COMMISSIONER OF INCOME TAX vs. T.R. SHANMUGASUNDARAM

TCA/228/2024HC Madras21 October 2024Bench: Honourable Mr Justice R. SURESH KUMAR4 pages

AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the Tax Case Appeal filed by the Revenue. The dismissal was based on a submission by the Revenue's learned Standing Counsel, citing CBDT's Circular No.9 of 2024 dated 17.09.2024. According to this circular, the tax effect in the instant case was less than the monetary limit imposed for filing appeals. Consequently, the Court decided to dispose of the appeal without adjudicating on the substantial questions of law. The substantial questions of law were expressly kept open for adjudication at an appropriate stage. No costs were awarded. Therefore, the Tribunal's order dated 14.02.2022, which directed the Assessing Officer to estimate Gross Profit at 8% and restricted disallowances to 40%, was not reviewed on its merits.

What were the facts?

The Revenue has filed a Tax Case Appeal before the High Court of Judicature at Madras, challenging an order dated 14.02.2022 passed by the Income Tax Appellate Tribunal, Chennai ('the Tribunal'). The appeal concerns assessment year(s) not explicitly stated in the provided text. The core of the dispute involves additions made by the Assessing Officer based on seized materials indicating suppressed sales receipts, and disallowances on account of sale commission and development expenditure. The Tribunal had previously directed the Assessing Officer to estimate Gross Profit at 8% on accounted sales and restricted disallowances on commission and development expenditure to 40%. The procedural history relevant here is the Revenue's appeal to the High Court against the Tribunal's order.

What were the issues?

The Tribunal had to decide three substantial questions of law: 1. Whether the Tribunal was correct in directing the Assessing Officer to estimate Gross Profit at 8% on accounted sales, when the Assessing Officer's addition was based on seized material showing suppressed sales receipts to the extent of 2 to 5 times. 2. Whether the Tribunal was correct in restricting the disallowance for sale commission and development expenditure to 40%, as against the 70% made by the Assessing Officer, without considering the assessee's lack of credible proof beyond self-made vouchers. 3. Whether the Tribunal's order was perverse for overlooking judicial pronouncements favouring the Revenue on additions made through extrapolation of facts from seized materials. The Revenue contended that the Tribunal erred in its directions regarding Gross Profit estimation and disallowance percentages. The Revenue argued that the assessee lacked credible proof for expenses and that the Tribunal overlooked favourable judicial pronouncements. The judgment does not record specific arguments from the assessee.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

T.C.A.No.228 of 2024 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 21.10.2024 CORAM THE HON'BLE MR.JUSTICE R.SURESH KUMAR AND THE HON'BLE MR.JUSTICE C.SARAVANAN Tax Case Appeal No.228 of 2024 Commissioner of Income Tax Central Circle-I, Coimbatore. .... Appellant Vs. T.R.Shanmugasundaram .... Respondent ----- Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, 'A' Bench Chennai, dated 14.02.2022 made in I.T.A.No.650/Chny/2019. For Appellant : Mr.Karthik Ranganathan Senior Standing Counsel ----- J U D G M E N T (Delivered by R.SURESH KUMAR, J.) This Tax Case Appeal has been filed by the Revenue calling in question the correctness of the order passed by the Income Tax Appellate Tribunal, Chennai by raising the following substantial questions of law: https://www.mhc.tn.gov.in/judis T.C.A.No.228 of 2024 1. Whether on the facts and in the circumstances of the case the Tribunal was right in directing the Assessing Officer to estimate the Gross Profit fate of 8% on accounted sale when the assessing officer made the addition based on a few instance, based on the seized material in which the assessee has suppressed sale receipts to the extent of more than 2 to 5 times? 2. Whether on the facts and in the circumstances of the case, the tribunal was right in restricting the disallowance made by the assessing officer on account of sale commission and on account of development expenditure to 40% as against 70% made by the assessing officer without considering that the assessee has not produced any credible to proof to substantiate it except from self-made vouchers? 3. Whether on the facts and in the circumstances of the case, the Tribunal order was perverse when it over looked the judicial pronouncements in favour of revenue on the addition made on extrapolation of facts relating to the entries available in the seized / impounded materials?" 2. It is brought to our notice by the learned Standing Counsel for the appellant Revenue that in the instant case, as per the CBDT's Circular No.9 of 2024 dated 17.09.2024 the tax effect is said to be less than the monetary limit https://www.mhc.tn.gov.in/judis T.C.A.No.228 of 2024 imposed and therefore, the appeal can be disposed of, keeping the substantial questions of law raised in this appeal open for adjudication at a later point of time. 3. Recording the aforesaid submission made by the learned Standing Counsel for the appellant Revenue, this Tax Case Appeal is dismissed for low tax effect, keeping open the substantial questions of law for adjudication at appropriate stage. No costs. (R.S.K.,J.) (C.S.N.,J.) 21.10.2024 NCS : Yes/No KST To The Income Tax Appellate Tribunal 'A' Bench, Chennai. https://www.mhc.tn.gov.in/judis T.C.A.No.228 of 2024 R.SURESH KUMAR, J. AND C.SARAVANAN, J. KST T.C.A.No.228 of 2024 21.10.2024 https://www.mhc.tn.gov.in/judis

Recent GST High Court judgments

Search GST case law →