COMMISSIONER OF INCOME TAX - I vs. MADHUR SHARES & STOCKS PVT LTD

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TAXAP/2398/2010HC GujaratGJHC24028099201011 June 2012Author: HONOURABLE MR. JUSTICE VIJAY MANOHAR SAHAI,HONOURABLE MR. JUSTICE N.V.ANJARIA3 pages

AI SummaryDismissed

What did the High Court hold?

The High Court, in its oral judgment, heard the learned Senior Standing Counsel for the Income-tax Department. The Court found no merit in the appeal filed by the Revenue and concluded that no substantial question of law arose. The ITAT had dismissed the Revenue's appeal because the additions on account of bad debts, which were the basis for the penalty, had been deleted by the Tribunal. The ITAT reasoned that once the addition does not survive, no penalty can be levied, citing several High Court and Tribunal decisions. The High Court agreed with this reasoning, stating that since the additions made against the assessee had been deleted by the Tribunal, there was no question of levying any penalty. Consequently, the Tax Appeal was summarily dismissed.

What were the facts?

The Revenue (Commissioner of Income Tax - I) filed a Tax Appeal before the High Court of Gujarat challenging an order dated 31.5.2010 passed by the Income Tax Appellate Tribunal (ITAT). The ITAT had dismissed the Revenue's appeal against the assessee, Madhur Shares & Stocks Pvt Ltd. The ITAT's decision was based on the fact that the additions made on account of bad debts, which formed the subject matter of a penalty, had been entirely deleted by the Tribunal in a prior order. The Revenue's appeal before the High Court was filed by Mr. M.R. Bhatt, Senior Standing Counsel, assisted by Mrs. Mauna M. Bhatt. No one appeared for the opponent (assessee).

What were the issues?

1. Whether the Income Tax Appellate Tribunal erred in dismissing the Revenue's appeal against the assessee, thereby upholding the deletion of additions on account of bad debts and consequently disallowing any penalty. The Revenue's contention, as implied by the filing of the appeal and the ITAT's observation, is that a penalty should be leviable. The ITAT's order indicates that the Revenue likely argued for the sustainment of the penalty, even after the deletion of the primary addition. The assessee's argument, as reflected in the ITAT's decision, was that once the addition on account of bad debts was deleted, no penalty could be levied. The ITAT relied on several case laws, including Addl. CIT v. Badriprasad Kashiprasad (1993) 200 ITR 206 (All.), ACIT v. VIP Industries (2009) 122 TTJ – 289 (Mum), CIT v. Mohd Bux Sokat Ali 265 ITR – 326 (Raj), CIT v. Bengal Jute Mills Co. Ltd., 174 ITR 402 (Cal.), and CIT v. Shishpal 255 ITR 187 (Raj.).

AI-generated summary — verify with the full judgment below

TAXAP/2398/2010 1/3 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 2398 of 2010 For Approval and Signature: HONOURABLE MR.JUSTICE V. M. SAHAI HONOURABLE MR.JUSTICE N.V. ANJARIA ======================================

Whether Reporters of Local Papers may be allowed to see the judgment ? NO 2. To be referred to the Reporter or not ? NO 3. Whether their Lordships wish to see the fair copy of the judgment ? NO 4. Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? NO 5. Whether it is to be circulated to the civil judge ? NO ====================================== COMMISSIONER OF INCOME TAX - I - Appellants Versus MADHUR SHARES & STOCKS PVT LTD - Opponent ====================================== Appearance : MR M R BHATT, SENIOR STANDING COUNSEL ASSISTED BY MRS MAUNA M BHATT for Appellant. None for Opponent. ====================================== CORAM : HONOURABLE MR.JUSTICE V. M. SAHAI and HONOURABLE MR.JUSTICE N.V. ANJARIA

TAXAP/2398/2010 2/3 JUDGMENT Date : 11/06/2012 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE V. M. SAHAI)

We have heard Mr. M.R. Bhatt, learned Senior Standing Counsel appearing for the Income-tax Department. This appeal has been filed challenging the order dated 31.5.2010 passed by the Income Tax Appellate Tribunal by which the Tribunal has dismissed the appeal filed by the revenue by making the following observations :- “We have considered that rival submissions and perused the material on record. In our considered view, there is no interference is called for in the learned C.I.T. (A). It is because the subject matter of penalty was the addition on account of bad debts which have been totally deleted by the Tribunal in the order of even date. In other words, entire claim of the assessee has been considered as business loss. Once the addition does not survive, no penalty can be levied as held in Addl. CIT v. Badriprasad Kashiprasad (1993) 200 ITR 206 (All.), (2) ACIT v. VIP Industries (2009) 122 TTJ – 289 (Mum); (3) CIT v. Mohd Bux Sokat Ali 265 ITR – 326 (Raj); (4) CIT v. Bengal Jute Mills Co. Ltd., 174 ITR 402 (Cal.) and (5) CIT v. Shishpal 255 ITR 187 (Raj.) as the entire deduction is deleted, there is no case for sustaining any penalty.”

Since the additions made against the assessee has been deleted by the Tribunal, therefore, there is no question

TAXAP/2398/2010 3/3 JUDGMENT of levying any penalty from the assessee. For the aforesaid reasons, we do not find any merit in this appeal nor any question of law, much less any substantial question of law arises in this appeal. This tax appeal is accordingly summarily dismissed. [V. M. SAHAI, J.] [N. V. ANJARIA, J.] Savariya

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