THE PR COMMISSIONER OF INCOME TAX CENTRAL V. M/S KARTHIK ESTATE

ITA/30/2023

AI Insights

The case involves an appeal by the Revenue against the order of the Income Tax Appellate Tribunal, Bengaluru, which had quashed the order passed by the revisional authority under section 263 of the Income Tax Act, 1961. The Tribunal had found that the Pr. Commissioner of Income Tax was not justified in invoking revision proceedings as the Assessing Officer had not made any enquiry or verification regarding the source of additional income declared during the search proceedings. The Revenue challenged this decision, arguing that the Pr. Commissioner had the power to set aside the assessment order if it was found to be erroneous and prejudicial to the interest of the Revenue. The appeal was admitted to consider substantial questions of law regarding the Tribunal's findings and the powers of the Pr. Commissioner under section 263 of the Act.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 758646 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 27-09-2024
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: MADHUSUDHAN
• Assessee Lawyers: DILIP; RAVI RAJ
• Keywords: Assessment Order; Central Board of Direct Taxes circular; Erroneous and Prejudicial; Income tax appeal; Revision proceedings; Tax effect; Tax effect
• Section: 263; 260-A

Judgement Text

" - 1 - NC: 2024:KHC:40425-DB ITA No. 30 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF SEPTEMBER, 2024 PRESENT THE HON'BLE MR JUSTICE S.G.PANDIT AND THE HON'BLE MR JUSTICE C.M. POONACHA INCOME TAX APPEAL NO. 30 OF 2023 BETWEEN: 1. THE PR.COMMISSIONER OF INCOME TAX CENTRAL, 3RD FLOOR, C.R.BUILDING QUEENS ROAD BANGALORE - 560 001. 2. THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 1 C.R.BUILDING, ATTAVARA MANGALORE - 575 001. …APPELLANTS (BY SRI.DILIP M., ADVOCATE ALONG WITH SRI.RAVIRAJ Y.V., ADVOCATE) Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA - 2 - NC: 2024:KHC:40425-DB ITA No. 30 of 2023 AND: M/S. KARTHIK ESTATE 79/AP1, 79/1A1, KIDIYOOR VILLAGE, UDUPI -576 103 PAN: AAQFK0031M …RESPONDENT (BY SRI. MADHUSUDHAN U.A., ADVOCATE) THIS APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT, 1961, PRAYING TO ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BENGALURU IN ITA. NO. 432/BANG/2022 DATED 24.08.2022 FOR ASSESSMENT YEAR 2018-2019 ANNEXURE-C AND ETC., THIS APPEAL IS COMING ON FOR FINAL HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE S.G.PANDIT AND HON'BLE MR JUSTICE C.M. POONACHA - 3 - NC: 2024:KHC:40425-DB ITA No. 30 of 2023 ORAL JUDGMENT (PER: HON'BLE MR JUSTICE S.G.PANDIT) Heard the learned counsel Sri.Dilip.M., along with Sri.Raviraj.Y.V., learned counsel for the appellants/Revenue and Sri.Madhusudhan.U.A., learned counsel for respondent/assessee. 2. The Revenue is in appeal under Section 260-A of the Income Tax Act, 1961 (for short, ‘the Act’) questioning the correctness and legality of order dated 24.08.2022 passed by the Income Tax Appellate Tribunal, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.432/Bang/2022 for the assessment year 2018-19. 3. This Court, admitted the appeal on 10.01.2023 to consider the following substantial questions of law: \"1. Whether in the facts and circumstances of the case and law, the Tribunal’s order is perverse in nature in holding that the Pr. Commissioner of Income Tax was not justified invoking revision proceedings when the Assessing Officer has not made any enquiry or verification with regard to the source of additional income declared by the managing partner during course of search proceedings? - 4 - NC: 2024:KHC:40425-DB ITA No. 30 of 2023 2. Whether in the facts and circumstances of the case and law, the Tribunal is correct in law not appreciating that Pr. Commissioner of Income Tax has power to set-aside the assessment order and send the matter for assessing authority, if he is satisfied that impugned order is erroneous and prejudicial to the interest of the Revenue? 3. Whether in the facts and circumstances of the case and law, the Tribunal’s order is perverse in nature in quashing the order passed by revisional authority under section 263 of the Act when the all the conditions prescribed under said section are fully satisfied?\" 4. Learned counsel for the assessee submits that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal should not be entertained at the instance of the revenue in view of the Circular No.09/2024 dated 17.09.2024 issued by the Central Board of Direct Taxes. It is also submitted that the aforesaid Circular binds the revenue. 5. On the other hand, learned counsel for the revenue submits that he be granted liberty to revive the appeal in case the matter falls within the exceptions under the aforesaid - 5 - NC: 2024:KHC:40425-DB ITA No. 30 of 2023 Circular dated 17.09.2024 and Circular No.5/2024 dated 15.03.2024. 6. In view of the aforesaid submissions, the appeal is disposed of with liberty as prayed for by the learned counsel for the revenue. However, the question of law is kept open to be adjudicated in an appropriate proceeding. Sd/- (S.G.PANDIT) JUDGE Sd/- (C.M. POONACHA) JUDGE SMJ List No.: 4 Sl No.: 41 "