Sri. Thimmayya Shetty 'Panchadurga' Padukonaje Moodabidri V. The Assistant Commissioner of Income Tax Investigation Circle, Mangalore

ITA/693/2007

AI Insights

The case involves an appeal by Sri. Thimmayya Shetty against the orders of the Tribunal concerning block assessment periods from 1988 to 1999. The primary contention was the Tribunal's lack of jurisdiction to examine the validity of the search authorization, which was a prerequisite for the block assessment. The Tribunal had relied on earlier judgments which stated it did not have the power to examine the validity of the search in appeals against block assessments. However, the High Court of Karnataka referenced its own previous decision, which held that the Tribunal does have jurisdiction to examine the validity of the search authorization as it is essential for initiating the assessment process. Consequently, the High Court remitted the matter back to the Tribunal for a fresh examination of the jurisdictional point and other issues.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 670854 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 18-08-2014
• Assessment Year: misc
• Other Referred Cases: Promain Ltd. Vs Deputy Commissioner Of Income Tax (281 ITR 107), M.Bhat Vs. CIT (279 ITR 298), C.Ramaiah Reddy Vs. Assistant Commissioner of Income Tax (Imv) (2011 61 DTR (KAR) 82)
• 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: Block assessment; Jurisdiction; Remand; Validity of search
• Section: 132; 260-A

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 18TH DAY OF AUGUST 2014 PRESENT THE HON'BLE MR. JUSTICE N. KUMAR AND THE HON'BLE MRS. JUSTICE RATHNAKALA I.T.A. NO.693/2007 BETWEEN: SRI.THIMMAYYA SHETTY “PANCHADURGA” PADUKONAJE MOODABIDRI ... APPELLANT (BY SRI.A.SHANKAR & SRI.M.LAVA, ADVS.) AND: THE ASSISTANT COMMISSIONER OF INCOME TAX INVESTIGATION CIRCLE, MANGALORE. ... RESPONDENT (BY SRI.K.V.ARAVIND, ADV.) THIS INCOME TAX APPEAL IS UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 9.11.2006 & 9.5.2007 PASSED IN IT(SS)A NO.81/BANG/2003 AND MP NO.13/BANG/2007 FOR THE BLOCK ASSESSMENT PERIOD 1.4.1988 TO 24.2.1999, PRAYING THIS HON'BLE COURT TO: 1. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATE THEREIN 2. ALLOW THE APPEAL AND SET ASIDE THE ORDER OF THE TRIBUNAL BEARING NO. IT(SS)A NO.81/BANG/2003 FOR THE BLOCK ASSESSMENT PERIODS 1988 TO 1999 TO THE EXTENT IT IS AGAINST 2 THE APPELLANT AND MP NO.13/BANG/2007, ANNEXURES-A1 AND A2, IN THE INTEREST OF JUSTICE AND EQUITY. THIS APPEAL COMING ON FOR HEARING, THIS DAY, N.KUMAR, J., DELIVERED THE FOLLOWING: J U D G M E N T The assessee has preferred this appeal against the orders passed by the Tribunal which has held that the Tribunal has no power to examine the validity of the search and thereafter proceed to examine the case on merits and has passed the impugned orders. 2. The Tribunal was following the judgment of the Special Bench in the case of Promain Ltd. Vs Deputy Commissioner Of Income Tax (281 ITR 107), where it was held that the Tribunal has no powers to examine the validity of authorization for search in appeal against block assessment. It has also relied on judgment of the Delhi High Court in the case of M.Bhat Vs. CIT reported in 279 ITR 298 where it was 3 held that Tribunal has no power to decide the issue of validity of warranty under Section 132 while hearing block assessment. This Court had an occasion to consider the said question in the case of C.Ramaiah Reddy Vs. Assistant Commissioner of Income Tax (Imv) reported in 2011 61 DTR (KAR) 82 wherein it was held that the Tribunal has jurisdiction to go into a validity of the search as it is a sina qua non for the authorities to initiate authorization and consequently to pass assessment order. Therefore, the said order passed by the Tribunal cannot be sustained. Hence it is appropriate that the matter should be remanded to the Tribunal to consider the jurisdictional point, in the light of the aforesaid judgment of this Court. 3. In view of the fact that matter is remitted back to the Tribunal, we are not going into the findings recorded by the Tribunal against the assessee as that matter also can be looked into by the Tribunal afresh. Hence we pass the following: 4 O R D E R The appeal is allowed. The impugned order insofar as it is against the assesee is hereby set aside. The matter is remitted back to the Tribunal for fresh consideration in accordance with law in the light of the aforesaid decision in C.Ramaiah Reddy’s case and also consider all other issues which are the subject matter of this appeal. Sd/- JUDGE Sd/- JUDGE RS/* "