2024 (10) TMI 756 - HC - Income Tax

Substantial questions of law or not - 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 - 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 under Section 40A (3) of the Act in respect of earth-filling/project development expenses, disallowance of a sum in respect of the interest paid, disallowance of a round-sum 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? HELD THAT - 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 Income-tax. Accordingly, order passed by the Income Tax Appellate Tribunal, Bangalore Bench C and order passed by the Commissioner of Income-Tax (Appeals)-III, Bangalore are quashed.

Summary

Issues: Appeal admission based on substantial questions of law, non-payment of admitted tax, remand to First Appellate Authority, interest compensation by appellant, quashing of previous orders.

Analysis:
The judgment by the High Court of Karnataka involved the consideration of substantial questions of law raised in an appeal memorandum. The appellant questioned the Tribunal's decision not to adjudicate on additions made by the assessing officer due to non-payment of taxes, violation of Article 265 of the Constitution, and the legality of various disallowances and interest levies. Both parties agreed that the appeal should be remanded to the First Appellate Authority as the appellant had deposited the admitted tax during the appeal's pendency. The appellant relied on a previous court decision to support the deposit of admitted tax for appeal consideration. The respondent raised concerns about the appellant's delayed tax payments until 2024 and sought interest compensation. The court noted that the appeal should be remanded to the First Appellate Authority since the admitted tax had been deposited, allowing for a consideration of the matter on merits. Consequently, the orders of the Income Tax Appellate Tribunal and the Commissioner of Income-Tax (Appeals) were quashed, and the First Appellate Authority was directed to examine the appeal on its merits. The judgment disposed of the appeal while leaving all contentions open for further consideration.