Shri G Venkatesh vs The Income Tax Officer
2021 Latest Caselaw 5998 Kant

  IN THE HIGH COURT OF KARNATAKA AT BENGALURU

    DATED THIS THE 13TH DAY OF DECEMBER, 2021

                        PRESENT

        THE HON'BLE MRS.JUSTICE S.SUJATHA

                          AND

    THE HON'BLE MR. JUSTICE S.VISHWAJITH SHETTY

                   I.T.A.No.29/2018

BETWEEN :

SHRI G.VENKATESH
# 199, 16TH MAIN, 4TH T BLOCK,
JAYANAGAR, BENGALURU-560041,
PAN: AFEPG1125R                               ...APPELLANT

  (BY SRI S.ANNAMALAI A/W SRI BHAIRAV KUTTAIAH, ADVS.)

AND :

THE INCOME TAX OFFICER
WARD 4(1), BMTC BUILDING,
80 FEET ROAD, 6TH BLOCK,
KORAMANGALA, BENGALURU-560095              ...RESPONDENT

    (BY SRI DILEEP M., ADV. FOR SRI K.V.ARAVIND, ADV.)

      THIS INCOME TAX APPEAL IS FILED UNDER SECTION
260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER
DATED 22.09.2017 PASSED IN ITA Nos.1075/BANG/2012 AND
1432/BANG/2012, FOR THE ASSESSMENT YEAR 2005-2006,
PRAYING (A) TO FORMULATE THE SUBSTANTIAL QUESTIONS
OF LAW STATED ABOVE AND ANSWER THE SAME IN FAVOUR
OF THE APPELLANT. (B) TO ALLOW THE APPEAL AND SET
ASIDE THE FINDINGS THEREIN TO THE EXTENT AGAINST THE
APPELLANT IN THE ORDER PASSED BY THE INCOME-TAX
APPELLATE TRIBUNAL, "B" BENCH, BANGALORE IN ITA
Nos.1075/BANG/2012    AND    1432/BANG/2012     DATED
                           -2-



22.09.2017 FOR THE ASSESSMENT YEAR 2005-2006 [VIDE
ANNEXURE-A].

      THIS APPEAL COMING ON FOR HEARING,     THIS   DAY,
S. SUJATHA, J., DELIVERED THE FOLLOWING:

                   JUDGMENT

This appeal is filed by the assessee under Section

260A of the Income Tax Act, 1961 ('Act' for short)

challenging the order dated 22.09.2017 passed in ITA

Nos.1075/Bang/2012 and 1432/Bang/2012 by the

Income Tax Appellate Tribunal, "B" Bench, Bangalore

('Tribunal' for short) relating to the assessment year

2005-06.

2. The appellant - assessee is an individual.

The return filed by the assessee for the assessment year

under consideration was processed under Section

143(1) by the Assessing Officer. Thereafter, a notice

under Section 148 of the Act dated 08.03.2010 was

issued, to which the assessee sought for reasons

recorded under Section 148(2) of the Act. The reasons

recorded was furnished to the assessee, pursuant to

which, the assessee filed objections/reply. The

Assessing Officer has passed the assessment order

dated 28.12.2010 under Section 144 read with Section

147 of the Act. Being aggrieved by the said order, the

appellant - assessee preferred an appeal before the CIT

(Appeals) mainly on the ground that no separate order

dealing with the objections raised was passed before

passing the assessment order dated 28.12.2010. The

said appeal came to be partly allowed. The rectification

petition filed by the appellant - assessee, however, came

to be rejected.

3. Being aggrieved by the said orders of the CIT

(Appeals), two separate appeals were filed by the

assessee before the Tribunal. The Tribunal, after

hearing the parties has directed the Assessing Officer to

pass a separate speaking and reasoned order disposing

of the objections raised by the assessee holding that if

the Assessing Officer arrives at a finding that the re-

assessment proceedings are valid then it should

complete the assessment proceedings denovo after

providing reasonable opportunity of being heard to the

assessee. Aggrieved by the same, the assessee has filed

this appeal.

4. The appeal has been admitted by this Court

to consider the following substantial questions of law:-

1) Whether the Tribunal erred in law in not annulling the assessment when the Assessing Officer has not passed a separate speaking order in disposing of the objections to the notice under section 148 of the Act before passing the Assessment order on the facts and circumstances of the case?

2) Whether the Tribunal erred in law in not holding that the mandatory conditions for issue of notice under section 148 did not exist and have not been complied and consequently ought to have held that the entire assessment is devoid of jurisdiction and further ought to have cancelled the

assessment on the facts and circumstance of the case?

3) Whether the Tribunal erred in law in not holding that the assessing officer who had issued the notice under section 148 of the Act had no jurisdiction to issue such notice on the facts and circumstance of the case?

4) Whether the notice issued under section 148 of the Act, is itself bad in law in as much as the notice is very vague as the notice is very vague as the notice does not specify whether to 'assess' or 'reassess' the income of the Appellant and consequently the order passed under section 144 r/w section 147 of the Act on an invalid notice is bad in law and void ab initio on the facts and circumstances of the case?

5. Learned counsel for the assessee argued that

any assessment order sans considering the objections is

void ab initio. In the absence of separate speaking order

passed by the Assessing Officer considering the

objections, the Tribunal ought to have set aside the

assessment order. In support of his contentions, learned

counsel has placed reliance on the following judgments:

1. Deepak Extrusions (P) Ltd., vs. Deputy Commissioner of Income-tax, Bangalore [(2017) 80 taxmann.com 77 (Karnataka)];

2. Standard Chartered Finance Ltd., vs. Commissioner of Income-tax, Bangalore [(2016) 381 ITR 453 (SC)];

3. GKN Driveshafts (India) Ltd., vs. Income-tax Officer [(2003) 259 ITR 19 (SC)].

6. Learned counsel for the Revenue justifying

the impugned order submitted that the Tribunal indeed

has directed the Assessing Officer to pass a speaking

order on the objections said to have been filed by the

appellant - assessee, thereafter to initiate denovo

proceedings after providing reasonable opportunity of

being heard to the parties. Learned counsel further

submitted that the appellant - assessee has preferred

Miscellaneous Petition Nos.81 and 126/Bang/2018

contending that the assessment order should have been

quashed as bad in law that the Tribunal has restored

back the matter to the Assessing Officer for fresh

decision, which is not line with the judgment of Hon'ble

Apex Court rendered in the case of GKN Driveshafts

(India) Ltd., supra, and the judgment of this Court

rendered in the case of Deepak Extrusions (P) Ltd.,

supra. The Tribunal having considered the said

arguments advanced by the appellant dismissed the

Miscellaneous Petitions, however the same is not

challenged before this Court. On this ground alone, the

appeal deserves to be dismissed.

7. We have bestowed our anxious consideration

to the arguments advanced by the learned counsel for

the parties and perused the material on record.

8. In Deepak Extrusions (P) Ltd., supra, the

Co-ordinate Bench of this Court held that the Assessing

Officer, not disposing of the objections prior to

proceeding with the assessment and further passing the

order would indicate that the mandatory procedure of

disposal of the objections by the Assessing Officer before

proceeding with the assessment has not been followed

and exercise of power can be said as not only vitiated,

but order of assessment cannot be sustained. Setting

aside the said assessment order, it has been observed

that the Assessing Officer shall be at liberty to proceed

in the matter in accordance with law.

9. In Standard Chartered Finance Ltd.,

supra, the Hon'ble Apex Court considering the

contention of the assessee that when there was no

assessment order even passed in the original

proceedings, held that the ratio laid down in Trustees of

H.E.H., The Nizam's Supplemental Family Trust's case

[(2000) 242 ITR 381] would be applicable. It has been

held that where there is no assessment order passed,

there cannot be a notice for re-assessment inasmuch as

the question of re-assessment arises only when there is

an assessment in the first instance.

10. There is no cavil on the legal proposition

canvassed by the learned counsel for the appellant -

assessee based on the aforesaid dictums laid down by

the Hon'ble Courts. The grounds urged before the

Tribunal was exclusively relating to the Assessing

Officer not passing a separate speaking order dealing

with the objections filed by the assessee. The order

passed in the Miscellaneous Petitions would disclose

that the assessee has not co-operated with the

Assessing Officer in assessment proceedings, which

resulted in passing of ex-parte order under Section 144

of the Act. In this background, the Tribunal has

restored the matter to the file of the Assessing Officer

for fresh decision. Further, it is forthcoming from the

said order that albeit the appellant - assessee has

referred to the ruling of this Court in Deepak

- 10 -

Extrusions (P) Ltd., supra, no judgment copy was

made available before the Tribunal. Mere citing of a

judgment is not suffice, copies of the same must be

made available before the Tribunal/Court.

11. The circumstances which forced the

Assessing Officer to pass the ex-parte assessment order

under Section 144 as narrated in the Assessment order

is quoted hereunder:-

"The notice under Section 148 was issued

on 08.03.2010 and served on the assessee on

09.03.2010 requesting the assessee to file return

within 16 days. The assessee further sought

time to file return of income. Despite granting

reasonable opportunity, the assessee has

neither filed return of income nor filed any

reply."

12. Hence, Assessing Officer has issued a notice

under Section 142(1) and further notices were also

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issued. But the assessee has not filed the return nor

adopted the return filed earlier as the return filed

subsequent to issue of notice under Section 148 of the

Act.

13. Considering the law enunciated by the

Hon'ble Apex Court in GKN Driveshafts (India) Ltd.,

supra, the Tribunal has observed that the Assessing

Officer has provided the reasons and also disposed of

the objections though not by way of separate order but

in the body of the assessment order, hence dismissed

the Miscellaneous Petitions. The assessee has

suppressed these material facts before this Court. Even

assuming that the Miscellaneous Petitions were filed

subsequent to filing of the present appeal, it was

obligatory on the part of the assessee to bring it to the

notice of this Court at the time of hearing inasmuch as

the disposal of the Miscellaneous Petitions in the

manner as aforesaid. In the absence of challenge to the

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order passed in Miscellaneous Petitions, the arguments

now advanced by the learned counsel for the assessee is

wholly untenable. Moreover, no prejudice is caused to

the assessee in restoring the matter back to the file of

Assessing Officer to pass a speaking order on the

objections and then to conclude the assessment. With

great respect, the judgments relied upon by the learned

counsel for the appellant - assessee are distinguishable

and not applicable to the facts and circumstances of the

case.

14. In GKN Driveshafts (India) Ltd., supra, the

Hon'ble Apex Court has held that the assessee can seek

reasons recorded by the Assessing Officer only after

filing of the return of income. Objections could be raised

thereafter which requires to be disposed of by Assessing

Officer. But the assessee herein has not filed the return

subsequent to issuance of notice under Section 148 of

the Act nor adopted the return filed earlier. Hence,

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alleging non-disposal of the objections by a speaking

order has been rightly considered by the Tribunal and

the matter has been restored back to the file of the

Assessing Officer. Hence, we find no perversity or

infirmity in the order impugned.

15. For the reasons aforesaid, the substantial

questions of law are answered in favour of the Revenue

and against the assessee.

Resultantly, the appeal stands dismissed.

Sd/-

JUDGE

Sd/-

JUDGE

PMR