ITO Vs Sanath Kumar Murali (Karnataka High Court)
Summary: The Karnataka High Court dismissed the Revenue’s intra-court appeal against the order dated 24th May, 2023 of the learned Single Judge, which had set aside the order dated 21.03.2023 passed under Section 148A(d) of the Income Tax Act, 1961 and the notice dated 21.03.2023 issued under Section 148 for Assessment Year 2016-2017.
The Revenue contended that once an amount of Rs.50.00 lakh was ascertained as escaped income for assessment, interference by the Writ Court was unwarranted. The assessee, however, submitted that merely because the concerned conveyance mentioned Rs.55.00 lakh, the entire amount could not be treated as income escaping assessment because the cost of acquisition had to be deducted and, after such deduction, the amount would fall below the Rs.50.00 lakh threshold.
The assessee relied on the decision of the Division Bench of the Madhya Pradesh High Court at Jabalpur in Nitin Nema v. Office of Principal Chief Commissioner of Income Tax, and submitted that the challenge to that decision before the Supreme Court in SLP No(C). 38708 of 2024 had attained finality on 17.09.2024.
The Karnataka High Court broadly agreed with the learned Single Judge that, while assessing the quantum of escaped income in such matters, the amount mentioned in the registered conveyance could not be straightaway taken without deducting the cost of acquisition. The Court also noted that the Madhya Pradesh High Court had followed the impugned order and that the Revenue’s challenge before the Supreme Court had been repelled. Finding no merit in the appeal, the High Court dismissed it, with costs having been made easy.
Karnataka High Court on Computation of Escaped Income under Section 149
Challenge to Section 148A(d) Order and Section 148 Notice
The intra-court appeal was directed against the learned Single Judge’s Order dated 24th May, 2023, by which respondent-Assessee’s Writ Petition No.7647 of 2023 had been allowed.
