Pr. Commissioner Of Income Tax 2 vs. M/S Prabhakar Paper Mills Pvt. Ltd.

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ITA/143/2019HC Madhya Pradesh07 February 2020Bench: HON'BLE THE CHIEF JUSTICE2 pages
For Petitioner: Sanjay Lal
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the Revenue. The dismissal was based on the principle laid down by the Apex Court in Commissioner of Income Tax Vs. Dhanalekshmi Bank Limited (2015) 14 SCC 749, where an appeal was dismissed due to low tax effect without delving into the merits of the case, leaving the question of law open. The High Court explicitly clarified that the dismissal of the present appeal should not be construed as an affirmation of the ITAT's order on merits. Furthermore, the legal issues raised by the Revenue were expressly left open to be adjudicated in an appropriate future case. No specific findings were made on the substantial questions of law, nor were any operative directions issued regarding remand or deletion of additions, as the appeal was disposed of on the preliminary ground of low tax effect.

What were the facts?

The Revenue, represented by the Principal Commissioner of Income Tax, filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated May 7, 2019, passed by the Income Tax Appellate Tribunal (ITAT), Indore Bench. The ITAT's order was in ITA No. 824//Ind/2018. The appeal concerns the assessment year(s) not explicitly stated but implied to be related to an order passed by the Assessing Officer (AO) under Section 143(3) read with Section 254 of the Act on November 28, 2016. The Revenue's challenge also pertains to an order passed by the Principal CIT under Section 263 on July 31, 2018. The amount in dispute, as stated by the Revenue's counsel, is Rs. 34,22,380/-, with a tax effect of less than Rs. 3,19,860/- excluding interest and penalty.

What were the issues?

The High Court was asked to decide the following substantial questions of law: 1. Whether the ITAT was justified in holding that the order under Section 143(3) read with Section 254 was not erroneous, despite the AO's alleged failure to make inquiries regarding the determination of book profit under Section 115JB, leading to non-assessment of book profit under MAT provisions? 2. Whether the ITAT was justified in quashing the order under Section 263, passed on July 31, 2018, when it was passed within the time allowed, considering the AO's order under Section 143(3)/254 was dated November 28, 2016? 3. Whether the ITAT correctly quashed the order under Section 263, holding that the Principal CIT exceeded jurisdiction by invoking Section 263 powers and ignoring clause (c) of Explanation 1 to sub-section (1) of Section 263? 4. Whether the ITAT was correct in restoring the AO's assessment order under Section 143(3)/254, dated November 28, 2016, by concluding it was not erroneous, without appreciating that the order under Section 263 was based on issues not forming the subject matter of the appeal before the ITAT? The Revenue contended that the ITAT's order was perverse and that the Principal CIT's order under Section 263 was passed within the prescribed time. The Revenue also argued that the Principal CIT did not exceed his jurisdiction. The assessee's contentions are not explicitly recorded in the provided text, other than their implied position as the respondent in the appeal.

Which sections of the Income-tax Act were involved?

Section 260A,Section 143(3),Section 254,Section 115JB,Section 263

AI-generated summary — verify with the full judgment below

The High Court Of Madhya Pradesh ITA-143-2019 (PR. COMMISSIONER OF INCOME TAX 2 Vs M/S PRABHAKAR PAPER MILLS PVT. LTD.) Jabalpur, Dated : 07-02-2020 Shri Sanjay Lal, Advocate for the appellant. In this appeal filed under Section 260A of the Income Tax Act, 1961 by the Revenue against the order dated 07.5.2019 passed by the Income Tax Appellate Tribunal, Indore Bench, Indore in ITA No.824//Ind/2018, the Revenue has claimed following substantial questions of law :- "1. Whether, on the facts and in the circumstances of the case, and in law, the ITAT was justified in holding that the order u/s 143(3) r.w.s. 254 is not erroneous when the said order passed by the AO determining the income of the assessee was without making enquiries about determination of book profit u/s 115JB of the Act which resulted in non-assessment of book profit, involving tax- effect under MAT provisions of the I.T. Act, 1961 ? Hence, the order of the ITAT is perverse on facts and in law. 2. Whether, on the facts and in the circumstances of the case, and in law, the ITAT was justified in quashing the order u/s 263 of the Act dated 31.07.2018 when the same was passed well within the time allowed since the order u/s 143(3)/254 of the Act was passed by the AO on 28.11.2016 ? 3. Whether, the Tribunal was correct in quashing the order u/s 263 dated 31.07.2018 passed by the Pr. CIT-2, Bhopal holding that the Pr. CIT exceeded the jurisdiction by invoking the powers u/s 263 of the Income Tax Act and ignoring clause (c) of explanation 1 to sub-section (1) of Section 263 ? 4. Whether, the ITAT was correct in restoring the assessment order of the AO u/s 143(3)/254 dated 28.11.2016 with the conclusion that the order framed by the Assessing officer u/s 143(3) r.w.s. 254 of the Income Tax Act is not erroneous without appreciating the fact that the order passed u/s 263 was based on different issues which were not subject matter of appeal before the ITAT ?" Learned counsel for the appellant candidly admitted that the challenge 1 ITA-143-2019 (AJAY KUMAR MITTAL) CHIEF JUSTICE (VIJAY KUMAR SHUKLA) JUDGE in the present appeal is regarding addition of Rs.34,22,380/- as would be clear from the substantial questions of law as proposed above. In the aforesaid premise, it was stated that the tax effect without interest and penalty would be less than Rs.3,19,860/-. The Apex Court in the case of Commissioner of Income Tax Vs. Dhanalekshmi Bank Limited (2015) 14 SCC 749 had dismissed the appeal of the revenue without going into the merits of the appeal due to low tax effect leaving the question of law open. In view of the above order of the Apex Court, the present appeal is dismissed. It is, however, clarified that dismissal of the appeal shall not be taken to be affirmation of order of the Tribunal on merits. Further, the legal issue as claimed by the Revenue is being left open to be adjudicated in an appropriate case. PK

2 ITA-143-2019 Digitally signed by PARITOSH KUMAR Date: 2020.02.12 11:42:00 IST SAN Signature Not Verified Digitally signed by PARITOSH KUMAR Date: 2020.02.12 11:42:00 IST SAN Signature Not Verified

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