2020 (6) TMI 509 - HC - Income Tax

Maintainability of appeal - low tax effect - Revision u/s 263 - assessee, while inviting the attention of this Court to the proposal under Section 263 of the Income Tax Act, 1961, submitted that the tax impact is less than ₹ 1 Crore - HELD THAT - As revenue submitted that the appeal may be disposed of with liberty to revive the same subject to the condition that if the tax effect is more than ₹ 1 Crore or exceptions as mentioned in the notification dated 08.08.2019 are attracted. In view of the aforesaid submission, the appeal is disposed of with liberty as prayed for by the revenue.

Summary

Issues:
1. Jurisdiction of the Tribunal in holding the order of the Commissioner under Section 263 of the Income Tax Act as without jurisdiction.
2. Consideration of Section 170 of the Act and other provisions regarding notice service compliance.

Analysis:

Issue 1: Jurisdiction of the Tribunal
The appeal before the Karnataka High Court involved a challenge by the revenue regarding the jurisdiction of the Tribunal in holding the order of the Commissioner under Section 263 of the Income Tax Act as without jurisdiction. The substantial question of law raised was whether the Tribunal was correct in holding that the order passed in the name of a different entity, now known as the assessee, was without jurisdiction due to a discrepancy in the name used in the notice issued under Section 263 of the Act. The subject matter of the appeal pertained to the assessment year 2001-02.

Issue 2: Compliance with Notice Service
Another significant issue raised in the appeal was whether the Tribunal should have considered Section 170 of the Act and other relevant provisions regarding notice service compliance. The counsel for the assessee pointed out that the tax impact was less than ?1 Crore, making the appeal not maintainable as per a circular issued by the Government of India in 2019. In response, the revenue's counsel submitted that the appeal could be disposed of with the condition to revive it if the tax effect exceeds ?1 Crore or if exceptions mentioned in the notification dated 08.08.2019 are applicable.

The High Court, considering the submissions made by both parties, disposed of the appeal with liberty as requested by the revenue. This decision allowed for the appeal to be revived if the tax effect surpassed ?1 Crore or if the exceptions outlined in the notification dated 08.08.2019 were triggered. The judgment highlighted the importance of adhering to procedural requirements and jurisdictional aspects in tax matters, emphasizing the need for proper notice service and compliance with relevant provisions under the Income Tax Act.