COMMISSIONER OF INCOME TAX vs. M/S.VISWAMS

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TCA/264/2016HC Madras30 August 2019Bench: Hon`ble Mr Justice T. S. SIVAGNANAM4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the Revenue. The dismissal was based on a submission by the Revenue's counsel that the appeal was not being pursued due to low tax effect, in accordance with CBDT Circular No. 17/2019. This circular increased the monetary limit for pursuing appeals before the High Court to Rs. 1 Crore, and the tax effect in this case was below this threshold. Consequently, the substantial questions of law framed were left open. The Revenue was granted liberty to seek restoration of the appeal if the tax effect was found to be above the threshold limit. No costs were imposed. The connected civil miscellaneous petition was also dismissed.

What were the facts?

The Revenue, represented by the Commissioner of Income Tax, Central Circle, Chennai, filed an appeal before the High Court of Madras against an order dated February 5, 2015, passed by the Income Tax Appellate Tribunal (ITAT), Chennai 'C' Bench. The appeal pertains to assessment year 2003-04 and challenges the ITAT's decision to quash an assessment made under Section 153A of the Income Tax Act, 1961. The assessee is M/s. Viswams, Tirunelveli. The High Court admitted the appeal on three substantial questions of law.

What were the issues?

The High Court was to decide three substantial questions of law: 1. Whether the ITAT was correct in quashing the assessment made under Section 153A, given the absence of seized materials for fresh assessments. 2. Whether the ITAT correctly appreciated that Section 153A mandates determination of 'total income' as opposed to the 'undisclosed income' in the old search assessment procedure. 3. Whether the ITAT was correct in holding that an assessment under Section 153A requires incriminating material, disregarding the non-obstante clause that excludes reopening under Section 147. The Revenue argued that the assessment under Section 153A was valid. The assessee's arguments are not explicitly detailed in the provided text, but their position was upheld by the ITAT, leading to the Revenue's appeal. The Revenue relied on the provisions of Section 153A and the distinction between 'total income' and 'undisclosed income' in search assessments.

Which sections of the Income-tax Act were involved?

Section 260A,Section 153A,Section 147

AI-generated summary — verify with the full judgment below

TCA.No.264 of 2016 In the High Court of Judicature at Madras Dated : 30.8.2019 Coram : The Honourable Mr.Justice T.S.SIVAGNANAM and The Honourable Mrs.Justice V.BHAVANI SUBBAROYAN Tax Case Appeal No.264 of 2016 & CMP.No.5543 of 2016 The Commissioner of Income Tax, Central Circle, Chennai-34 ...Appellant Vs M/s.Viswams, Tirunelveli. ...Respondent APPEAL under Section 260A of the Income Tax Act, 1961 against the order dated 05.2.2015 made in ITA.No.1091/Mds/2014 on the file of the Income Tax Appellate Tribunal, Chennai 'C' Bench for the assessment year 2003-04. For Appellant: Mr.T.R.Senthilkumar, SSC assisted by Ms.K.G.Usharani, SC For Respondent: Mr.R.Venkatanarayanan for M/s.Subbaraya Aiyer Padmanabhan Judgment was delivered by

T.S.Sivagnanam,J

We have heard Mr.T.R.Senthilkumar, learned Senior Standing Counsel assisted by Ms.K.G.Usharani, learned Standing Counsel appearing for the appellant – Revenue and Mr.R.Venkatanarayanan, learned counsel appearing for the respondent – assessee. 1/4 http://www.judis.nic.in TCA.No.264 of 2016

2.

This appeal, filed by the Revenue under Section 260A of the Income Tax Act, 1961 is directed against the order dated 05.2.2015 made in ITA.No. 1091/Mds/2014 on the file of the Income Tax Appellate Tribunal, Chennai 'C' Bench for the assessment year 2003-04. 3. The appeal was admitted on 26.4.2016 on the following substantial questions of law : “i. Whether on the facts and circumstances of the case, the Appellate Tribunal was right in quashing the assessment made under Section 153A, as there are no seized materials to make fresh assessments ? ii. Whether on the facts and circumstances of the case, the Appellate Tribunal is correct in not appreciating that the new search assessment procedure under Section 153A of the Act wherein the 'total income' is to be determined whereas in the old search assessment procedure, the 'undisclosed income' is to be determined ? and iii. Whether in the facts and circumstances of the case, the Tribunal is correct in holding that any assessment under Section 153A can be done only based on incriminating material ignoring the non- obstante clause which excludes reopening under Section 147?” 4. The learned Senior Standing Counsel for the appellant submits that 2/4 http://www.judis.nic.in TCA.No.264 of 2016 the above appeal is not pursued by the Revenue on account of the low tax effect in terms of Circular No.17/2019 dated 08.8.2019 issued by the Central Board of Direct Taxes. By the said Circular, the monetary limit for filing or pursuing an appeal before the High Court has been increased to Rs.1 Crore. It is further submitted that the tax effect in this case is less than the threshold limit. 5. In the light of the said submissions, the above tax case appeal is dismissed on account of the low tax effect. The substantial questions of law framed are left open. In the event the tax effect is above the threshold limit fixed in the said circular, liberty is granted to the Revenue to make a mention to this Court to restore the appeal to be heard and decided on merits. No costs. Consequently, the connected CMP is also dismissed.

(T.S.S.J.) (V.B.S.J.) 30.8.2019 Speaking (or) Non Speaking Order Index : Yes (or) No Internet: Yes (or) No To The Income Tax Appellate Tribunal, Chennai 'C' Bench. RS 3/4 http://www.judis.nic.in TCA.No.264 of 2016 T.S.SIVAGNANAM,J AND V.BHAVANI SUBBAROYAN,J RS TCA.No.264 of 2016 & CMP.No.5543 of 2016 30.8.2019 4/4 http://www.judis.nic.in

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