Kajjehalli Estate Bettadamane Post, Mudigere Taluk Chickmagalur V. The Deputy Commissioner of Agrl. Income Tax(Asst) Chickmagalur and The Commissioner of Commercial Taxes, VTK, Gandhinagar, Kalidasa Road Bangalore and The State of Karnataka represented by the Commissioner of Commercial Taxes (Karnataka) Vanijya Therige Karyalaya-1 Gandhinagar Bangalore-560009

CRP/119/2011

AI Insights

The case involves M/s Kajjehalli Estate, the petitioner, who challenged the orders related to the assessment of agricultural income tax. Initially, the Assessing Authority disallowed a substantial portion of the expenditure claimed by the assessee. The First Appellate Authority reversed this decision, leading to a reduced tax liability. However, the Commissioner of Commercial Taxes, in suo-motto proceedings, restored the First Appellate Authority's decision, necessitating a fresh assessment by the Assessing Authority. The High Court's decision dismissed the revision petition, emphasizing the need for a merit-based reassessment by the Assessing Authority.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 794156 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 10-07-2014
• Assessment Year: misc
• Laws Referred To: Karnataka Agricultural Income Tax Act, 1957
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: S
• Assessee Lawyers: S PARTHASARATHI
• Keywords: Agricultural income-tax; Assessment; Expenditure disallowance; Revision petition; Suo-motto Proceedings
• Section: 55; 35; 35A

Judgement Text

" - 1 - IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 10TH DAY OF JULY 2014 PRESENT THE HON’BLE MR.JUSTICE N. KUMAR AND THE HON’BLE MR. JUSTICE B. MANOHAR C.R.P. NO. 119 OF 2011 (AIT) BETWEEN: M/S KAJJEHALLI ESTATE BETTADAMANE POST, MUDIGERE TALUK CHICKMAGALUR ... PETITIONER (BY SRI. S PARTHASARATHI, ADV.) AND 1. THE DEPUTY COMMISSIONER OF AGRL. INCOME TAX(ASST) CHICKMAGALUR 2. THE COMMISSIONER OF COMMERCIAL TAXES, VTK, GANDHINAGAR, KALIDASA ROAD BANGALORE 3. THE STATE OF KARNATAKA REPRESENTED BY THE COMMISSIONER OF COMMERCIAL TAXES (KARNATAKA) VANIJYA THERIGE KARYALAYA-1 GANDHINAGAR BANGALORE-560009 ... RESPONDENTS (BY SMT. S. SUJATHA, GOVERNMENT ADVOCATE) - 2 - THIS CRP IS FILED UNDER SEC.55 OF AGRICULTURAL INCOME TAX ACT, AGAINST THE ORDERS DATED:12.01.2011 PASSED IN NO.KAIT/SMT/CR-01/10-11 ON THE FILE OF THE COMMISSIONER OF COMMERCIAL TAXES, KARNATAKA, BANGALORE, SETTING ASIDE THE R.A.DATED 24.07.2002; AND ETC. THIS CRP COMING ON FOR FINAL HEARING THIS DAY, N. KUMAR J. DELIVERED THE FOLLOWING: O R D E R This revision petition is preferred by the assessee challenging the order passed by the Commissioner of Commercial Taxes under Sec. 35A of the Karnataka Agricultural Income Tax Act, 1957. 2. The Assessing Authority, after considering the returns filed by the assessee, disallowed substantial portion of the expenditure which the assessee had claimed. Aggrieved by the said order, the assessee preferred an appeal to the Joint Commissioner of Commercial Taxes, First Appellate Authority. The First Appellate Authority set aside the said order and remanded the matter back to the Assessing Authority - 3 - for fresh assessment. The Addl. Commissioner of Commercial Taxes invoked the power under Sec. 35 of the Act on the ground that the order passed by the First Appellate Authority is erroneous and prejudicial in the interest of the revenue. After hearing the parties, he set aside the order of the First Appellate Authority and also granted relief to the assessee by reducing the liability to tax. The Commissioner of Commercial Taxes initiated suo-motto proceedings under Sec.35A of the Act and set aside the said order and restored the order of the First Appellate Authority, the effect of which is the Assessing Authority has to consider the case on merits afresh. It is against the said order, the present revision is filed by the assessee. 3. When a power is conferred on the revision authority to initiate suo-motto proceedings on the ground that the order is erroneous and prejudicial in the interest of revenue in that jurisdiction, the only - 4 - order that could be passed is to set aside the erroneous order and restore the order of the Assessing Authority. Unfortunately, without keeping this basic principle in mind, the order of the First Appellate Authority is set aside. The order of the Assessing Authority is also set aside. The revision authority frames the assessment for the first time, granting benefits to the assessee. It is totally impermissible in law. Therefore, rightly, the Commissioner of Commercial Tax, in a suo-motto proceedings, has set aside the said order. In that view of the matter, we do not see any justification to interfere with the well-considered order passed by the revision authority. Under these circumstances, we pass the following order: The revision petition is dismissed. The matter is now relegated to the Assessing Authority. It is open to the assessee to appear before the Assessing Authority, produce all necessary documents and the - 5 - Assessing Authority shall consider the claim on merits and in accordance with law, without in any way being influenced by any of the observations made in any of these proceedings. All questions are kept open. The assessee shall appear before the Assessing Authority on 4/8/2014. Sd/- JUDGE Sd/- JUDGE Rd/- "