PR. COMMISSIONER OF INCOME TAX 2 CHANDIGARH vs. SHRI PARMINDER SINGH

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ITA/223/2019HC Punjab & HaryanaPHHC01046253201905 August 2024Bench: MR. JUSTICE SANJEEV PRAKASH SHARMA,MR. JUSTICE SANJAY VASHISTH3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court, considering the meager amount of the addition (Rs. 3,98,246/-) and referring to Circular No. 5/2024 issued by the GOI, Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, which stipulates that appeals with a tax effect below Rs. 1,00,00,000/- are to be adjudicated before the ITAT, found that the present appeal would be rendered as not pressed. Consequently, the High Court dismissed the appeal as not pressed. The operative direction was the dismissal of the appeal. No issue was expressly left undecided, as the appeal was disposed of on procedural grounds related to tax effect and circulars.

What were the facts?

The Principal Commissioner of Income Tax (PCIT)-2, Chandigarh, challenged an order dated 20.11.2018 passed by the Income Tax Appellate Tribunal (ITAT). The ITAT had set aside an order dated 18.12.2018 passed by the CIT (Appeals)-2, Chandigarh, which had allowed the appeal of the respondent-assessee. The original addition of Rs. 3,98,246/- was made by the Assessing Officer (AO) pursuant to a revisionary order under Section 263 of the Income Tax Act, 1961, passed by the PCIT-2. The assessee had appealed to the ITAT against the PCIT's order. The ITAT, in its order, noted that the expenditure on 'Langar' was meager and could not be strictly said to be without the motive of business growth, thus setting aside the PCIT's order. The High Court noted the tax effect was low and referred to CBDT Circular No. 5/2024.

What were the issues?

1. Whether the ITAT was justified in setting aside the revisionary order passed by the PCIT under Section 263 of the Income Tax Act, 1961, thereby deleting the addition of Rs. 3,98,246/- made by the AO. Assessee's contentions: The assessee argued that the expenditure incurred on 'Langar' was meager and that the motive for such expenditure was for the growth of the business. The assessee relied on the ITAT's observation that it could not be said in strict terms that the motive was not for business growth. Revenue's contentions: The revenue, through the PCIT, had initiated revisionary proceedings. The judgment does not explicitly record the revenue's specific arguments before the High Court, other than its challenge to the ITAT's order. However, the underlying issue was the validity of the PCIT's revisionary order and the subsequent additions made by the AO.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3)

AI-generated summary — verify with the full judgment below

ITA-223-2019 (O&M) - 1 - IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH 229 ITA-223-2019 (O&M) Decided on : 05.08.2024 Pr. Commissioner of Income Tax-2, Chandigarh . . . Appellant(s) Versus Shri Parminder Singh . . . Respondent(s) CORAM: HON’BLE MR. JUSTICE SANJEEV PRAKASH SHARMA HON'BLE MR. JUSTICE SANJAY VASHISTH PRESENT: Ms. Priyanka, Advocate for Mr. Vaibhav Gupta, Sr. Standing Counsel for the appellant(s). Mr. S.A. Khemka, Advocate for the respondent(s) – assessee (appearing through V.C.) **** SANJEEV PRAKASH SHARMA, J. (Oral) 1. This Court finds that the appellant – revenue has challenged the order dated 20.11.2018, passed by the ITAT and in terms of the said order, the CIT (Appeals)-2, Chandigarh, allowed the appeal of the respondent – assessee vide order dated 18.12.2018. The relevant extract of order dated 18.12.2018, is as under:- “7.2 During the course of appellate proceedings, the Ld. AR has filed order of the Hon’ble ITATs order ITA No.525/CHD/2017 Dt. 20/11/2018, passed in their case. The observation/decision of the Hon’ble ITAT is reproduced below:- “Considering the meager amount of expenditure incurred on the ‘Langar’ by the assessee and the JAWALA RAM 2024.08.07 17:39 I attest to the accuracy and authenticity of this document

ITA-223-2019 (O&M) - 2 - above submission of the Ld. Counsel for the assessee, we do not find it a fit case for exercising of revision jurisdiction by the Ld. PCIT as it cannot be said in strict term that the motive of the expenditure was not for getting growth of the business. In view of this, the impugned order of the Ld. PCIT is set aside and the appeal of the assessee.” 7.3 The addition of Rs.3,98,246/- in this case was made by the AO in pursuance to the order u/s 263 of the Pr. CIT-2, Chandigarh. Aggrieved by the said order of Pr. CIT-2, Chandigarh, the assessee approached the ITAT. Hon’ble ITAT vide its order in ITA No.525/CHD/2017, Dt. 20/11/2018 has set aside the order of the Pr. CIT-2, Chandigarh and has allowed the appeal of the assessee. Since the order of the Pr. CIT-2, Chandigarh on the basis of which the additions u/s 143(3) r.w.s. 263 to the tune of Rs.3,98,246/- had been made, has been deleted by the Hon’ble ITAT Bench, Chandigarh, the additions made in the subsequent order of the AO also do not survive. This ground of appeal is allowed. 8. In the result appeal is allowed.” 2. Taking into consideration the short addition of Rs.3,98,246/-, we are satisfied that the tax effect is at lower side and in terms of the Circular No.5/2024, dated 13th March, 2024, issued by the GOI, Ministry of JAWALA RAM 2024.08.07 17:39 I attest to the accuracy and authenticity of this document

ITA-223-2019 (O&M) - 3 - Finance, Department of Revenue, Central Board of Direct Taxes, where the tax effect less than the monetary limit of Rs.1,00,00,000/- is liable to be only adjudicated before ITAT, thus, thereafter the present appeal would be rendered as not pressed. We, accordingly, dismissed this appeal as not pressed. Misc. application(s), if any, also stands disposed of. (SANJEEV PRAKASH SHARMA) JUDGE (SANJAY VASHISTH) JUDGE August 05, 2024 J.Ram Whether speaking/reasoned: Yes/No Whether Reportable: Yes/No JAWALA RAM 2024.08.07 17:39 I attest to the accuracy and authenticity of this document

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