2018 (12) TMI 1267 - HC - Income Tax

Tax Court Reverses Tribunal Decision on Capital Gains Jurisdiction

Smt. P. Ammani Versus The Deputy Commissioner of Income Tax

The High Court held that the Tribunal erred in not addressing the jurisdictional issue raised by the appellant regarding Section 158 BD of the Income Tax ... Tribunal not adjudicating the grounds relating to the question of jurisdiction as raised by the assessee - Held that:- Whenever a question of jurisdiction is raised before the authority, the same should be adjudicated. The very power of the authority to consider the plea of the assessee is called in question. Whether it is to be accepted or not is completely within the jurisdiction of the authority. However, the question of jurisdiction should necessarily be answered by the authority which has not been done. Therefore, the first substantial question of law is answered in favour of the assesee by holding that the Tribunal was not justified in passing the impugned order without adjudicating the ground relating to jurisdiction. Addition in respect of KGF property - Tribunal not recording any reasons for passing the said order with regard to modifying the addition - Held that:- Tribunal has not given any reasons for recording such a finding. Any conclusion to be recorded by the authority should stand preceded by reasons. In the absence of recording any reasons, the order becomes unsustainable Issues:1. Jurisdiction under Section 158 BD of the Income Tax Act.2. Adhoc addition of income from capital gains.3. Failure to adjudicate grounds relating to jurisdiction by the assessing officer.4. Application of tax rate to capital gains.Jurisdiction under Section 158 BD:The appellant, a partner in a business concern subjected to search proceedings under Section 132 of the Income Tax Act, received a notice under Section 158 BD to file a return. The assessing officer computed capital gains, which led to appeals before the Tribunal. The Tribunal failed to address the jurisdiction issue raised by the assessee, leading to the High Court holding that the Tribunal erred in not adjudicating the jurisdiction question, emphasizing the importance of addressing jurisdictional challenges.Adhoc addition of income from capital gains:The Tribunal made an adhoc addition of income from capital gains regarding a specific property without providing any reasons for this decision. The High Court found this lack of reasoning rendered the Tribunal's order unsustainable, emphasizing that any conclusion by an authority must be supported by reasons. Consequently, the High Court held that the Tribunal's order was vitiated due to the absence of reasons for modifying the addition related to the property.Failure to adjudicate grounds relating to jurisdiction:The High Court addressed the failure of the Tribunal to adjudicate the grounds concerning jurisdiction raised by the assessee. It emphasized that when a question of jurisdiction is raised, it must be considered and decided by the authority. The High Court held that the Tribunal's failure to address this issue rendered its order invalid, highlighting the necessity for authorities to address jurisdictional challenges raised before them.Application of tax rate to capital gains:The High Court did not delve into the issue of the tax rate applied to capital gains as it was not a substantial question of law in the present appeal. The focus remained on the jurisdictional aspects and the lack of reasoning in the Tribunal's decision regarding the modification of the addition concerning the property. Consequently, the High Court allowed the appeal, setting aside the Tribunal's order and remanding the matter for fresh adjudication based on the observations provided in the judgment.