PRINCIPAL COMMISSIONER OF INCOME TAX 4 vs. VIMALACHAL PRINT AND PACK PVT LTD

PDF · subscribers
TAXAP/543/2018HC GujaratGJHC24029300201812 June 2018Author: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE MR. JUSTICE B.N. KARIA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the Income Tax Appellate Tribunal (ITAT) did not err in setting aside the addition under Section 41(1) and remanding the issue to the Assessing Officer for fresh verification. The Court noted that the amount in dispute was small and the ITAT's action was to allow the Assessing Officer to verify the assessee's claim that the liability was written off in later years and the amount offered to tax. The Court found no reason to interfere with the ITAT's order. The ratio decidendi is that a remand for verification of the assessee's claim regarding cessation of liability under Section 41(1), especially when the amount is small and the claim involves subsequent taxability, is a reasonable course of action and not an error of law or fact.

What were the facts?

The Revenue, Principal Commissioner of Income Tax 4, is in appeal against an order of the Income Tax Appellate Tribunal (ITAT), Ahmedabad, dated November 22, 2017. The appeal concerns Assessment Year(s) not specified in the judgment. The ITAT had set aside an addition made by the Assessing Officer under Section 41(1) of the Income Tax Act, 1961, and remanded the issue back to the Assessing Officer for fresh verification. The assessee, Vimalachal Print and Pack Pvt Ltd, contended that the liability in question was written off in later years and the amount was offered to tax. The amount in dispute is described as "quite small".

What were the issues?

1. Whether the Appellate Tribunal has erred in law and on facts in setting aside the issue of addition under Section 41(1) to the file of the Assessing Officer? Assessee's Contentions: The assessee argued that the liability concerning four different parties was actually written off in later years and the amount was offered to tax. The ITAT's decision to remand the issue was to verify this claim. Revenue's Contentions: The judgment does not record specific contentions made by the Revenue in support of their appeal. The appeal itself is against the ITAT's order of remand.

Which sections of the Income-tax Act were involved?

Section 41(1)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
C/TAXAP/543/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL No. 543 of 2018 ============================================================== PRINCIPAL COMMISSIONER OF INCOME TAX 4 Versus VIMALACHAL PRINT AND PACK PVT LTD ============================================================== Appearance : Mrs MAUNA M BHATT, Advocate for the PETITIONER for the RESPONDENT ============================================================== CORAM: HONOURABLE Mr. JUSTICE AKIL KURESHI and HONOURABLE Mr. JUSTICE B.N. KARIA 12th June 2018 ORAL ORDER (PER : HONOURABLE Mr. JUSTICE AKIL KURESHI) Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal, Ahmedabad [“Tribunal” for short] dated 22nd November 2017 raising the following question for our consideration : “Whether the Appellate Tribunal has erred in law and on facts in setting aside the issue of addition under Section 41[1] to the file of the Assessing Officer ?” Having perused the order on record with the assistance of learned counsel for the Revenue, we notice that quite apart from the very small amount being involved in this appeal, the Tribunal Page 1 of 2

merely remanded the proceedings for fresh verification by the Assessing Officer. In the context of cessation of liability under Section 41[1] of the Income Tax Act, 1961, the contention of the assessee was that the liability concerning four different parties was actually written off in the later years and the amount was offered to tax. It was for the purpose of verifying the same, as such the Tribunal placed the issue back before the Assessing Officer There is no reason to interfere with. Tax Appeal is dismissed. [Akil Kureshi, J.] [B.N Karia, J.] Prakash

More judgments on Section 41(1)

All 1,943 judgments and leading authorities on Section 41(1) →

Recent GST High Court judgments

Search GST case law →