THE COMMISSIONER OF INCOME TAX V. VENKATESHA EDUCATION SOCIETY

ITA/572/2007

AI Insights

This case involves an appeal by the Commissioner of Income-Tax and the Assistant Director of Income-Tax against the Venkatesha Education Society concerning the assessment year 1998-99. The core issue revolves around the revisional authority's order dated 21-02-2003, which set aside the Assessing Officer's earlier order and directed further inquiries. The Tribunal had previously set aside the revisional authority's order, leading to the current appeal. The High Court found that the Tribunal had erred in setting aside the revisional authority's order without proper consideration of the subsequent detailed order by the Assessing Officer.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 729068 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 18-02-2014
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: S PARTHASARATHI
• Assessee Lawyers: K V ARAVIND
• Keywords: Appeal; Assessing Officer; Assessment Year 1998-99; Exemptions; Income Tax; Revisional Authority; Tribunal
• Section: 143(3); 263; 260-A; 10(22)

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 18TH DAY OF FEBRUARY 2014 PRESENT THE HON'BLE MR.JUSTICE DILIP B.BHOSALE AND THE HON'BLE MR.JUSTICE B.MANOHAR ITA No.572/2007 BETWEEN: 1. The Commissioner of Income-Tax, Central Circle, C.R Building, Queens Road, Bangalore. 2. The Assistant Director of Income-Tax (Exemptions) Circle -17(2), Bangalore. …Appellants (By Sri.K.V.Aravind, Advocate) AND: Venkatesha Education Society, No.125, Armstrong Road, Shivaji Nagar, Bangalore. …Respondent (By Sri.S.Parthasarathi, Advocate) 2 This ITA is filed u/Sec.260-A of I.T.Act, 1961, arising out of order dated 03-02-2006 passed in ITA No.1778/Bang/2004, for the Assessment Year 1998-99, praying this Hon’ble Court to: i. formulate the substantial questions of law stated therein. ii. allow the appeal and set aside the orders passed by the ITAT, Bangalore in ITA.No.1778/Bang/2004 dated 03/02/2006 and confirm the order of the Appellate Commissioner confirming the order passed by the Assistant Director of Income Tax (Exemptions), Circle -17(2), Bangalore. This appeal is coming on for Hearing this day, DILIP B. BHOSALE J., delivered the following: P.C. This income tax appeal is directed against the order dated 3rd February 2006 passed by Income Tax Appellate Tribunal (for short ‘the Tribunal’ ) in ITA No.1778/Bang/04 for the assessment year 1998-99. By this order, the Tribunal allowed the appeal which was directed against the order dated 21-02-2003 passed in exercise of the revisional power conferred under Section 3 263 of the Income Tax Act, 1961 (for short ‘the Act’), by the Director of Income Tax (Exemptions), Bangalore (for short ‘the Revisional Authority’). By this order, the revisional authority, set aside the order dated 24-11-2000 passed by the Deputy Commissioner of Income Tax (for short ‘the Assessing Officer’) holding that the order under Section 143(3) of the Act is erroneous and prejudicial to the interest of the Revenue and remanded the matter to the Assessing Officer with a direction to make further enquiries on the basis of the observations made therein. In the order, the revisional authority, made detailed reference to the points, on which show cause notice was issued by the Commissioner dated 08-01-2003. The concluding paragraph in the order of the revisional authority reads thus: “In view of the aforesaid the order u/s.143(3) dated 24.11.2000 being erroneous and prejudicial to the interest of Revenue is hereby set aside with a direction to the present AO to make further enquiries on the 4 lines directed above earlier and also to take note of the fact of diversion of funds, and lack of existence of a genuine society as laid down under the Memorandum of Association etc., into account and pass a fresh order on the claim of the assessee for exemption u/s.10(22) and determine the total income accordingly”. 2. After the order of revisional authority dated 21-02-2003, it appears that the Assessing Officer passed a detailed order, after having taken into consideration the observations made by the revisional authority in the order dated 21-02-2003 and disposed of the matter vide order dated 30-03-2004. At the same time, the order of the revisional authority dated 21-02-2003 was also challenged by the assessee before the Tribunal and the Tribunal, after the order of the revisional authority was acted upon, set aside the same by the impugned order holding that the points on which, the revisional authority had set aside the order dated 24-11-2000 passed by the Assessing Officer and remanded the matter to hold fresh enquiry were already 5 considered and enquired by the Assessing Officer while passing the said order (24-11-2000). This observation, in our opinion, was factually incorrect. More over, it was not proper on the part of the Tribunal to decide the matter on merits and set aside the order passed in the revision dated 21-02-2003, despite the fact that the said order had already been acted upon and the Assessing Officer had decided the matter vide order dated 30-03-2004. 3. It is pertinent to note that the assessee did not seek stay of the proceedings pending before the Assessing Officer, after filing of the appeal before the Tribunal, against the order passed by the revisional authority dated 21-02-2003. As a result thereof, the Assessing Officer proceeded to hear and decide the matter on merits in the light of the observations made by the revisional authority in his order dated 30-03-2004. That apart, the assessee then had filed an 6 appeal before the CIT (A) against the order dated 30-03-2004 and the appeal was also pending when the Tribunal decided the appeal vide order dated 3rd February 2006. However, in view of the order passed by the Tribunal, CIT (A) instead of deciding the appeal on merits disposed it of vide order dated 16-02-2006 as infructuous. 4. We have perused the order dated 24-11-2000 and find that the order passed by the Assessing Officer was cryptic and running into hardly one page and he had not considered the particulars furnished by the assessee in pursuance of the notice issued under Section 143(2) of the Act. In the circumstances, we are satisfied that no prejudice whatsoever will be caused to the assessee if the order of the Tribunal is set aside and the appeal that was filed by the assessee against the order dated 30-03-2004 bearing ITA No.14/Trust/CIT 7 (A)-V/03-04 is restored to file with a direction to decide it on merits. 5. We deem it appropriate to adopt this course in view of the fact that after the order of remand passed by the revisional authority dated 21-02-2003, the Assessing Officer passed a detailed order taking into consideration the directions issued and the observations made by the revisional authority in the said order (dated 21-02-2003). It is pertinent to note that the assessee also participated in the said proceedings with full vigor and seems to have contested the matter seriously. The order of the Assessing Officer dated 30-03-2004, in our opinion, is reasoned order which was the subject matter of the appeal before the CIT (A) filed by the assessee. Since the appeal was disposed of as infructuous, we deem it appropriate that this appeal can be conveniently disposed of by the following order: 8 (a) The order dated 03-02-2006 passed by the Tribunal is set aside and the order dated 21-02-2003 passed by the revisional authority is restored to file. (b) The order dated 30-03-2004 passed by the Assessing Officer in view of the order of remand vide order dated 21-02-2003, passed by the revisional authority, also stands restored to file. Similarly the appeal filed by the assessee against the said order (30-03-2004) bearing ITA No.14/Trust/CIT (A)-V/03-04 is also restored to file. The Commissioner of Income Tax (Appeals) is directed to decide the said appeal on merits in accordance with law after giving an opportunity of being heard to the parties, in particular, the assessee. All contentions of the parties on merits, insofar as that appeal is concerned are kept open. The Appellate Authority shall endeavor to decide the said appeal as expeditiously as possible, preferably within a period of 8 months from the date of receipt of this order. 9 It is needless to mention that since the order dated 30-03-2004 is the subject matter of the appeal before the CIT (A), the Assessing Officer shall not take any coercive steps to recover the amount, till the appeal is disposed of. With these observations, the appeal is disposed of. Sd/- JUDGE Sd/- JUDGE mpk/-* "