is specifically stated at D4 snow.cause notice, the assessee was required to snow cause)videletterdated22.2.2013,whyanamountof| Rs.194,82,50,000/- for the assessment year 2010-11 andRs.37,45,06,000/- for tne assessment year 2011-12)Should not be brougnt to tax as his undisclosed business|income. Tnerefore, he would submit that the subject)matter of the appeal before the Commissioner of Appeals.and substantive appeal before deciding the said appeal, if)the protective appeal rejected by the Commissioner of.Appeals on delay and laches and if tne Tribunal proceeds in|ITA No.954/BANG/2017, the revenue will be put to great)hardship and loss as they cannot make fresh assessmentorder because of time limit constraint. Tnerefore, ne|sought to allow the petition. J.Having heard the learned counsel for the)parties, it is an undisputed fact that the petitioners passed Original assessment order on 31.3.2013 as per Annexure-B|against Gali Janardnan Reddy which discioses that a sum)of Rs.194.82 crores and Rs.3/7.45 crores are added to tneassessee’s income as arising from undisclosed sources forthe assessment years 2010-11 and 2011-12 respectively.| Tne said order came to be set aside by tne Income Tax.Appellate Tribunal on 17.10.2016 on _ tecnnicality acontended by the learned counsel for the petitioners and.on merits as contended py the learned counsel for the.respondent. The fact remains that, petitioners passed fresh.Orders exercising power under Section 14/7 of the Act on29.12.2017. Against the assessment order, appeal filed bythe assessee on substantive assessment pending before)the Commissioner of Income Tax (Appeais)-11 in Appeal|No.ITA.No.12 & 13/DCIT, CC-1(3)/CIT(A)-11/2014-15. | 8.It is also not in dispute that appeal is filed bythe present respondent against tne assessment order)dated 27.3.2013. The appeal before the Commissioner of.Income Tax (Appeals) came to be dismissed on 20.1.2017.on the ground of delay and laches. That is the subjectmatter of the appeal before the Tribunal in ITANo.954/BANG/2017. It was the specific case of tne}petitioners before the Tribunal that a request was made todefer the hearing of the appeal on the ground that the) assessment in appeal being protective basis and the order|of assessment order on substantive basis in case of Gall|Janardnan Reddy. The Appellate Commissioner has to)decide the matter at the earliest. Therefore, a request was|made to defer the appeal before the Tribunal till a decisionis taken in the appeal filed by Janardhan Reddy which is a)substantive appeal. Tne said request was turned down in)ITA No.954/BANG/2017. The Tribunal without considering|the said application on its merits directed the revenue to)argue the matter on merits of the appeal in ITANo.954/BANG/2017 on 12.01.2017. That is how the writ)petitions came to be filed. 9. It is not in dispute that in the’ protectiveassessment order at Annexure-A there is a reference to'the case of Gali Janardhan Reddy which reads as under: | In the light of the above evidence, theassessee was reguired to snow cause, vide fetterdated07.01.7013|whyaf)amount.Of|Rs.194,82,50,000/- for the assessment year2010-11 andRs.37,45,06,000/-forthe 9. It is not in dispute that in the’ protectiveassessment order at Annexure-A there is a reference to'the case of Gali Janardhan Reddy which reads as under: | In the light of the above evidence, theassessee was reguired to snow cause, vide fetterdated07.01.7013|whyaf)amount.Of|Rs.194,82,50,000/- for the assessment year2010-11 andRs.37,45,06,000/-forthe assessmentYE|2011-12,should.notbebrought to tax as his unalisclosed businessincome. — 10.Mr.Madnukumar|Varmafurnished|nisexplanation vide letter dated 24.1.2012 by disassociating|nimself from the seized material and contradicting nis own)statements made during the time of search. Hence, hiscontention|WaSrejected.In.SUCN|circumstances,considering the evidence on record, the above sum of.Rs.194.82 crores is added protectively in the nands of tne}aSSECSSFCand.substantivelyinthe.nands.Of|Mr.G.Janardnana Reddy as_ arising from _ undisclossources for the assessment year 2010-11. 11. Though an attempt was made py learnedcounsel for the respondent, that the said order was set-aside by the Tribunal on 17.10.2016 and the same reacned finality. The fact remains that a reassessment order cameto be passed as per Annexure-D on 29.12.2017 and that is)the.subjectmatterof|appealpendingbeforethe. Commissioner of Appeals. In all fairness, the Tribunalougnt to have decided the application filed for deferment|by the petitioners nor deferred the hearing of ITANo.954/BANG/2017 till a decision is taken in the)substantive appeals filed by the Janardhan Reddy in ITA.No.216/CIT(A)-11/Bang/2017-18. Therefore, the same:nas not been done by the Tribunal. When the application|filed py the petitioners is pending before the Tribunal in)ITA No.954/BANG/2017 for deferment, it is appropriate for|the Tribunal to decide the said application first on itsmerits and thereafter, can proceed in the appeal. | 12. Sri Aravind K.V. learned CGSC for petitionersmade submission across tne bar that he will pursue the)appeal pending before the Commissioner of Appeals and a.request will be made to expedite the appeal at the earliest.Tne said submission is placed on record. — 13. In view of the above, the Tribunal is directed toconsider the application filed by the petitioners for) deferment of hearing in ITA No.954/BANG/2017. Till such. application is decided on merits, the Tribunal shall not) proceed with the hearing of ITA No.954/BANG/2017. With the above observation, the writ petitions are disposed of. All the contentions are left open. Sd/-| JUDGE| DKB/Dvr