Maharaja Shopping Complex V. The Deputy Commissioner of Income-Tax, Circle-1(2)

ITA/832/2008

AI Insights

The case involves M/s Maharaja Shopping Complex, the appellant, challenging the order of the Income-Tax Appellate Tribunal which confirmed the assessment order passed by the Deputy Commissioner of Income-Tax for the assessment year 2003-2004. The primary contention was whether the tribunal was justified in holding that the assessment was completed within the time of limitation when the order was served on the appellant beyond the prescribed time without an opportunity for rebuttal regarding the date of completion of assessment. The court examined the procedural validity of the assessment order, particularly focusing on the communication of the order to the assessee.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 794112 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 14-10-2014
• Assessment Year: misc
• Other Referred Cases: GOVERNMENT WOOD WORKS vs STATE OF KERALA, Malayil Mills v. State of Kerala, Raja Harish Chandra Raj Singh v. Deputy Land Acquisition Officer, Bachhittar Singh v. State of Punjab, State of Punjab v. Khemi Ram, B.J. Shelat v. State of Gujarat, T. R. C. No. 6 of 1981, Viswanaihan Chettiar, Laxmidas & Co.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND
• Assessee Lawyers: A SHANKAR; M LAVA
• Keywords: Income Tax; Jurisdictional aspect; Limitation; Assessment Year 2003-2004; Generator Acquisition
• Section: 260-A

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 14th DAY OF OCTOBER 2014 PRESENT THE HON’BLE MR JUSTICE N. KUMAR AND THE HON’BLE MR JUSTICE B. MANOHAR ITA NO. 832/2008 BETWEEN: M/S MAHARAJA SHOPPING COMPLEX WESLEY PRESS CAMPUS OPP TO KSRTC BUS STAND BANGALORE – NILGIRI ROAD MYSORE – 570 001 REPRESENTED BY ITS MANAGING PARTNER SMT A K RADHAMANI AGED ABOUT 74 YEARS W/O SRI P N S PILLAI. ..APPELLANT (BY SRI A SHANKAR & M LAVA, ADVS.) AND: THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1(2) NO.55/1, SHILPASHREE BUILDING STERLING TALKIES ROAD VISVESWARANAGAR MYSORE – 570 008. ..RESPONDENT (BY SRI K V ARAVIND, ADV.) THIS APPEAL IS FILED UNDER SECTION 260- A OF I.T.ACT, 1961 PASSED BY INCOME -TAX 2 APPELLATE TRIBUNAL BEARING ITA NO.534/BANG/2007 FOR THE ASSESSMENT YEAR 2003-2004 DATED 4.4.2008, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN AND ALLOW THE APPEAL AND SET ASIDE THE ORDER OF THE INCOME-TAX APPELLATE TRIBUNAL BEARING ITA NO.534/BANG/07 FOR THE ASSESSMENT YEAR 2003-2004 DATED 4.4.2008. THIS APPEAL COMING ON FOR HEARING THIS DAY, N KUMAR J., DELIVERED THE FOLLOWING: JUDGMENT The assessee has preferred this appeal challenging the order passed by the appellate authorities which confirms the order passed by assessing authority. 2. This appeal was admitted on 16.12.2008 to consider the following substantial question of law: “Whether in law, the Tribunal was justified in holding that the appellant had not discharged the onus of proving the acquisition of generator inspite of having filed the confirmation from the sellers towards the same and also with reference to the entries in the books of account and other evidences, available relating to the existence of the asset?” 3. At the time of hearing, Sri A Shankar, learned counsel for the assessee wanted an additional substantial question of law to be raised which goes to 3 the root of the matter being on a jurisdictional aspect. The said substantial question of law is as under: “Whether in law, the tribunal was justified in holding that the assessment was completed within the time of limitation when the order was served on the appellant well beyond the time of limitation and when the appellant was not provided an opportunity for its rebuttal with regard to the date of completion of assessment”. 4. The undisputed facts are the assessment order for the assessment year 2003-04 had to be passed on or before 31.03.2006, the period prescribed under law. The order was passed on 28.02.2006 within the said period. However, the copy of the said order was served on the assessee on 18.04.2006. The Division Bench of the Kerala High Court in the case of GOVERNMENT WOOD WORKS vs STATE OF KERALA (1988 STC Vol 69, page 62) after referring to several Judgments of the Apex Court held as under: “13. A Division Bench of this Court, consisting of Subramonian Potti, Ag. C. J. and Chandrasekhara Menon, J., had occasion to deal with a similar question in Malayil Mills v. State of Kerala (T.R.C. Nos. 15 and 16 of 1981), the judgment in which was delivered on 7th June, 1982. The assessee in that case had purchased copra during the years 1961- 4 62 and 1962-63. The law, as it then stood, did not serve the purpose of bringing to tax the purchases of copra. The Kerala State Legislature, therefore enacted the Kerala Sales Tax (Levy and Validation) Act, 1965 to validate the levy of tax on copra during the said two years, among others and to enable assessments to be made where non-existed. Section 3 of the Act, which was to operate retrospectively from 1st April, 1958, imposed a liability on every dealer to pay tax on his turnover relating to purchase of copra. Section 4(1)(iv) which operated from 27th September, 1965, enabled assessments to be made within three years (extended by subsequent amendment to five years) of the date of publication of the Validation Act in cases where the tax payable on the purchase of copra had not been assessed under the General Sales Tax Act. By virtue of this provision, as amended, the assessing authority could assess the tax due on the purchases of copra within five years from 27th September, 1965, i.e., before 27th September, 1970. The assessments in question for the two years 1961-62 and 1962- 63 were made on 23rd September, 1968; but the orders were served on the assessee only on 4th February, 1972. The assessee challenged the said orders before this Court, inter alia, on the ground that the orders were barred by limitation as they had been made only long after the prescribed period of five years. The matter was dealt with in detail by this Court. Relying on the decisions in Raja Harish Chandra Raj Singh v. Deputy Land Acquisition Officer [1962] 1 SCR 676, Bachhittar Singh v. State of Punjab AIR 1963 SC 395, State of Punjab v. Khemi Ram AIR 1970 SC 214, B.J. Shelat v. State of Gujarat AIR 1978 SC 1109 and the earlier decision of this Court in T. R. C. No. 6 of 5 1981, to which the Acting Chief Justice was a party, it was stated : “Any authority on which power is conferred, the exercise of which power would affect the rights of parties, is to communicate its order to the party against whom the order would operate. The mere preparation of an order or even keeping the order signed in the files of the office would not render it an effective order, an order which is operative. The exceptions are cases where there is requirement of pronouncing the orders and they are pronounced on notified dates. Then irrespective of the actual presence or otherwise of the parties, notice to the parties is assumed. In other cases, if the authority making the order fails to communicate the order, the order could not be said to have been made, for communication of such order is an essential part of making such order. This is naturally so, for any authority who writes out an order and signs it is free to change it at any time before it is communicated. It is not final at all, for the authority may become wiser on information supplied to it or otherwise and may choose to change the order at any time before it is despatched to the party against whom it operates.\" * * * “9. In the circumstances, we have no hesitation to find that the order of the Sales Tax Officer, assuming that it was made, signed and kept in the files, was not effective and complete until it was issued to the party which was done only in 1972. By that time the five years period had expired. Action would be barred and the order could not have been passed”. 6 14. The order of any authority cannot be said to be passed unless it is in some way pronounced or published or the party affected has the means of knowing it. It is not enough if the order is made, signed, and kept in the file, because such order may be liable to change at the hands of the authority who may modify it or even destroy it, before it is made known, based on subsequent information, thinking or change of opinion. To make the order complete and effective, it should be issued, so as to be beyond the control of the authority concerned, for any possible change or modification therein. This should be done within the prescribed period, though the actual service of the order may be beyond that period. This aspect of the matter had not come up for consideration in the cases of Viswanaihan Chettiar [1954] 25 ITR 79 (Mad.) and Laxmidas & Co. [1969] 72 ITR 88 (Bom) where the only question dealt with was whether service of the order after the prescribed period rendered it invalid. Unless, therefore, the order of the Deputy Commissioner in this case had been so issued from his office within the period prescribed, it has to be held that the proceedings are barred by limitation. This question has not been considered by the Tribunal. The Tribunal, which passed the order, apparently did not have the benefit of the decision in Malayil Mills case (T. R. C. Nos. 15 and 16 of 1981 decided on 7th June, 1982-Kerala High Court) which, so far as we could see, remains, unreported. The matter has therefore to go back to the Tribunal for an examination of the records to ascertain whether the order of the Deputy Commissioner had been issued from his office within the period of four years prescribed in Section 35(2) of the Act. The Tribunal will adjudicate the matter in the light of the observations contained herein and in 7 the judgment in the case of Malayil Mills (T. R. C. Nos. 15 and 16 of 1981 decided on 7th June, 1982-Kerala High Court) extracted earlier”. 5. Learned counsel for the revenue is unable to point out from the records whether the assessment order was dispatched from the office before 31.03.2006. Therefore, it is clear when the same was received by the assessee on 18.04.2006, it might have been dispatched few days prior to that and subsequent to 31.03.2006. In that view of the matter, the law laid down as aforesaid squarely applies to the facts of this case and therefore, any just conclusion that could be reached is that the order passed is barred by law of limitation. In that view of the matter, the additional substantial question of law framed today is answered in favour of the assessee and against the revenue. Accordingly, the appeal is allowed. The impugned orders are set-aside. sd/- JUDGE Sd/- JUDGE Brn "