L.K.SUDHISH vs. THE ASSISTANT COMMISSIONER

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TCA/302/2016HC Madras13 September 2021Bench: Hon`ble Mr Justice T. S. SIVAGNANAM7 pages
AI SummaryRemanded

What did the High Court hold?

The High Court did not decide the substantial questions of law. It was informed that the assessee had availed the benefit of the Direct Tax Vivad Se Vishwas Act, 2020, and had been issued Form-3 on February 10, 2021. Consequently, the Court found no useful purpose in keeping the appeal pending. The Tax Case Appeal was disposed of on the ground that the assessee had availed the Vivad Se Vishwas Scheme. The Department was directed to process the application at the earliest. The assessee was granted liberty to restore the appeal if the ultimate decision under the Vivad Se Vishwas Act was not in their favour. In such an event, the Registry was to entertain a Miscellaneous Petition for Restoration without insisting on condonation of delay. The substantial questions of law were left undecided.

What were the facts?

The assessee, Shri L.K. Sudhish, filed an appeal before the High Court of Judicature at Madras against an order of the Income Tax Appellate Tribunal (ITAT), Chennai Bench, dated October 16, 2015. This order pertained to the assessment year 2007-08. The appeal was admitted on substantial questions of law. During the pendency of the appeal, the assessee availed the benefit of the Direct Tax Vivad Se Vishwas Act, 2020. The assessee was issued Form-3 under the scheme on February 10, 2021. The High Court noted that no useful purpose would be served by keeping the appeal pending given the assessee's participation in the Vivad Se Vishwas Scheme.

What were the issues?

The High Court was to decide six substantial questions of law, framed as follows: 1. Whether the ITAT was right in applying the Revenue's case and confirming a 2.5% disallowance on the appellant's appeal, despite appreciable differences in the grounds of appeal and relief sought? 2. Whether the ITAT was right in confirming a disallowance that was not based on materials seized during a search, especially when the original assessment under Section 143 was already completed? 3. Whether the ITAT was right in not considering that the Assessing Officer assumed extra-jurisdictional powers in complicating the assessment and making disallowances and consequential interest charges? 4. Whether the ITAT was right in confirming a disallowance on items already disallowed and not subject to deduction? 5. Whether the ITAT was right in its interpretation of the calculation of interest under Sections 234A, 234B, and 234C read with Section 153A of the Income Tax Act, 1961, and its effect? 6. Whether the ITAT was right in placing reliance on cited facts and cases to disallow the appellant's appeal? The assessee contended that the ITAT erred in its findings on these issues. The revenue, represented by its counsel, likely defended the ITAT's order, though their specific arguments are not detailed in the provided text.

Which sections of the Income-tax Act were involved?

Section 260A,Section 143,Section 234A,Section 234B,Section 234C,Section 153A

AI-generated summary — verify with the full judgment below

Tax Case Appeal No.302 of 2016 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 13.09.2021 CORAM : THE HON'BLE MR. JUSTICE T.S. SIVAGNANAM AND THE HON'BLE MR. JUSTICE SATHI KUMAR SUKUMARA KURUP Tax Case Appeal No.302 of 2016 Shri. L.K. Sudhish

... Appellant Vs.

The Assistant Commissioner of Income Tax, Central Circle – I[2] Chennai – 600 034. ... Respondent

Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Chennai Bench "B" dated 16.10.2015 passed in I.T.A.No.697/Mds/2013 for the AY 2007-08. Page 1/7 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.302 of 2016 For Appellant : Mr.B.Ramana Kumar & Mr.M.Velmurugan For Respondent : Mr.T.R. Senthil Kumar

Senior Standing Counsel and Ms.K.G. Usha Rani Standing Counsel

J U D G M E N T (Judgment was delivered by T.S. SIVAGNANAM, J.) This appeal filed by the assessee under Section 260A of the Income Tax Act, 1961 ('the Act' for brevity), is directed against the order dated 16.10.2015 passed by the Income Tax Appellate Tribunal, Chennai "B" Bench, ('the Tribunal' for brevity) in I.T.A.No.697/Mds/2013 for the assessment year 2007-08. The appeal has been admitted on 20.04.2016 on the following substantial questions of law : “1.Whether on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in applying the case of the Revenue confirming the 2.5% disallowances on the appellant's appeal where the grounds of appeal and relief sought have appreciable differences? Page 2/7 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.302 of 2016 2.Whether on the facts and in the circumstances of the case, the Appellate Tribunal is right in confirming disallowance which was not out of any materials seized at the time of the search and that the original assessment under Section 143 was completed? 3.Whether on the facts and in the circumstances of the case, the Appellate Tribunal is right in not considering that the Assessing Officer assumed extra jurisdictional powers in complicating the assessment and made the disallowances and the resultant interests? 4.Whether on the facts and in the circumstance of the case, the Appellant Tribunal is right in confirming disallowance where the same is already disallowed and on items that are not subject to deduction in the circumstance? 5.Whether on the facts and in the circumstance of the case, the Income Tax Appellate Tribunal is right in law in their interpretation on the calculation of interest under Ssections 234A, 234B and 234C read with Section 153A of the Income Tax Act, 1961 and its effect? And 6.Whether on the facts and in the circumstance of the case, the Appellate Tribunal is right in law in placing reliance on the facts and cases cited above in disallowing the appeal of the appellant?” Page 3/7 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.302 of 2016 2. We have heard Mr.B.Ramana Kumar and Mr.M.Velmurugan, learned counsel appearing for the appellant/assessee and Mr.T.R.Senthil Kumar, learned Senior Standing Counsel and Ms.K.G.Usha Rani, learned Standing Counsel for the respondent/Revenue. 3. It may not be necessary for this Court to decide the Substantial Questions of Law framed for consideration on account of certain subsequent developments. The Government of India enacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of 2020) to provide for resolution of disputed tax and for matters connected therewith or incidental thereto. The Act of the Parliament received the assent of the President on 17th March 2020 and published in the Gazette of India on 17th March 2020. 4. We are informed by the learned counsel for the appellant/ assessee that the assessee has availed the benefit of Vivad Se Vishwas Scheme and the assessee had already been issued with Form-3 on 10.02.2021. Page 4/7 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.302 of 2016 5. In the light of the fact that the assessee has already availed the benefit under the Act, no useful purpose would be served in keeping the appeal pending. At the same time, the interest of the assessee in the event the order to be passed by the Department under the Act is not in favour of the assessee, is to be safeguarded. Accordingly, the Tax Case Appeal stands disposed of on the ground that the assessee has already been issued with Form-3 and the Department shall process the application at the earliest in accordance with the said Act and communicate the decision to the assessee at the earliest. As observed, the assessee is given liberty to restore the appeal in the event the ultimate decision to be taken on the declaration filed by the assessee under Section 4 of the said Act is not in favour of the assessee. If such a prayer is made, the Registry shall entertain the prayer without insisting upon any application to be filed for condonation of delay in restoration of the appeal and on such request made by the assessee by filing a Miscellaneous Petition for Restoration, the Registry shall place such petition before the Division Bench for orders. Page 5/7 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.302 of 2016 6. With this observation, this Tax Case Appeal stands disposed of with the aforementioned liberty, and consequently, the Substantial Questions of Law are left open. No costs. (T.S.S., J.) (S.S.K., J.) 13.09.2021 (5/5)

Note to Registry : Issue order copy on 15.09.2021 jeni/mkn

Internet : Yes

Index : Yes / No To 1. Income Tax Appellate Tribunal, Chennai "B" Bench 2.The Assistant Commissioner of Income Tax, Central Circle – I[2], Chennai – 600 034. Page 6/7 https://www.mhc.tn.gov.in/judis/ Tax Case Appeal No.302 of 2016 T.S. SIVAGNANAM, J. and SATHI KUMAR SUKUMARA KURUP, J. jeni/mkn Tax Case Appeal No.302 of 2016

13.09.2021 (5/5) Page 7/7 https://www.mhc.tn.gov.in/judis/

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