DEPUTY COMMISSIONER OF INCOME TAX vs. M/S.KUGEL DEVELOPERS PVT. LTD.

TCA/257/2024HC Madras21 October 2024Bench: Honourable Mr Justice R. SURESH KUMAR4 pages

AI SummaryDismissed

What did the High Court hold?

The High Court noted the submission by the Revenue's Senior Standing Counsel that, as per CBDT's Circular No.9 of 2024 dated 17.09.2024, the tax effect in this case was below the monetary limit for filing appeals. Consequently, the Court decided to dispose of the appeal without adjudicating the substantial questions of law raised. The appeal was dismissed on the ground of low tax effect, with the substantial questions of law left open for adjudication at an appropriate future stage. No costs were awarded. The specific findings of the ITAT on the merits of the additions and the burden of proof were not discussed or decided by the High Court.

What were the facts?

The Revenue, represented by the Deputy Commissioner of Income Tax, Company Circle -II(4), Chennai, filed a Tax Case Appeal before the High Court of Judicature at Madras against an order of the Income Tax Appellate Tribunal (ITAT), 'B' Bench, Chennai, dated 28.10.2022. The appeal challenges the ITAT's decision in ITA No.348/Chny/2019 concerning M/s. Kugel Developers Pvt Ltd. The core of the dispute revolves around additions made to the assessee's total income. The Revenue contends that the execution of the contract and the expenditure claimed by the assessee were unsubstantiated, leading to additions. The ITAT, however, deleted 92% of these additions, granting substantial relief to the assessee.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the Tribunal was correct in deleting 92% of the additions to Total Income and granting substantial relief when the execution of the contract and expenditure claimed were unsubstantiated? 2. Whether the Tribunal was correct in shifting the burden of proof upon the Department against the settled proposition that the assessee must prove all claimed expenditure, especially when the assessee had not produced prima facie evidence or shifted the burden? The Revenue argued that the ITAT erred in deleting the additions as the assessee failed to substantiate its claimed expenditure and the execution of the contract. The Revenue contended that the burden of proof lies with the assessee to prove its claims, and the ITAT wrongly shifted this burden to the Department. The judgment does not record specific arguments from the assessee regarding these issues, other than implicitly through the ITAT's decision.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

T.C.A.No.257 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.257 of 2024 Deputy Commissioner of Income Tax Company Circle -II(4) Chennai 600034. .... Appellant Vs. M/s.Kugel Developers Pvt Ltd Times Partner. No.58, Perambur Barracks Road, Vepery, Chennai 600 007. .... Respondent ----- Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, 'B' Bench Chennai, dated 28.10.2022 made in I.T.A.No.348/Chny/2019. For Appellant : Mrs.V.Pushpa Senior Standing Counsel For Respondent : Mr.Rajiv Saxena ----- 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.257 of 2024 "(i) Whether on the facts and in the circumstances of the case the Tribunal is correct in deleting 92% of the additions to Total Income and granting substantial relief, when the execution of the contract and expenditure claimed to have been incurred thereof stands unsubstantiated? (ii) Whether on the facts and in the circumstances of the case and law, the Hon'ble Tribunal is correct in shifting the burden of proof upon the Department against the settled proposition of law which casts a duty upon the assessee to prove all expenditure claimed by it and when the Assessee has not even produced any prima facie evidence or shifted the burden? 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 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. https://www.mhc.tn.gov.in/judis T.C.A.No.257 of 2024 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 'B' Bench, Chennai. https://www.mhc.tn.gov.in/judis T.C.A.No.257 of 2024 R.SURESH KUMAR, J. AND C.SARAVANAN, J. KST T.C.A.No.257 of 2024 21.10.2024 https://www.mhc.tn.gov.in/judis

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