THE PRINCIPAL COMMISSIONER OF INCOME TAX, VADODARA 1 vs. PRAHLADRAY M SHAH

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TAXAP/184/2021HC GujaratGJHC24025364202108 September 2021Bench: HONOURABLE THE CHIEF JUSTICE MS. JUSTICE SONIA GOKANI,HONOURABLE MR. JUSTICE RAJENDRA M. SAREEN2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court, without entering into the merits of the case and keeping the legal issues alive for decision in an appropriate case, dismissed the Tax Appeal. The dismissal was solely on the ground of the monetary aspect, referencing CBDT Circular No.17 of 2019 dated 09.08.2019. The Court noted that the tax effect involved in the appeal for Assessment Year 1999-2000 was Rs.2,127/-. Therefore, the ITAT's order was not adjudicated on its substance, and no finding was given on the specific issues raised by the Revenue regarding the deletion of the addition for non-operative finance or the reliance on the quashed ITAT decision. The operative direction was the dismissal of the appeal.

What were the facts?

The Principal Commissioner of Income Tax, Vadodara 1 (the Revenue) has filed an appeal before the High Court of Gujarat against an order dated 21.02.2020 passed by the Income Tax Appellate Tribunal (ITAT). The ITAT's order was in Appeal No. ITA No.1787/Ahd/2015 for the Assessment Year 1999-2000. The appeal challenges the ITAT's deletion of an addition of Rs.3,00,000/- made on account of non-operative finance. The Revenue contends that in the absence of details from the assessee, the Assessing Officer had no option but to make the addition, as dishonoured cheques represented non-operative advances, distinct from operative advances. The tax effect in this appeal for Assessment Year 1999-2000 is Rs.2,127/-.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the learned ITAT has erred in law and in facts in deleting the addition made on account of non-operative finance of Rs.3,00,000/- without appreciating that in the absence of any details filed by the assessee, the Assessing Officer had no option but to conclude that the addition was warranted, as dishonoured cheques represented non-operative advances, distinct from operative advances? (This issue turns on the interpretation of provisions related to additions based on bank account entries and dishonoured cheques). 2. Whether, in the facts and circumstances of the case, the learned ITAT has erred in law and on facts in relying on the decision of a co-ordinate bench dated 30.01.2018 in ITA No.1758 to 1796/Ahd/2015 for the A.Ys. 1998-99 to 2003-04, which was subsequently quashed and set aside by the High Court by order dated 16.07.2019 in Tax Appeal No.47 of 2019 and other connected appeals? (This issue concerns the validity of relying on a precedent that has been overturned). Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The Assessing Officer was justified in making the addition of Rs.3,00,000/- on account of non-operative finance because the assessee failed to provide necessary details, and dishonoured cheques indicated non-operative advances, which are distinct from operative advances. The ITAT erred in deleting this addition and in relying on a previous ITAT decision that was later quashed by the High Court.

Which sections of the Income-tax Act were involved?

Section 138

AI-generated summary — verify with the full judgment below

C/TAXAP/184/2021 ORDER DATED: 08/09/2021 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 184 of 2021 ========================================================== THE PRINCIPAL COMMISSIONER OF INCOME TAX, VADODARA 1 Versus PRAHLADRAY M SHAH ========================================================== Appearance: MR.VARUN K.PATEL(3802) for the Appellant(s) No. 1 for the Opponent(s) No. 1 ========================================================== CORAM: HONOURABLE MS. JUSTICE SONIA GOKANI and HONOURABLE MR. JUSTICE RAJENDRA M. SAREEN Date : 08/09/2021 ORAL ORDER (PER : HONOURABLE MS. JUSTICE SONIA GOKANI) 1. Aggrieved by the order dated 21.02.2020 passed by the Income Tax Appellate Tribunal (‘the ITAT’ for short) in an Appeal being ITA No.1787/Ahd/2015 for the Assessment Year 1999- 2000, the appellant has approached this Court with the following substantial questions of law: “(a) Whether on the facts and in the circumstances of the case, the learned ITAT has erred in law and in facts in deleting the addition made on account of non-operative finance of Rs.3,00,000/- without appreciating the facts that in absence of any details filed by the assessee, the Assessing Officer had no option but to come to the conclusion of addition of the same, since cheque returned/ dishonoured appearing in the bank accounts of the assessee represented non operative advances, in which cases u/s 138 of the N.I.Act have been filed and is distinct from the addition made on the basis of cheque credits representing operative advances? Page 1 of 2

C/TAXAP/184/2021 ORDER DATED: 08/09/2021 (b) Whether in the facts and circumstances of the case, learned ITAT has erred in law and on facts in relying on the decision of the co- ordinate bench dated 30.01.2018 in ITA No.1758 to 1796/Ahd/2015 for the A.Ys. 1998-99 to 2003-04, which has been quashed and set aside by this Hon’ble Court by order dated 16.07.2019 in Tax Appeal No.47 of 2019 and other connected appeals?” 2. We have heard the learned standing counsel, Mr.Varun Patel appearing for the appellant. He confirms that the very issues of addition made on account of non-operative and revealation of various cases under the Negotiable Instruments Act finance are already challenged in other appeals. We have noticed that the tax effect involved in the appeal of Assessment Year 1999-2000 is Rs.2,127/-. An attempt is made to take recourse to the CBDT Circular No.17 of 2019 dated 09.08.2019 3. Without entering into the merits and keeping the legal issue alive to be decided in appropriate case, this Tax Appeal is dismissed and disposed of only on the ground of the monetary aspect. (SONIA GOKANI, J) (RAJENDRA M. SAREEN,J) M.M.MIRZA Page 2 of 2

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