THE COMMISSIONER OF INCOME TAX V. M/S SUSHIL WOOD INDUSTRIES

ITA/571/2007

AI Insights

The case involves an Income Tax Appeal by the Commissioner of Income Tax and the Joint Commissioner of Income Tax against M/s Sushil Wood Industries, concerning the assessment year 1998-99. The appeal was directed against the order of the Income Tax Appellate Tribunal, Bangalore, which had dismissed the Revenue's appeal and upheld the decision of the Appellate Authority that favored the assessee. The core issue revolved around the assessment of transactions between the assessee and its sister concern, which were allegedly not conducted at arm's length. The High Court's decision to remand the case was based on the need for a detailed examination of these transactions across multiple assessment years, following a precedent set in a related case (ITA No.406/2004).

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 733442 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 27-01-2014
• Assessment Year: misc
• Other Referred Cases: ITA No.406/2004
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: S PARTHASARATHI
• Assessee Lawyers: K V ARAVIND
• Keywords: Appellate Tribunal; Assessing Officer; Assessment Year; First Appellate Authority; Income tax appeal
• Section: 143(3); 260-A

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 27TH DAY OF JANUARY 2014 PRESENT THE HON'BLE MR.JUSTICE DILIP B. BHOSALE AND THE HON'BLE MR.JUSTICE B.MANOHAR ITA NO.571/2007 BETWEEN 1. THE COMMISSIONER OF INCOME TAX C.R.BUILDING ATTAVARA MANGALORE. 2. THE JOINT COMMISSIONER OF INCOME TAX ASSESSMENT SPECIAL RANGE C.R.BUILDING ATTAVARA MANGALORE. ... APPELLANTS (By Sri. K V ARAVIND, ADV.S) AND M/S SUSHIL WOOD INDUSTRIES RUPIN CHAMBERS BALMATTA ROAD MANGALORE. ... RESPONDENT (By Sri. S PARTHASARATHI, ADV.) I.T.A. filed u/S.260-A of I.T. Act 1961 arising out of order dated 26-12-2006 passed in ITA No.353/BAN/2005 for the Assessment Years 1998-99, praying that this Hon'ble Court may be pleased to: 2 i. formulate the substantial questions of law stated therein, ii. allow the appeal and set aside the order passed by the ITAT, Bangalore Bench -B in ITA No.353/BAN/2005 dated 26-12-2006 & confirm the order passed by the Joint Commissioner of Income Tax, Special Range, Mangalore, in the interest of justice and equity. THIS ITA COMING ON FOR FINAL HAERING THIS DAY, DILIP B.BHOSALE J. DELIVERED THE FOLLOWING: J U D G M E N T This Income Tax Appeal is directed against the order dated 21.12.2006 passed by the Income Tax Appellate Tribunal, Bangalore Bench ‘B’ (for short ‘the Tribunal’) in ITA No.353/2005 pertaining to assessment year 1998-99, whereby the appeal filed against the order of the Appellate Authority dated 17.12.2004, by the Revenue was dismissed by the Tribunal. The Appellate Authority, against the order of the Assessing Officer dated 31.1.2001 had allowed the appeal filed by the respondent assessee. 2. It appears that the Assessing Officer had passed the order under Section 143(3) of the Act against the very same respondent assessee for the assessment year 1997-98. Against the order of the Assessing Officer, the 3 assessee had filed an appeal before the First Appellate Authority and that appeal was also dismissed. The order in the appeal was carried by the assessee in further appeal before the Tribunal. The Appellate Tribunal allowed the appeal filed by the assessee and set aside the concurrent findings recorded by the First Appellate Authority and the Assessing Officer vide order dated 14.1.2004. In view thereof, the Appellate Authority, in the present case vide its order dated 17.12.2004, allowed the appeal filed by the assessee. 3. Mr.Aravind, learned counsel appearing for the Revenue at the outset invited our attention to the order dated 7.2.2008 passed by the Division Bench of this Court in ITA No.406/2004, whereby the order dated 14.01.2004 passed by the Tribunal, reversing the concurrent findings of the Assessing Officer and the Commissioner of Income Tax (Appeals) in respect of the very same assessee pertaining to assessment year 1997- 98, was set aside. He submitted that this Court allowed the appeal filed by the Revenue and remanded the matter to the Assessing Officer, directing him to look 4 into the entire sale transaction of the particular assessment year, not only with that of the sister concern of the assessee, but also all other transaction, if any, and to find out whether any undue favour is shown to sister concern without collecting the sale price within a reasonable time as prudent business man and without collecting any interest on belated payment. This Court further observed that, in the usual course, the assessee is selling the timber on credit basis to third parties in the similar line to that of the transaction with the sister concern of the assessee, then the Assessing Officer has to pass an order taking into consideration the overall transaction of the assessee. 4. It is in this backdrop, Mr.Aravind, learned counsel appearing for the Revenue submitted that this appeal may also be allowed in terms of the order dated 7.2.2008 passed by this Court in ITA No.406/2004 and the matter be remitted to the Assessing Officer with direction to the Assessing Officer to decide the matter afresh along with the matter pertaining to the 5 assessment year 1997-98 and of other assessment years, if any. The learned counsel appearing for the respondent- assessee consented for such order. Hence, we dispose of this appeal by the following order: We set aside the orders passed by all the three authorities namely the Tribunal, the First Appellate Authority and the Assessing Officer and remand the matter to the Assessing Officer for deciding it afresh in terms of the order dated 7.2.2008 passed in ITA No.406/2004 along with the matters in respect of the respondent assessee pertaining to assessment year 1997-98 and other assessment years, if any. With these observations, this appeal is disposed of. All contentions of the parties are kept open. Sd/- JUDGE Sd/- JUDGE ap. "