Disposed

M/S Sss Projects Ltd. v. the Deputy Commissioner of Income Tax

Karnataka HC2 Sept 2024ITA/177/2014

Case brief

AI extract

What is this about?

Assessee's appeal was dismissed in limine by appellate authorities for non-payment of admitted tax for assessment year 2007-08. The assessee deposited the admitted tax during pendency. The High Court quashed the CIT(A) and Tribunal orders and remanded the matter to the Commissioner of Income-Tax for fresh disposal on merits.

What did the court decide?

Orders of CIT(A) and ITAT quashed; matter remanded to Commissioner of Income-Tax to decide appeal on merits.

M/S Sss Projects Ltd. Vs the Deputy Commissioner of Income Tax — Income Tax | Karnataka HC (2024)

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NC: 2024:KHC:35648-DB ITA No. 177 of 2014

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 2^ND DAY OF SEPTEMBER, 2024 PRESENT

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THE HON'BLE MR JUSTICE S.G.PANDIT

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AND

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THE HON'BLE MR JUSTICE C.M. POONACHA INCOME TAX APPEAL NO. 177 OF 2014

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BETWEEN:

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M/S. SSS PROJECTS LTD REP. BY ITS MANAGING DIRECTOR SRI K. SATHISH KUMAR, NO.4, SHIRDI SAI KRUPA COMPLEX, III FLOOR, NAGAPPA STREET, SESHADRIPURAM, BANGALORE- 560020.

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…APPELLANT

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(BY SRI. A SHANKAR, SR. ADV. FOR SRI M LAVA, ADV.)

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AND:

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Digitally signed by MARIGANGAIAH PREMAKUMARI Location: HIGH COURT OF KARNATAKA

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THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 12 (3), R.P BHAVAN, OPP. RBI, NO.14/3, 5^TH FLOOR, NRUPATHUNGA ROAD, BANGALORE -560001.

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…RESPONDENT (BY SMT. E.I. SANMATHI, ADV.)

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INCOME TAX APPEAL FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 27/11/2013 PASSED IN ITA NO.350/BANG/2012, FOR THE ASSESSMENT YEAR 2007-2008 PRAYING TO 1. TO FORMULATE THE SUBSTANTIAL QUESTION OF LAW AS STATED ABOVE AND ANSWER THE SAME IN FAVOUR OF THE APPELLANT AND ETC.

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THIS APPEAL, COMING ON FOR HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

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CORAM: HON'BLE MR JUSTICE S.G.PANDIT AND

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HON'BLE MR JUSTICE C.M. POONACHA

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ORAL JUDGMENT

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(PER: HON'BLE MR JUSTICE S.G.PANDIT)

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Heard learned senior counsel Sri.A.Shankar for

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learned counsel Sri.M.Lava for the appellant and learned counsel Sri.E.I.Sanmathi for respondent-revenue.

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The above appeal was admitted on 26.07.2017 to examine the substantial questions of law raised at paragraphs 37, 38, 39 and 40 of the appeal memorandum, which reads as follows:

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37. Whether the Tribunal was justified in not adjudicating on merits of the matter in respect of additions made by the assessing officer merely on account of non-payment of taxes due on the returned income and in violation of Article 265 of the Constitution of India and consequently the appellant is liable to pay huge taxes on the illegal additions made by the

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3 - NC: 2024:KHC:35648-DB ITA No. 177 of 2014

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assessing officer on the facts and circumstances of the case?

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38. Whether the appellate authorities below are justified in law in not adjudicating the issues on re-opening of the assessment under Section 147 of the Act, issues on treating the capital gain as business income contrary to what is declared in the return, disallowance of a sum of Rs.97,53,719/- under Section 40A(3) of the Act in respect of earth-filling/project development expenses, disallowance of a sum of Rs.2,20,55,987/- in respect of the interest paid, disallowance of a round-sum of Rs.5,00,000/- in respect of expenses supported by self made vouchers and levying interest under sections 234B and 234C on the facts and circumstances of the case?

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39. Whether the appellate authorities below were justified in law in dismissing the appeal filed by the appellant in-limine in reassessment proceedings by holding that the appeal is not maintainable on account of non-payment of undisputed tax on the return of income originally filed on the facts and circumstances of the case?

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40. Whether the appellant authorities below were justified in law in dismissing the appeal filed by the appellant in-limine holding that the appeal is mot maintainable on account of nonpayment of undisputed tax when the very reopening of the assessment under section 147 of the Act was challenged in appeals before the appellate authorities on the facts and circumstances of the case?

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Both the learned counsel appearing for the parties would submit that none of the substantial questions of law raised would arise for consideration in the present circumstances as the subject matter of the appeal needs to be remanded to the First Appellate Authority i.e., Commissioner of Income-Tax in view of the fact that the appellant has deposited admitted tax, during the pendency of this appeal.

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Learned senior counsel Sri.A.Shankar placing reliance on the decision of co-ordinate Bench of this Court in COMMISSIONER OF INCOME-TAX-III v/s K.SATISH

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KUMAR SINGH reported in (2012) 19 taxmann.com 154 (Karnataka) submits that this Court has held that if the admitted tax is deposited, the Appellate Authority shall be liberal in entertaining the appeal and to consider the same on merits.

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Learned counsel Sri.E.I.Sanmathi would not dispute the legal position, but he would submit that since the tax amount due from the appellant was for the assessment year 2007-08 and that the appellant has deposited the admitted tax in installments till 2024, the respondentRevenue has to be compensated by way of interest.

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To the above submission, learned senior counsel Sri.A.Shankar would submit that in case the appellant fails in appeal before the First Appellate Authority, the appellant is bound to pay interest from the date of the order till it is deposited. Therefore, he submits that compensating Revenue at this stage would not arise.

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We have carefully considered the submissions of the learned counsel appearing for the parties.

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The substantial questions of law on which, the appeal was admitted would not arise for consideration at this stage, since we are of the view that the matter needs to be remanded to the First Appellate Authority i.e., Commissioner of Income Tax. The First and Second Appellate Authorities refused to entertain the appeal of the appellant herein only on the ground that the appellant had failed to deposit the admitted tax. Therefore, any question that is to be examined shall have to be decided by the Appellate Authorities on merits. Since the appellant has deposited the admitted tax as on this date, we deem it appropriate to remit the subject matter of the appeal to the First Appellate Authority i.e., Commissioner of Incometax.

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