THE PR COMMISSIONER OF INCOME TAX PATIALA vs. M/S MANDI ALOYS P LTD

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ITA/126/2016HC Punjab & HaryanaPHHC01110309201621 August 2018Bench: MR. JUSTICE AMIT RAWAL,MR. JUSTICE RAJESH BINDAL3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal as not maintainable. The court noted that the learned counsel for the appellant did not dispute that the amount involved in the present appeal was ₹34,39,695/-. As this amount was less than the limit prescribed in the Central Board of Direct Taxes (CBDT) Circular dated 11.07.2018, the appeal was dismissed on this procedural ground. The High Court explicitly clarified that the dismissal of the appeal would not be taken as upholding the order passed by the Tribunal. The legal issue raised in the appeal was left open to be considered in an appropriate case. Therefore, no decision was rendered on the merits of the substantial questions of law concerning the deletion of the addition by the ITAT.

What were the facts?

The Principal Commissioner of Income-Tax, Patiala (appellant) challenged an order dated 27.11.2015 passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh (respondent). The ITAT's order arose from Appeal No. 222/CHD/2015 for assessment year 2005-06. The appeal to the High Court concerned an addition of ₹94,00,000/- made by the Assessing Officer (AO) on account of unexplained subscription to share capital of the assessee company, M/s Mandi Alloys (P) Ltd. The amount in dispute before the High Court was stated to be ₹34,39,695/-. The High Court noted that the appellant's counsel did not dispute this amount.

What were the issues?

The High Court was asked to decide several substantial questions of law: 1. Whether the ITAT was correct in deleting the addition of ₹94,00,000/- made by the AO on account of unexplained subscription to share capital. 2. Whether the ITAT erred in deleting the addition by failing to appreciate that cash was deposited in the bank accounts of the subscribing companies and cheques were issued against these deposits. 3. Whether the ITAT was correct in relying on M/s Stellar Investments Ltd. (251 ITR 263) when the facts of the instant case were different. 4. Whether the ITAT was correct in relying on M/s Lovely Exports (P) Ltd. (2016 CTR 195) when the facts of the instant case were different. 5. Whether the ITAT failed to appreciate that the relied-upon case laws pertained to public limited companies, whereas the present case involved a closely held private limited company. 6. Whether the ITAT failed to follow the judgment of the Delhi High Court in CIT Vs. Nova Promoters & Finlease Pvt. Ltd. (342 ITR 369). Assessee's Contentions: The judgment does not record specific contentions made by the assessee (respondent) before the High Court. However, the ITAT's decision, which was under challenge, had upheld the deletion of the addition made by the AO. Revenue's Contentions: The appellant (revenue) argued that the ITAT was incorrect in deleting the addition and raised specific points regarding the reliance on case laws and the nature of the companies involved. The revenue also raised the issue of cash deposits and cheque issuances. The revenue's primary argument before the High Court was that the appeal should be dismissed as not maintainable because the amount involved was less than the prescribed limit in a CBDT Circular.

AI-generated summary — verify with the full judgment below

ITA No.126 of 2016 (O&M) 1 211-2 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No.126 of 2016 (O&M) Date of decision : 21.08.2018 The Principal Commissioner of Income-Tax, Patiala ... Appellant Versus M/s Mandi Alloys (P) Ltd. ... Respondent CORAM: HON'BLE MR. JUSTICE RAJESH BINDAL HON'BLE MR. JUSTICE AMIT RAWAL Present: Mr. Zora Singh Klar, Advocate for the appellant. Mr. Rishabh Kapoor, Advocate for the respondent. **** RAJESH BINDAL, J. The appellant in the present appeal has challenged the order dated 27.11.2015 passed by the Income Tax Appellate Tribunal, Division Bench, Chandigarh, arising out of Appeal No.222/CHD/2015 for the assessment year 2005-06, raising the following substantial questions of law:- “(i) “Whether on facts and circumstances of the case, the Hon'ble ITAT was correct in law in upholding the decision of the Ld. CIT (A) in deleting the addition of `94,00,000/- made by the AO on account of unexplained subscription to share capital of the assessee company.” ii) “Whether on the facts and circumstances of the case, the Hon'ble ITAT was correct in law in deleting the above Yogesh Sharma 2018.08.27 12:07 I attest to the accuracy and integrity of this document

ITA No.126 of 2016 (O&M) 2 addition, failing to appreciate that cash was deposited in the bank accounts of the companies subscribing to the share capital and cheques were issued against the same?” iii) “Whether on facts and circumstances of the case, the Hon'ble ITAT was correct in law in deleting the addition by relying on the decision of the Hon'ble Supreme Court in the case of M/s Stellar Investments Ltd. 251 ITR 263, failing to appreciate that the facts of the instant case are totally different from that case?” iv) “Whether on facts and circumstances of the case, the Hon'ble ITAT was correct in law in deleting the addition by relying on the decision of the Hon'ble Supreme in the case of M/s Lovely Exports (P) Ltd., 2016 CTR 195, failing to appreciate that the facts of the instant case are totally different from that case?” v) “Whether on facts and circumstances of the case, the Hon'ble ITAT was correct in law in not appreciating that the referred case laws pertain to Public Limited companies, whereas the present case is that of closely held Private Limited Company?” vi) “Whether on facts and circumstances of the case, the Hon'ble ITAT was correct in law in not following the judgment of the Hon'ble Delhi High Court in the case of CIT Vs. Nova Promoters & Finlease Pvt. Ltd., 342 ITR 369?” Yogesh Sharma 2018.08.27 12:07 I attest to the accuracy and integrity of this document

ITA No.126 of 2016 (O&M) 3 At the very outset, learned counsel for the appellant did not dispute the fact that the amount involved in the present appeal is `34,39,695/-. As the amount involved is less than the limit prescribed in the Circular issued by the Central Board of Direct Taxes dated 11.07.2018, the present appeal be dismissed as not maintainable. Ordered accordingly. However, it is made clear that dismissal of present appeal will not be taken as upholding the order passed by the Tribunal as the legal issue raised therein is left open to be considered in an appropriate case. ( RAJESH BINDAL ) JUDGE 21.08.2018 Yogesh Sharma ( AMIT RAWAL ) JUDGE  Whether speaking/reasoned Yes/ No Whether Reportable Yes/ No Yogesh Sharma 2018.08.27 12:07 I attest to the accuracy and integrity of this document

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