THE ITO, WARD-1(3)(3), AHMEDABAD vs. SHRI MANOHARLAL BHURALAL KOTHARI, AHMEDABAD

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ITA 449/AHD/2016Status: DisposedITAT Ahmedabad03 July 2019AY 2012-134 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal dismissed the Revenue's appeal based on the low tax effect of the disputed additions, as per CBDT instructions. The Department can approach the Tribunal for recall if re-verification shows a higher tax effect or if the case falls under exceptions.

What were the facts?

The Revenue appealed against the CIT(A)'s order deleting additions made on account of deemed dividend, commission expenses, and disallowance under Section 40(a)(ia). The assessee argued that the appeal should be dismissed due to low tax effect as per CBDT instructions.

What were the issues?

Whether the Revenue's appeal is maintainable due to low tax effect, and the merits of additions related to deemed dividend, commission expenses, and disallowance under Section 40(a)(ia).

Which sections of the Income-tax Act were involved?

Section 2(22)(e),Section 40(a)(ia),Section 268A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “ A ” BENCH, AHMEDABAD

Before: SHRI RAJPAL YADAV & SHRI PRADIP KUMAR KEDIA

For Respondent: Shri S.N. Divatia, AR
Pronounced: 03/07/2019

आदेश / O R D E R

PER SHRI RAJPAL YADAV, JUDICIAL MEMBER :

1.

The Revenue is in appeal before the Tribunal against the order of Ld.Commissioner of Income Tax(Appeals)-10, Ahmedabad [‘CIT(A)’ in short] dated 01/01/2016 passed for Assessment Year (AY) 2012-13.

ITO vs. Shri Manoharlal B.Kothari Asst.Year – 2012-13 - 2 - 2. The Revenue has raised the following grounds in its appeal: (1) That the ld. CIT(A), erred in law and on the facts by deleting addition of Rs.9,86,867/- made by the AO u/s.2(22)(e) of the I.T.Act, without appreciating the fact that as per conditions of provisions u/s.2(22)(e) of the Act, the case of the assessee clearly falls under the ambit of section 2(22)(e) of the Act.

(2) That the ld.CIT(A), erred in law and on the facts by deleting addition of Rs.5,76,239/-, made by the AO on account of Commission expenses without appreciating the fact that, expenditure was incurred without rendering any services and purposely debited to avoid tax liability.

(3) That the ld.CIT(A) erred in law and on the facts by deleting addition of Rs.42,11,125/- made by the Assessing Officer u/s.40(a)(ia) of the Act without appreciating the fact that the conditions of provisions u/s.40(a)(ia) are not fulfilled by the assessee.

3.

The ld. counsel for the assessee at the outset submitted that the appeal of the Revenue deserves to be dismissed on account of low tax effect involved in it. He submitted that the tax effect on the addition disputed by the Revenue of Rs.17,84,237/- which is below Rs.20 lakhs, and therefore, by virtue of the CBDT instruction bearing no.3 of 2018 dated 11.08.2018, the Revenue is prohibited from filing such appeal before the Tribunal therefore, the present appeal is not maintainable at the threshold. The tax effect on the impugned addition calculated by the assessee is as under:

ITO vs. Shri Manoharlal B.Kothari Asst.Year – 2012-13 - 3 - Ground No. Issue Amount Rs. 1 2(22)(e) 986,867 2 Commission Expense 576,239 3 40(a)(ia) 4,211,125 Total 5,774,231 Tax @ 30.9% 1,784,237

4.

On the other hand, Ld.DR is unable to controvert the contention of the ld.counsel for the assessee for want of requisite details. Thus, on the strength of the submissions of the ld.counsel for the assessee and in view of the above CBDT Circular which is applicable to all pending appeals and provisions of section 268A of the Income Tax Act, we are of the view that the appeal of the Revenue deserves to be dismissed. It is accordingly dismissed.

However, it is observed that in case on re-verification at the end of the AO it comes to the notice that the tax effect is more or Revenue’s case falls within the ambit of exceptions provided in the Circular, then the Department will be at liberty to approach the Tribunal for recall of ITO vs. Shri Manoharlal B.Kothari Asst.Year – 2012-13 - 4 - this order. Such application should be filed within the time period prescribed in the Act.

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