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

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TAXAP/185/2021HC GujaratGJHC24025365202108 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 dismissed the Tax Appeal, disposing of it solely on the ground of the monetary aspect, without entering into the merits of the legal issues. The Court noted that the very issues of addition on account of non-operative finance and revelation of various cases under the Negotiable Instruments Act were challenged in other appeals. The tax effect involved in the appeal for Assessment Year 2000-2001 was Rs.1028/-. The Court stated that it was keeping the legal issue alive to be decided in an appropriate case. Therefore, no finding was given on the substantial questions of law raised by the revenue. The operative direction was to dismiss the appeal.

What were the facts?

The appellant, the Principal Commissioner of Income Tax, Vadodara 1, has filed a Tax Appeal before the High Court of Gujarat at Ahmedabad. The appeal challenges an order dated 21.02.2020 passed by the Income Tax Appellate Tribunal (ITAT) in ITA No.1789/Ahd/2015 for Assessment Year 2000-2001. The dispute pertains to an addition of Rs.2,62,000/- made on account of non-operative finance. The assessee is Prahladray M Shah. 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 indicated non-operative advances, distinct from operative advances. The tax effect involved in this appeal is Rs.1028/-.

What were the issues?

The High Court had to decide the following substantial questions of law: 1. Whether the ITAT erred in deleting the addition of Rs.2,62,000/- on account of non-operative finance, given that the assessee provided no details and dishonoured cheques indicated non-operative advances, which are distinct from operative advances, and cases under Section 138 of the N.I. Act were filed? (Question of law and fact, concerning Section 138 of the Negotiable Instruments Act). 2. Whether the ITAT erred in relying on a co-ordinate bench decision (ITA No.1758 to 1796/Ahd/2015 for AYs 1998-99 to 2003-04) which was subsequently quashed and set aside by the High Court in Tax Appeal No.47 of 2019 and other connected appeals? (Question of law). Contentions: Assessee: Not recorded in the judgment. Revenue: Argued that in the absence of details from the assessee, the Assessing Officer was justified in making the addition on account of non-operative finance, as indicated by dishonoured cheques and related Section 138 N.I. Act proceedings. The revenue also argued that the ITAT's reliance on a quashed decision was erroneous.

Which sections of the Income-tax Act were involved?

Section 138

AI-generated summary — verify with the full judgment below

C/TAXAP/185/2021 ORDER DATED: 08/09/2021 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 185 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.1789/Ahd/2015 for the Assessment Year 2000- 2001, the appellant has approached this Court with the following substantial questions of law: “(a) Whether in 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.2,62,000/- 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/185/2021 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 is already challenged in other appeals. We have noticed that the tax effect involved in the appeal of Assessment Year 2000-2001 is Rs.1028/-. 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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