Principal Commissioner of Income Tax-3, vs. SHEER MEDIA PVT LTD

TCA/224/2024HC Madras14 October 2024Bench: Honourable Mr Justice R. SURESH KUMAR5 pages

AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the Tax Case Appeal. The Court found that the ITAT had dismissed the appeal before it on the ground of low tax effect. The Revenue argued that this dismissal overlooked an exceptional clause in CBDT Circular 3/2018. However, the High Court disagreed with the Revenue's submission. The Court reasoned that even if the Revenue's argument regarding the exceptional clause were accepted, the appeal could not have been entertained by the ITAT on that ground alone, in addition to the reason of low tax effect already provided by the ITAT. Therefore, from any perspective, the Tax Case Appeal could not be entertained and was liable to be rejected. The Court explicitly rejected the appeal. No order as to costs was made.

What were the facts?

The appeal is filed by the Principal Commissioner of Income Tax-3, Chennai (Revenue) against the order of the Income Tax Appellate Tribunal (ITAT) 'C' Bench, Chennai, dated 18.12.2023, for the assessment year 2020-21. The ITAT had dismissed the appeal before it (I.T.A.No.1188/Chny/2023) on the ground of low tax effect. The assessee is M/s.Sheer Media Private Limited. The Revenue contends that the ITAT's decision to dismiss the appeal on low tax effect failed to consider an exceptional clause in CBDT Circular 3/2018. The High Court heard arguments from the Revenue and reviewed the ITAT's order.

What were the issues?

1. Whether the order of the ITAT is contrary to law and facts and circumstances of the case? (Question of law) 2. Whether, on the facts and circumstances of the case and in law, the ITAT has erred in holding that filing of Form 67 cannot be treated as mandatory, rather it is directory in nature by placing reliance on the decision of ITAT, Mumbai in the case of Sonakshi Sinha (ITA No.1704/Mum2022)? (Question of mixed law and fact, concerning the interpretation of statutory provisions related to Form 67) 3. Whether, on the facts and circumstances of the case and in law, the ITAT has failed to note that power of condonation of the CBDT/Central Government cannot be taken away by the CIT (A)? (Question of mixed law and fact, concerning the powers of condonation) 4. Whether, on the facts and circumstances of the case and in law, the ITAT has failed to note that any order nullifying an unambiguous statutory rule makes it lose its legal force and is therefore covered within the exceptional clause (a) of para 10 of CBDT's Circular 3/2018 viz. "Constitution Validity of the provisions of an Act or Rule is under Challenge"? (Question of law, concerning the interpretation of CBDT Circular 3/2018 and statutory rules) Assessee's arguments: Not recorded in the judgment. Revenue's arguments: The ITAT's decision to dismiss the appeal on low tax effect amounts to a failure to note that the case is covered by the exceptional clause (a) of para 10 of CBDT's Circular 3/2018.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

T.C.A.No.224 of 2024 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 14.10.2024 CORAM THE HONOURABLE MR.JUSTICE R.SURESH KUMAR and THE HONOURABLE MR.JUSTICE C.SARAVANAN T.C.A.No.224 of 2024 The Principal Commissioner of Income Tax-3, 121, Mahatma Gandhi High Road, Chennai - 600 034. ... Appellant -Vs- M/s.Sheer Media Private Limited, 1B, 1st Floor, Jains La Gardenia, 18B, New No.46, Kothari Road, Nungambakkam, Chennai - 600 034. PAN:AAQCS1751D ... 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 'C' Bench, Chennai dated 18.12.2023 in I.T.A.No.1188/Chny/2023 for the assessment year 2020-21. For Appellant : Mr.J.Narayanaswamy Senior Standing Counsel 1/5 https://www.mhc.tn.gov.in/judis T.C.A.No.224 of 2024 J U D G M E N T (Judgment of the Court was delivered by R.SURESH KUMAR, J) This tax case appeal has been filed against the order passed by the Income Tax Appellate Tribunal 'C' Bench, Chennai for the assessment year 2020-21 in I.T.A.No.1188/Chny/2023 dated 18.12.2023. 2. The following substantial questions of law had been framed by the appellant: i. Whether the order of ITAT is contrary to law and facts and circumstances of the case? ii. Whether, on the facts and circumstances of the case and in law, the ITAT has erred in holding that Filing of Form 67 cannot be treated as mandatory, rather it is directory in nature by placing reliance on the decision of ITAT, Mumbai in the case of Sonakshi Sinha (ITA No.1704/Mum2022)? iii. Whether, on the facts and circumstances of the case and in law, the ITAT has failed to note that power of the condonation of the CBDT/Central Government cannot be taken away by the CIT (A)? iv. Whether, on the facts and circumstances of the case and in law, the ITAT has failed to note that any 2/5 https://www.mhc.tn.gov.in/judis T.C.A.No.224 of 2024 order nullifying an unambiguous statutory rule makes it lose its legal force and is therefore covered within the exceptional clause (a) of para 10 of CBDT's Circular 3/2018 viz. "Constitution Validity of the provisions of an Act or Rule is under Challenge"? 3. We have heard Mr.J.Narayanaswamy, learned Senior Standing Counsel appearing for the appellant and have gone through the order impugned passed by the Income Tax Appellate Tribunal dated 18.12.2023. 4. The Income Tax Appellate Tribunal in fact had dismissed the said I.T.A.No.1188/Chny/2023 on the ground of low tax effect. However, it is argued by the learned Senior Standing Counsel appearing for the appellant Revenue that, such a decision taken by the Income Tax Appellate Tribunal would amount to failure to note that it is covered with the exceptional clause (a) of para 10 of CBDT's Circular 3/2018. 5. We do not feel so as projected by the learned Senior Standing Counsel appearing for the appellant Revenue, the reason being that, assuming for the arguments sake, such a challenge could not have been made before the Income 3/5 https://www.mhc.tn.gov.in/judis T.C.A.No.224 of 2024 Tax Appellate Tribunal. Therefore, even on that ground also, no appeal could be entertained by the Income Tax Appellate Tribunal apart from the reasons stated by the Income Tax Appellate Tribunal that it is under low tax effect. Therefore, looking from any angle, this Tax Case Appeal cannot be entertained for the reasons discussed hereinabove, hence it is liable to be rejected, accordingly, it is rejected. However, there shall be no order as to costs. (R.S.K., J.) (C.S.N., J.) 14.10.2024 NCC : Yes / No Index : Yes / No Speaking Order : Yes / No vji To Income Tax Appellate Tribunal 'C' Bench, Chennai. 4/5 https://www.mhc.tn.gov.in/judis T.C.A.No.224 of 2024 R.SURESH KUMAR, J. and C.SARAVANAN, J. vji T.C.A.No.224 of 2024 14.10.2024 5/5 https://www.mhc.tn.gov.in/judis

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