Commissioner of Income Tax Mysore and The Income Tax Officer Ward-2(2) Mysore and Deputy Commissioner of Income Tax Circle-2(1), Mysore and The Income Tax Officer, Circle 2(1) Mysore V. Shivagiri Associates 'Souparnika'

ITA/506/2013

AI Insights

The case involves multiple appeals by the revenue against M/s Shivagiri Associates, a firm operating a stone quarry, concerning the assessment orders for the assessment year 2008-09. The primary legal issue was the jurisdiction of the Assessing Authority who passed the original assessment order. The Tribunal and the Appellate Authority both found that the Assessing Authority lacked both territorial and pecuniary jurisdiction over the assessee, leading to the annulment of the assessment order. The revenue's subsequent appeals were dismissed by the High Court, which upheld the Tribunal's decision and noted the initiation of reassessment proceedings by the correct jurisdictional officer.

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 816145 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 02-02-2015
• Assessment Year: misc
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: A SHANKAR
• Assessee Lawyers: E I SANMATHI
• Keywords: Assessment Order; Income Tax; Jurisdiction; Reassessment
• Section: 148; 143(3); 133-A; 260-A

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 2ND DAY OF FEBRUARY, 2015 PRESENT THE HON' BLE MR. JUSTICE N. KUMAR AND THE HON' BLE MR. JUSTICE B. VEERAPPA ITA No.506/2013 C/w. ITA Nos.632/2013 & 101/2014 ITA No.506/2013 BETWEEN 1. COMMISSIONER OF INCOME TAX MYSORE 2. THE INCOME TAX OFFICER WARD-2(2) MYSORE ... APPELLANTS (BY SRI E I SANMATHI, ADVOCATE) AND M/S SHIVAGIRI ASSOCIATES \"SOUPARNIKA\" NO. 711/1, III MAIN, III CROSS, I BLOCK, RAMAKRISHNANAGAR, MYSORE-570022 ... RESPONDENT (BY SRI A SHANKAR, ADVOCATE) 2 THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED:31/05/2013 PASSED IN ITA NO.669/BANG/2012, FOR THE ASSESSMENT YEAR 2008-09, PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE COURT AS DEEMED FIT AND TO SET ASIDE THE APPELLATE ORDER DATED 31/05/2013 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, 'A' BENCH, BANGALORE IN APPEAL PROCEEDINGS NO.ITA.NO.669/BANG/2012 FOR ASSESSMENT YEAR 2008-09, AS SOUGHT FOR IN THIS APPEAL. ITA Nos.632/2013 & 101/2014 BETWEEN 1. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-2(1), MYSORE. 2. THE INCOME TAX OFFICER, CIRCLE 2(1) MYSORE ...APPELLANTS (BY SRI E I SANMATHI, ADVOCATE) AND M/S SHIVAGIRI ASSOCIATES “SOUPARNIKA” NO.711/1, III MAIN 3 III CROSS I BLOCK RAMAKRISHNANAGAR MYSORE 570 022 ... RESPONDENT (BY SRI A SHANKAR, ADVOCATE) THESE ITAs ARE FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED:03/07/2013 PASSED IN ITA NOS.29 & 30/BANG/2013, FOR THE ASSESSMENT YEAR 2008- 09, PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE COURT AS DEEMED FIT AND TO SET ASIDE THE APPELLATE ORDER DATED:03/07/2013 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, 'C' BENCH, BANGALORE, IN APPEAL PROCEEDINGS NO.I.T.A. NO. 29 & 30/BANG/2013 FOR ASSESSMENT YEAR 2008-09 AS SOUGHT FOR IN THIS APPEAL. THESE ITAs COMING ON FOR ADMISSION THIS DAY, N. KUMAR, J., DELIVERED THE FOLLOWING: JUDGMENT The revenue has preferred the appeal in ITA No.506/2013 against the order passed by the Tribunal declining to interfere with the order passed by the First Appellate Authority on the question of jurisdiction of the 4 Assessing Authority over the assessee to pass the assessment order. 2. The assessee is a firm owning and operating a stone quarry. The return of income was filed for the concerned assessment year 2008-2009 on 30.09.2008 declaring an income of Rs.1,74,53,680/-. A survey was conducted under Section 133(A) of the Income-Tax Act (hereinafter referred to as ‘Act’) in the office premises of the assessee. It came to light that the assessee though having taxable income, had not paid the advance taxes commensurate to the income that was earned by the assessee as on the date of survey. Assessee had also not accounted for the entire cost sales in the book as appearing on the date of survey. The scrutiny assessment under Section 143(3) of the Act was completed vide order dated 16.12.2010 fixing the total income at Rs.5,73,24,153/- and levying tax in a sum of 5 Rs.1,84,35,700/-. Aggrieved by the said order, the assessee preferred an appeal to the Commissioner of Income-tax (Appeals). 3. In the appeal, it was contended that the Assessing Authority, who passed the impugned order had no territorial or pecuniary jurisdiction over the assessee. The Appellate Authority after considering the material on record, has held that the Assessing Authority, who passed the order had no jurisdiction both territorial and pecuniary and annulled the impugned assessment order. However, while passing the said order, the Appellate Authority has held that in view of vast amount of information available on record, the Department is free to take action to bring to tax any income, which has escaped assessment as per the law through the Jurisdictional Officer. Accordingly, the authorities initiated re-assessment proceedings for 6 reopening of the earlier assessment by issuing notice under Section 148 of the Act. 4. Simultaneously, they also preferred an appeal against the order passed by the Appellate Authority. The Tribunal after taking note of the fact that the proceedings are initiated for reopening of the earlier assessment and also being satisfied that the order passed by the Appellate Authority is in accordance with law, has declined to entertain the appeal. Aggrieved by the said order, the revenue is in this appeal. 5. We have heard the learned counsel for the parties. 6. The assessee is carrying on business only at one place and the Assessing Authority, who passed the order has no jurisdiction over that area. Though, such objection was not taken before the Assessing Authority, 7 it was taken before the First Appellate Authority. As the proceedings before the First Appellate Authority is nothing but continuation of the assessment proceedings, the assessee was entitled to take up that objection. On considering that argument, the Appellate Authority was justified in annulling the order of the assessment for want of territorial jurisdiction. Therefore the Tribunal committed no error in affirming the said order. Moreover, in pursuance of the order passed by the Appellate Authority, notice under Section 148 of the Act has been issued and proceedings for reopening of the assessment have set in motion. The order is also passed on 31.03.2014 and the said order is now in challenge before the First Appellate Authority. Under these circumstances, we do not see any merit in this appeal and accordingly, it is dismissed. 7. ITA Nos.632/2013 and 101/2014 arise out of the orders passed consequently. The order of assessment 8 passed by the Assessing Authority for the assessment year 2008-2009, one is rectification order declining to rectify the earlier order passed and another is the penalty order. As the original order itself is set aside, which is affirmed by both the Appellate Authorities, there is no justification to interfere with those orders in these appeals. Accordingly, both these appeals are also dismissed. Sd/- JUDGE Sd/- JUDGE Sbs* "