Principal Commissioner Of Income Tax vs. Muthusamy Shanmugam

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TCA/169/2024HC Madras19 August 2024Bench: Honourable Mr Justice R. SURESH KUMAR6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law had arisen for consideration. The Court found that the arguments advanced by the Revenue were purely questions of fact and not questions of law. The Revenue's contention that the ITAT came to a wrong conclusion based on erroneous appreciation of facts was considered a matter of fact. The Court stated that if the Revenue believed there was an error in the ITAT's appreciation of facts, they should move a suitable application for rectification of the order. Consequently, the High Court dismissed the appeal. The Court granted liberty to the appellant (Revenue) to move a suitable application for rectification of the impugned order of the ITAT. No order as to costs was made.

What were the facts?

The assessee, Muthusamy Shanmugam, is in appeal against an order of the Income Tax Appellate Tribunal (ITAT) dated 30.11.2023. The ITAT had allowed the assessee's appeal, setting aside a reassessment order dated 25.01.2023 passed by the Assessing Officer (AO) and restoring the original assessment order dated 30.03.2016. The AO had recomputed the assessee's income for assessment year 2013-14, disallowing a claim for Securities Transaction Tax and recomputing short-term capital loss and long-term capital gains. The ITAT found that the approval for reopening the assessment was obtained by providing incorrect and misleading information to the Commissioner of Income Tax (International Taxation). The Revenue, represented by the Principal Commissioner of Income Tax, has filed the present appeal before the High Court.

What were the issues?

1. Whether the ITAT erred in allowing the assessee's appeal by setting aside the reassessment order dated 25.01.2023 and restoring the original assessment order dated 30.03.2016, despite contrary directions from the Dispute Resolution Panel under Section 144(C)(5) of the Income Tax Act, 1961? Assessee's Contention: The judgment does not record any specific contentions made by the assessee before the High Court. Revenue's Contention: The Revenue argued that the ITAT committed a grave error in allowing the assessee's appeal. They contended that the ITAT's decision was contrary to the directions issued by the Dispute Resolution Panel. The Revenue also submitted that even though the tax effect was below the stipulated threshold, the Department could pursue the appeal as a bogus claim was made by the assessee. The Revenue further asserted that the assessee had wrongly claimed short-term capital loss and long-term capital gains, making the ITAT's order liable for interference. The Revenue relied on Circular dated 16.09.2019 in F.No.279/Misc/M-93/2018-ITJ(pt.).

Which sections of the Income-tax Act were involved?

Section 144(C)(5),Section 260A,Section 143(3)

AI-generated summary — verify with the full judgment below

T.C.A.No.169 of 2024 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 19.08.2024 CORAM THE HONOURABLE MR.JUSTICE R.SURESH KUMAR and THE HONOURABLE MR.JUSTICE C.SARAVANAN T.C.A.No.169 of 2024 The Principal Commissioner of Income Tax Ward-2(2), Chennai - 600 034. ... Appellant -Vs- Muthusamy Shanmugam, C/o.Ramesh & Ramachandran, CAs ... Respondent PRAYER : Tax Case Appeal filed under Section 260 A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal 'B' Bench, Chennai dated 30.11.2023 in I.T.A.No.362/Chny/2023 for the assessment year 2013-14. For Appellant : Mr.R.Karthick J U D G M E N T (Judgment of the Court was delivered by C.SARAVANAN, J.) The appellant is before this Court aggrieved by the impugned order dated 30.11.2023 passed by the Income Tax Appellate Tribunal 'B' Bench, Chennai in I.T.A.No.362/Chny/2023 for the assessment year 2013-14. 1/6 https://www.mhc.tn.gov.in/judis T.C.A.No.169 of 2024 2. By the impugned order, the Tribunal has allowed the assessee's appeal with the following observations: " ..... 9. We observe that the aforesaid information as was placed before the Commissioner of Income Tax (International Taxation), Chennai was incorrect and misleading. We observe that the return of income as was filed by the assessee for the AY 2013- 14 on 11.09.2013 was assessed by the Id. AO u/s.143(3) of the Act. The Id. AO after consideration of the details submitted by the assessee had disallowed the claim for deduction of amount as was paid as Securities Transaction Tax. The Id. AO vide assessment u/s.143(3) of the Act had recomputed the loss from short term capital gain at Rs.6,81,26,133/- instead of Rs.6,90,56,034/- and finally recomputed the income from long term capital gains at Rs.47,24,45,389/- vide order dated 30.0302016. 10. In view of the obtention of approval for reopening the assessment dated 30.03.2016 by stating incorrect / misleading information in the proposal for approval by the Income Tax Officer and reopening the assessment cannot be upheld legally. It was not a fact that the return of income filed by the assessee on 11.09.2013 was not 2/6 https://www.mhc.tn.gov.in/judis T.C.A.No.169 of 2024 assessed u/s.143(3) of the Act. The said return of income was assessed u/s.143(3) of the Act by the Id. AO after considering the details as was submitted by the assessee and completed the assessment vide order dated 30.03.2016. 11. As the approval for re-assessment was obtained by placing misleading and incorrect information from the concerned authority by the Income Tax Officer, we decide the appeal in favour of the assessee and set aside the reassessment order passed by the Id. AO dated 25.01.2023 and restore the original assessment order dated 30.03.2016. 12. In the result, the appeal of the assessee is allowed." 3. The case of the appellant is that the Tribunal has committed grave error in allowing the assessee's appeal despite the contrary directions issued by the Dispute Resolution Panel under Section 144(C)(5) of the Income Tax Act, 1961 on 19.12.2022. It is submitted that although the amount involved is below the tax effect, the circular dated 16.09.2019 in F.No.279/Misc/M-93/2018- ITJ(pt.) stipulates that the Department can pursue the appeal wherever the bogus claim is made. It is further submitted that the assessee has wrongly claimed short term capital loss / long term capital gains and therefore, the impugned order of the Tribunal is liable to be interfered with. 3/6 https://www.mhc.tn.gov.in/judis T.C.A.No.169 of 2024 4. We have heard the learned counsel appearing for the appellant and have perused the impugned order of the Tribunal. 5. In our considered view, no substantial question of law had arisen for consideration. What was argued by the learned counsel for the appellant are purely a questions of fact and not questions of law. It is the case of the Department that the Tribunal has come to a wrong conclusion based on the erroneous appreciation of the facts. If that be so, it is for the appellant Income Tax Department to move suitable application for rectification of the order. 6. Under these circumstances, we are inclined to dismiss the appeal and accordingly, it is dismissed with a liberty to the appellant to move suitable application, if any, for rectification of the impugned order of the Income Tax Appellate Tribunal. There shall be however no order as to costs. (R.S.K., J.) (C.S.N., J.) 19.08.2024 NCC : Yes / No Index : Yes / No Speaking Order : Yes / No vji 4/6 https://www.mhc.tn.gov.in/judis T.C.A.No.169 of 2024 To 1. The Principal Commissioner of Income Tax Ward-2(2), Chennai - 600 034. 2. The Income Tax Appellate Tribunal 'b' Bench, Chennai. 5/6 https://www.mhc.tn.gov.in/judis T.C.A.No.169 of 2024 R.SURESH KUMAR, J. and C.SARAVANAN, J. vji T.C.A.No.169 of 2024 19.08.2024 6/6 https://www.mhc.tn.gov.in/judis

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