COMMISSIONER OF INCOME TAX, KOLKATA-IV, KOLKATA vs. VANDANA COMMERCIALS (P) LTD.

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ITA/86/2010HC CalcuttaWBCHCO001303201016 September 2022Bench: HON'BLE JUSTICE T. S. SIVAGNANAM,HON'BLE JUSTICE SUPRATIM BHATTACHARYA2 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court noted that the tax effect involved in the appeal was significantly less than the threshold limit fixed by a Circular issued by the CBDT. Consequently, the Court held that the Revenue could not pursue the appeal on merits. The substantial question of law was left open. The appeal was disposed of on the ground of low tax effect. No finding was given on the merits of the additions or the alleged violation of Rule 46A.

What were the facts?

This appeal was filed by the Revenue (Commissioner of Income Tax, Kolkata – IV, Kolkata) under Section 260A of the Income Tax Act, 1961, challenging an order dated October 9, 2009, passed by the Income Tax Appellate Tribunal (ITAT), Kolkata, for the assessment year 2002-03. The ITAT's order had deleted additions of Rs. 1,76,23,687/- and Rs. 20,05,000/- made by the Assessing Officer in respect of sundry creditors and share application money, respectively, in the assessee's balance sheet. The additions were initially not explained to the satisfaction of the Assessing Officer and were subsequently deleted by the Commissioner of Income Tax (Appeals) by admitting fresh evidence, allegedly in violation of Rule 46A of the Income-tax Rules, 1962. The High Court admitted the appeal on a substantial question of law.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in deleting the additions of Rs. 1,76,23,687/- and Rs. 20,05,000/- respectively, in respect of sundry creditors and share application money appearing in the balance sheet of the assessee, which were not explained to the satisfaction of the Assessing Officer and were deleted by the Commissioner of Income Tax (Appeals) by admitting fresh evidence in violation of Rule 46A of the Income-tax Rules, 1962? Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The Revenue argued that the ITAT erred in deleting the additions made by the Assessing Officer concerning sundry creditors and share application money. The Revenue contended that these amounts were not satisfactorily explained by the assessee and that the CIT(A) had admitted fresh evidence in violation of Rule 46A of the Income-tax Rules, 1962, when deleting these additions. The Revenue relied on the substantial question of law admitted by the High Court.

Which sections of the Income-tax Act were involved?

Section 260A,Section 46A

AI-generated summary — verify with the full judgment below

O-114 ITA/86/2010 IN THE HIGH COURT AT CALCUTTA Special Jurisdiction (Income Tax) ORIGINAL SIDE COMMISSIONER OF INCOME TAX, KOLKATA – IV, KOLKATA -Versus- VANDANA COMMERCIALS (P) LTD. Appearance : Mr. Soumen Bhattacharya, Adv. . . . for the appellant. BEFORE: The Hon’ble JUSTICE T.S. SIVAGNANAM -And- The Hon’ble JUSTICE SUPRATIM BHATTACHARYA Date : 16th September, 2022. The Court : This appeal filed by the revenue under Section 260A of the Income Tax Act, is directed against the order dated 9th October, 2009 passed by the Income Tax Appellate Tribunal, “C” Bench, Kolkata (the Tribunal) in ITA No.531/Kol/2009 for the assessment year 2002-03. The appeal was admitted on the following substantial question of law: (i) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in deleting the additions of Rs.1,76,23,687/- and Rs.20,05,000/-

2 respectively, in respect of sundry creditors and share application money appearing in the balance sheet of the assessee, which were not explained to the satisfaction of the Assessing Officer and were deleted by the Commissioner of Income Tax (Appeals) by admitting fresh evidence in violation of Rule 46A of the Income-tax Rules, 1927?” We have heard Mr. Soumen Bhattacharyya, learned standing counsel for the appellant/department. From the substantial question of law which has been admitted it is seen that the tax effect involved in this appeal is much less than the threshold limit fixed by the Circular issued by the CBDT. Therefore, the revenue cannot pursue this appeal. Accordingly, the appeal (ITA/86/2010) stands disposed of on the ground of low tax effect and the substantial question of law is left open. (T.S. SIVAGNANAM, J.) (SUPRATIM BHATTACHARYA, J.) S.Das/As.

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