COMMISSIONER OF INCOME TAX vs. M/S.TRICHY STEEL ROLLING MILLS

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TCA/295/2016HC Madras04 June 2025Bench: Honourable The CHIEF JUSTICE4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court, in its order delivered by the Chief Justice, stated that it was not inclined to interfere with the order of the Income Tax Appellate Tribunal (ITAT). The ITAT had directed the Assessing Officer to ascertain whether the entire amount of Rs. 6.42 Crore represented only loan creditors. The Revenue's counsel acknowledged this direction but expressed dissatisfaction with the ITAT's additional finding that if the entire amount pertained to sundry creditors, it could not be subject to income tax. The High Court noted that the Assessing Officer was yet to ascertain the facts. Consequently, the High Court kept all rights and contentions open and disposed of the appeal accordingly, stating there would be no order as to costs. The operative direction was to dispose of the appeal, leaving the factual ascertainment to the Assessing Officer.

What were the facts?

The Commissioner of Income Tax, Trichy (Revenue) filed an appeal under Section 260A of the Income Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (ITAT), Madras 'C' Bench, dated 22.05.2015. The ITAT's order was in relation to ITA.No.834/Mds/2014 concerning Trichy Steel Rolling Mills Ltd (Assessee). The core of the dispute involved an amount of Rs. 6.42 Crore. The ITAT had directed the Assessing Officer to ascertain if this entire amount represented loan creditors. The Revenue's grievance was that the ITAT had also made a finding that if the amount pertained to sundry creditors, it could not be subject to income tax. The High Court was hearing the appeal against the ITAT's order.

What were the issues?

1. Whether the ITAT erred in directing the Assessing Officer to ascertain if the entire amount of Rs. 6.42 Crore represents only loan creditors, and if so, whether such a direction is legally sustainable. (Question of mixed law and fact, turning on principles of assessment and evidence). 2. Whether the ITAT erred in holding that if the entire amount pertains to sundry creditors, it cannot be subject to income tax, and if so, whether this finding is legally correct. (Question of law, potentially turning on Section 68 of the Income Tax Act, 1961, concerning unexplained cash credits). Assessee's Contention: The judgment does not record any specific contentions made by the Assessee before the High Court. Revenue's Contention: The Revenue, through its Senior Standing Counsel Mr. J. Narayanaswamy, argued that it would have been satisfied if the ITAT had only remanded the matter to ascertain the nature of the Rs. 6.42 Crore. However, it objected to the ITAT's further finding that if the entire amount pertained to sundry creditors, it could not be subjected to income tax. The Revenue implicitly sought to challenge this finding.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

TCA No.295 of 2016 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 04.06.2025 CORAM : THE HON'BLE MR.K.R.SHRIRAM, CHIEF JUSTICE AND THE HON'BLE MR.JUSTICE SUNDER MOHAN TCA No. 295 of 2016 The Commissioner of Income Tax Trichy. .. Appellant Vs Trichy Steel Rolling Mills Ltd Post Box No.603 Senthannipuram Trichy – 639 002. .. Respondent Prayer: Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal Madras “C” Bench, dated 22.5.2015 in ITA.No.834/Mds/2014. For Appellant(s): Mr.J.Narayanaswamy, Sr.Standing Counsel For Respondent(s): Mr.A.S.Sriraman JUDGMENT (Delivered by the Hon'ble Chief Justice) We are not inclined to interfere with the order of the Income Tax __________ Page 1 of 4 https://www.mhc.tn.gov.in/judis ( Uploaded on: 04/06/2025 08:57:11 pm ) TCA No.295 of 2016 Appellate Tribunal (ITAT) that is impugned in this appeal. The ITAT has only directed the Assessing Officer to ascertain whether the entire amount of Rs.6.42 Crore represents only loan creditors. 2. Mr.Narayanaswamy says that he would have been happy if the ITAT had only remanded the matter to ascertain the same, but the ITAT has also given a finding that if the entire amount is pertaining to sundry creditors, then it cannot be subject to income tax. 3. As the Assessing Officer is yet to ascertain, we keep all rights and contentions open. Appeal is disposed of accordingly. There shall be no order as to costs. (K.R.SHRIRAM, CJ.) (SUNDER MOHAN, J.)

04.06.2025 Index : Yes/No Neutral Citation : Yes/No sasi __________ Page 2 of 4 https://www.mhc.tn.gov.in/judis ( Uploaded on: 04/06/2025 08:57:11 pm ) TCA No.295 of 2016 To: 1. The Assistant Registrar Income Tax Appellate Tribunal Chennai Benches, Chennai. 2. The Commissioner of Income Tax (Appeals) No.44, Williams Road, Cantonment Tiruchirapalli – 620 001. 3. The Assistant Commissioner of Income Tax Circle-I(1), Tiruchirapalli. __________ Page 3 of 4 https://www.mhc.tn.gov.in/judis ( Uploaded on: 04/06/2025 08:57:11 pm ) TCA No.295 of 2016 THE HON'BLE CHIEF JUSTICE AND SUNDER MOHAN,J. (sasi)

TCA No. 295 of 2016

04.06.2025 __________ Page 4 of 4 https://www.mhc.tn.gov.in/judis ( Uploaded on: 04/06/2025 08:57:11 pm )

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