COMMISSIONER OF INCOME TAX-7 vs. PROFIN MONEY MARKETS LTD.

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ITA/584/2016HC DelhiDLHC01043185201616 August 2016Bench: CASES PERTAINING TO SPL.DIVISION BENCHES2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal on two grounds. Firstly, it held that the appeal was facially inordinately time-barred by ten years, and no sufficient cause was demonstrated for this delay, rendering the appeal not maintainable on this procedural ground alone. Secondly, the Court found no infirmity with the ITAT's order even on the merits. The ITAT had concurred with the CIT(A)'s reasoning that the allotment of shares through a public issue, being a statutorily regulated process by authorities like SEBI, did not warrant the application of Section 68. The ratio decidendi is that appeals filed with inordinate delay without sufficient cause are liable to be dismissed, and that Section 68 is not applicable to share allotments made through regulated public issues.

What were the facts?

The Commissioner of Income Tax-7 (Appellant) filed an appeal under Section 260A of the Income Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (ITAT) dated September 9, 2005, for Assessment Year 1997-98. The appeal was filed approximately ten years after the ITAT's order, and no sufficient cause was provided for this delay. The ITAT's order had upheld the decision of the Commissioner of Income Tax (Appeals) [CIT(A)], which had cancelled the Assessing Officer's addition of ₹92,06,800/-. This addition was made by invoking Section 68 of the Income Tax Act. The CIT(A) and ITAT reasoned that since the allotment of shares by way of public issue was strictly regulated by statutory authorities like SEBI, Section 68 was not applicable.

What were the issues?

1. Whether the appeal filed by the Revenue under Section 260A of the Income Tax Act, 1961, is maintainable given the inordinate delay of approximately ten years and the absence of sufficient cause for the delay. 2. Whether the ITAT erred in upholding the CIT(A)'s decision to cancel the addition of ₹92,06,800/- made by the Assessing Officer under Section 68 of the Income Tax Act, 1961. Assessee's Contentions: The judgment does not record any specific contentions made by the assessee (Profin Money Markets Ltd.). Revenue's Contentions: The Revenue argued that the appeal was maintainable and that the ITAT's order was flawed on merits. The Revenue's primary ground for appeal was the delay in filing, asserting that no sufficient cause was shown for the ten-year delay. The Revenue also implicitly challenged the ITAT's reasoning regarding the non-applicability of Section 68.

Which sections of the Income-tax Act were involved?

Section 260A,Section 68

AI-generated summary — verify with the full judgment below

$~27 * IN THE HIGH COURT OF DELHI AT NEW DELHI +

ITA 584/2016, CM APPL.29578-29579/2016

COMMISSIONER OF INCOME TAX-7

..... Appellant Through: Mr. P. Roychaudhuri, Sr. Standing Cousnel.

versus

PROFIN MONEY MARKETS LTD.

..... Respondent

Through: None.

CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE NAJMI WAZIRI

O R D E R %

16.08.2016

The present appeal under Section 260A of the Income Tax Act is directed against an order of the Income Tax Appellate Tribunal (“ITAT”) for AY 1997-98 in ITA No.2364/Del/2001. The impugned order is dated 09.09.2005. The appeal is facially inordinately time barred - i.e., by ten years. On this ground alone it is not maintainable as no sufficient cause has been shown for the filing of the appeal in a delayed fashion. That apart, the Court notices that the ITAT’s order concurred with the order of the CIT (A) which had cancelled/set aside the Assessing Officer’s order adding the amount of `92,06,800/- by applying Section 68. The common reasoning of the CIT (A) and the ITAT was that the allotment of shares by way of public issue was closely regulated by statutory authorities such as SEBI and in the

circumstances the question of applying Section 68 did not arise.

We find no infirmity with the order even on the merits.

The appeal is consequently dismissed along with all the pending applications.

S. RAVINDRA BHAT, J

NAJMI WAZIRI, J AUGUST 16, 2016 /vikas/

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