PRINCIPAL COMMISSIONER OF INCOME TAX 2 vs. M/S. L.G. CHAUDHARY

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TAXAP/1106/2018HC GujaratGJHC24052661201810 September 2018Bench: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE MR. JUSTICE B.N. KARIA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court noted that the Income Tax Appellate Tribunal (ITAT) had relied on its orders for earlier assessment years when deciding the present matter. The learned counsel for the Revenue candidly admitted that the Revenue's appeals against the ITAT's orders for earlier years, specifically Tax Appeals No. 1035 of 2014 and 1036 of 2014, concerning this very assessee, were dismissed by the High Court on October 7, 2014. Given this precedent and the admission by the Revenue's counsel, the High Court found no reason to interfere. The principle applied is that consistent findings on similar issues for earlier years, especially when upheld by the High Court, should be followed. The operative direction was to dismiss the present Tax Appeal. No issues were expressly left undecided.

What were the facts?

The Revenue, specifically the Principal Commissioner of Income Tax 2, has filed an appeal against an order passed by the Income Tax Appellate Tribunal (ITAT), Ahmedabad, dated March 23, 2018. The appeal concerns the assessment year 2006-07, although the specific assessment year for the present appeal is not explicitly stated. The core of the dispute revolves around the deletion of a penalty by the ITAT. The Revenue contends that the ITAT erred by relying on its order for AY 2006-07, where it claims there was no issue of excess deduction of Rs. 2,37,69,461. The Revenue also argues that the ITAT failed to appreciate that the case involved a bogus and false claim of deduction under Section 40(a)(ia) of the Income Tax Act, 1961, where the assessee claimed deduction on disallowances from earlier years without making the requisite Tax Deducted at Source (TDS) in the current year. The Revenue's appeals for earlier years concerning the same assessee were dismissed by the High Court on October 7, 2014.

What were the issues?

The High Court was asked to decide the following questions: 1. Whether the Appellate Tribunal has erred in law and on facts in deleting the penalty by relying on its order for AY 2006-07, wherein there was no issue of having claimed excess deduction of Rs. 2,37,69,461? (Question of law and fact, concerning Section 271(1)(c) of the Income Tax Act, 1961). 2. Whether the Appellate Tribunal has erred in law and on facts by not appreciating that it was not a mere case of addition on account of Section 40(a)(ia) of the Act, but a case of making a bogus and false claim of deduction under Section 40(a)(ia) of the Act, wherein the assessee had claimed deduction on disallowance made in the earlier years even though no such TDS was made on such sums during the year? (Question of law and fact, concerning Section 40(a)(ia) of the Income Tax Act, 1961). Contentions: Assessee: No specific contentions are recorded for the assessee in the provided judgment. Revenue: The Revenue argued that the ITAT erred in deleting the penalty by relying on its prior order for AY 2006-07, which they claim did not involve the specific issue of excess deduction of Rs. 2,37,69,461. They further contended that the ITAT failed to recognize the claim as bogus and false under Section 40(a)(ia), as the assessee claimed deductions on earlier years' disallowances without making the necessary TDS in the current year. The Revenue relied on the fact that their appeals for earlier years in this assessee's case were dismissed.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 271(1)(c)

AI-generated summary — verify with the full judgment below

C/TAXAP/1106/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL No. 1106 of 2018 ============================================================= PRINCIPAL COMMISSIONER OF INCOME TAX 2 Versus M/S. L.G. CHAUDHARY ============================================================= Appearance : Mrs MAUNA M BHATT, Advocate for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ============================================================= CORAM: HONOURABLE Mr. JUSTICE AKIL KURESHI and HONOURABLE Mr. JUSTICE B.N. KARIA 10th September 2018

ORAL ORDER (PER : HONOURABLE Mr. JUSTICE AKIL KURESHI) Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal, Ahmedabad dated 23rd March 2018, raising the following question for our consideration : [A] “Whether, the Appellate Tribunal has erred in law and on facts in deleting the penalty so levied by relying on their order of AY 2006-07, wherein there was no issue of having claimed excess deduction of Rs. 2,37,69,461/= ?” [B] “Whether the Appellate Tribunal has erred in law and on facts by not appreciating that it was not a mere case of addition on account of Section 40 [a](ia) of the Act, but it was a case of making Page 1 of 2

C/TAXAP/1106/2018 ORDER bogus and false claim of deduction under Section 40 [a](ia) of the Act wherein the assessee had claimed deduction on disallowance made in the earlier years even though no such TDS was made on such sums during the year ?” We notice that the Tribunal in the impugned judgment has relied upon consideration of similar questions for the earlier years. Learned counsel for the Revenue candidly pointed out that the Revenue’s appeals against the earlier years in the case of this very assessee were dismissed on 7th October 2014 in Tax Appeals No. 1035 of 2014 and 1036 of 2014. This Tax Appeal is therefore dismissed. [Akil Kureshi, J.] [B.N Karia, J.] Prakash Page 2 of 2

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