M/S. BHUWALKA PIPES (P) LIMITED V. JOINT COMMISSIONER OF INCOME TAX (OSD)

ITA/162/2020

AI Insights

The case involves M/S. Bhuwalka Pipes (P) Limited, the appellant, contesting orders from the Income Tax Appellate Tribunal (ITAT) which reversed the relief granted by the Commissioner of Income Tax (Appeals) regarding a commission payment disallowance. The ITAT's decision was challenged on grounds of exceeding the scope of the appeal and violating principles of natural justice. The High Court of Karnataka, after hearing both parties, directed the CIT(A) to re-evaluate the case on its merits, focusing on the agreements and evidence presented, without being influenced by the ITAT's previous orders.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 765667 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 06-03-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: E I SANMATHI
• Assessee Lawyers: LAKSHMI MENON
• Keywords: Assessment Year 2011-2012; Commission Payment; Income tax appeal; Jurisdiction; Maintainability; Natural Justice; Perversity
• Section: 143(3); 154; 260-A

Judgement Text

" - 1 - ITA No. 162 of 2020 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 6TH DAY OF MARCH, 2023 PRESENT THE HON'BLE MR. JUSTICE P.S.DINESH KUMAR AND THE HON'BLE MR. JUSTICE C.M. POONACHA INCOME TAX APPEAL NO. 162 OF 2020 BETWEEN: M/S. BHUWALKA PIPES (P) LIMITED “SOULS”, 8TH FLOOR E & G NO.02, 1ST CROSS J.C. ROAD BENGALURU-560 027 PAN :AABCB7778E …APPELLANT (BY MS. LAKSHMI MENON, ADVOCATE) AND: JOINT COMMISSIONER OF INCOME TAX (OSD) CIRCLE 1(1) (2) ROOM NO.242, 2ND FLOOR BMTC BUILDING, 80 FEET ROAD KORAMANGALA BENGALURU-560 095 …RESPONDENT (BY SHRI. E.I. SANMATHI, STANDING COUNSEL) THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW AS STATED THEREIN AND ANSWER THE SAME IN FAVOUR OF THE APPELLANT AND TO ALLOW THE APPEAL AND SET ASIDE THE FINDINGS TO THE EXTENT AGAINST THE APPELLANT IN THE ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU BENCH IN ITA NO. 882/BANG/2016 RELATING TO ASSESSMENT YEAR 2011-2012 VIDE ITS ORDER DATED 31.01.2018 (ANNEXURE-A) AND ORDER PASSED BY THE TRIBUNAL IN MISC. PETITION NO.262/BANG/2018 IN ITA NO. 882/BANG/2016 DATED 05.10.2018 RELATING TO THE ASSESSMENT YEAR 2011-2012 (ANNEXURE-B) AND ETC. Digitally signed by YASHODHA N Location: HIGH COURT OF KARNATAKA - 2 - ITA No. 162 of 2020 THIS ITA, COMING ON FOR FINAL HEARING, THIS DAY, P.S.DINESH KUMAR, J., DELIVERED THE FOLLOWING: JUDGMENT This appeal directed against order dated 31.01.2018 in ITA No.882/Bang/2016 (Annexure-A) and order 05.10.2018 in Misc.Petn.No.262/Bang/2018(Annexure-B), both passed by the ITAT1, ‘C’ Bench, Bengaluru, has been admitted to consider following questions of law: “(i) Whether the Tribunal was justified in law in giving finding which is not the subject matter of appeal before it on the facts and circumstances of the case? (ii) Whether the Tribunal's orders suffer from perversity to the extent that it travelled beyond the scope of the appeal preferred by the Department in that, the Tribunal assumed the plea on jurisdiction / maintainability to have been raised by the Department with respect to the powers of the CIT (A) while dealing with an appeal preferred against an order passed by the Assessing Officer under section 154 of the Act? (iii) Without prejudice whether the Tribunal was justified in law in not granting an opportunity to the appellant to make submission in respect of the finding on ambit and scope of provisions of section 154 of the Act and consequently the order passed is perverse and suffers from the violation of the principles of natural justice and requires to be set aside on the 1 Income Tax Appellate Tribunal - 3 - ITA No. 162 of 2020 facts and circumstances of the case. (iv) Whether the Tribunal was justified in law in confirming the disallowance made by the learned Assessing Officer a sum of Rs.85,77,510/- in respect of commission payment made, when all the evidences in support of the claim appreciated by the learned CIT (A) were produced before the learned Assessing officer on the facts and circumstances of the case. (v) Whether the Tribunal was justified in law in reversing the well-reasoned order of the learned Commissioner of Income- tax (Appeals) on the facts and circumstances of the case?” 2. Heard Ms. Lakshmi Menon, learned advocate for the appellant-assessee and Shri E.I.Sanmathi, learned Standing Counsel for the respondent-revenue. 3. Ms. Menon submitted that in the order passed by the A.O.2 under Section 143(3) of the Act3 for A.Y. 2011-12 dated 21.03.2014, the A.O has disallowed tax on 50% of the commission. The assesssee sought to file additional documents under Section 154 of the Act. The A.O. has held that assessee had not proved during the course of 2 Assessing Officer 3 Income Tax Act, 1961 - 4 - ITA No. 162 of 2020 assessment that commission paid was legitimate and as such, there was no mistake apparent on the face of the record which could be rectified under Section 154 of the Act. The CIT(A)4 having noticed in the earlier assessment order that there was no such disallowance, deleted the addition. The Revenue’s appeal before the ITAT was allowed vide order dated 31.01.2018 in ITA No.882/BANG/2016. Assessee filed Misc. Petition No.262/Bang/2018 and the ITAT has dismissed the same vide order dated 05.10.2018. The assessee has challenged both the orders in this appeal. 4. She submitted that CIT(A) has rightly granted the relief to the assessee. The ITAT has travelled beyond the scope of appeal preferred by the revenue and allowed the same. Therefore, orders impugned are unsustainable in law. Accordingly, she prayed for allowing this appeal. 5. Shri Sanmathi submitted that the orders of the A.O., CIT(A) and ITAT have arisen out of the assessee’s application filed under Section 154 of the Act. 4 Commissioner of Income Tax (Appeals) - 5 - ITA No. 162 of 2020 The assessee’s appeal on the main assessment order is pending consideration before the CIT(A). Therefore, the issue can be considered on merits by the CIT(A). Hence, this appeal does not merit any consideration. Accordingly, he prayed for dismissal of this appeal. 6. Ms.Lakshmi Menon did not dispute the facts stated by Shri Sanmathi and submitted that assesee would be satisfied if CIT(A) is directed to consider the appeal on merits by considering the agreements placed before the Assessing Authority and other supporting evidence. The said submission is just and fair. 7. Since the appeal on main assessment order is pending before the CIT(A) for consideration, in our opinion, ends of justice would be met by directing CIT (A) to consider the documents upon which the assessee relies, while disposing of the appeal, wholly uninfluenced by the orders passed by the ITAT. Ordered accordingly. - 6 - ITA No. 162 of 2020 8. In view of the above, this appeal is rendered academic and accordingly it stands disposed of. No costs. Sd/- JUDGE Sd/- JUDGE YN List No.: 1 Sl No.: 56 "