PRINCIPAL COMMISSIONER OF IN vs. M/S.G.R.THANGAMALIGAI AND SO

PDF · subscribers
TCA/303/2020HC Madras23 August 2022Bench: Hon`ble Mr Justice R. MAHADEVAN6 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court did not decide the substantial questions of law on merits. Instead, based on the submission by the Revenue regarding CBDT Circular No. 17/2019, which mandates that appeals should not be filed or pursued if the tax effect does not exceed Rs. 1,00,00,000, the Court dismissed the appeals. The Court noted that the tax effect in these appeals was below the stipulated threshold. The substantial questions of law were kept open for determination in appropriate cases. No costs were awarded.

What were the facts?

These are appeals by the Revenue against a common order of the Income Tax Appellate Tribunal (ITAT) dated June 28, 2019. The appeals pertain to multiple assessment years (2007-08 to 2012-13) and involve three assessees: M/s. G.R. Thangamaligai & Sons, M/s. G.R. Thangamaligai Firm, and M/s. G.R.T Jewellers India Pvt. Ltd. The High Court admitted these appeals on specific substantial questions of law. During the hearing, the Revenue brought to the court's notice CBDT Circular No. 17/2019, which stipulates that appeals should not be filed or pursued if the tax effect does not exceed Rs. 1,00,00,000. The Revenue submitted that the tax effect in these appeals was below this threshold.

What were the issues?

The High Court had to decide seven substantial questions of law. 1. Whether the ITAT was correct in holding that the Assessing Officer (AO) cannot initiate proceedings under Section 153A of the Income Tax Act, 1961 (the Act) without finding incriminating material during a search under Section 132 of the Act. 2. Whether the ITAT was justified in accepting the assessee's claim that an audited tally statement, found during search, was filed with the return for AY 2011-12, despite the return being e-filed under an annexure-less regime. 3. Whether the ITAT was correct in relying on the dismissal of a Special Leave Petition (SLP) in PCIT v. Meeta Gutgutia (96 taxmann.com 468) when the issue of Section 153A jurisdiction was not before the Supreme Court. 4. Whether the ITAT was justified in relying on an SLP dismissal simpliciter, ignoring the ratio that such dismissals have no binding effect, as per CIT v. Geetha Ramakrishna Mills (P) Ltd. and Kunhayammed v. State of Kerala. 5. Whether the ITAT was correct in directing the AO to allow the assessee's claim for purchases of diamonds. 6. Whether the ITAT failed to appreciate that some suppliers of diamonds were operated by individuals providing accommodation entries without actual supply of goods. 7. Whether the ITAT was correct in observing that it is not erroneous for an assessee to purchase goods from one entity and obtain bills from another, which would defeat the purpose of the P&L account. Assessee's contentions were not recorded. Revenue argued that the tax effect in these appeals was below the threshold stipulated in CBDT Circular No. 17/2019.

Which sections of the Income-tax Act were involved?

Section 153A,Section 132

AI-generated summary — verify with the full judgment below

T.C.A.Nos.303, 304, 307, 308, 309 and 311 to 315 of 2020 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 23.08.2022 CORAM : THE HONOURABLE MR. JUSTICE R. MAHADEVAN AND THE HONOURABLE MR. JUSTICE MOHAMMED SHAFFIQ T.C.A.Nos.303, 304, 307, 308, 309 and 311 to 315 of 2020 Principal Commissioner of Income Tax Central 1 No.108, Mahatma Gandhi Road, Chennai 600 034. ... Appellant in all TCAs Versus M/s.G.R.Thangamaligai & Sons No.138, Usman Road, T.Nagar, Chennai 600 017. PAN: AAG FG 3557L

... Respondent in TCA.Nos.303 and 307 of 2020 M/s.G.R.Thangamaligai Firm, No.136, Usman Road, T.Nagar, Chennai 600 017. PAN: AAD FG 7966Q

... Respondent in TCA.Nos.304, 308, 309, 313 and 315 of 2020 M/s.G.R.T Jewellers India Pvt. Ltd., No.136, Usman Road, T.Nagar, Chennai 600 017. PAN: AAACR 3582R

... Respondent in TCA.Nos.311, 312 and 314 of 2020 Page 1/6 https://www.mhc.tn.gov.in/judis T.C.A.Nos.303, 304, 307, 308, 309 and 311 to 315 of 2020 Appeals preferred under Section 260A of the Income Tax Act, 1961, against the order dated 28.06.2019 passed by the Income Tax Appellate Tribunal, “C” Bench, Chennai, in I.T.A.Nos.53, 58, 57, 59, 61, 65, 64, 60, 66 and 62 /Chny/2019. For Appellant : Mr.J.Narayanaswamy Senior Standing Counsel in all TCAs For Respondent : M/s.R.Sivaraman in all TCAs

COMMON JUDGMENT (Judgment of the Court was delivered by R.MAHADEVAN, J.) These tax case appeals have been filed by the appellant / Revenue, challenging the common order dated 28.06.2019 passed by the Income Tax Appellate Tribunal, “C” Bench, Chennai, in I.T.A.Nos.53, 58, 57, 59, 61, 65, 64, 60, 66 and 62 /Chny/2019., relating to the respective assessment years 2008-09, 2007-08, 2012-13, 2008-09, 2010-11, 2011-12, 2010-11, 2009-10, 2012-13 and 2011-12.

2.

By order dated 17.09.2020, this court admitted the aforesaid tax case appeals on the following substantial questions of law: “(i) Whether on the facts and in the circumstances of the case, the ITAT was right in law in holding that the assessing officer cannot initiate proceedings under Section 153A of the I.T.Act, where Page 2/6 https://www.mhc.tn.gov.in/judis T.C.A.Nos.303, 304, 307, 308, 309 and 311 to 315 of 2020 there was no incriminating material found during the course of search operation under Section 132 of the Act?

(ii) Whether on facts and circumstances of the case, the ITAT was justified in accepting the stand of the assessee that the audited tally statement, found during search and which formed the basis of search assessment, was filed alongwith the return of income for the assessment year 2011-12, without appreciating that the said return of income was e-filed and for that assessment year, annexure less return was only envisaged?

(iii) Whether on the facts and in the circumstances of the case, the ITAT was correct in law in placing reliance on SLP dismissal simpliciter in the case of PCIT V. Meeta Gutgutia (96 taxmann.com 468), when the issue of jurisdiction under Section 153A of the Income Tax Act was not at all before the Hon'ble Supreme Court in the said SLP?

(iv) Whether on the facts and circumstances of the case, the Appellate Tribunal was justified in deciding the impugned issue on the basis of SLP (Special Leave Petition) dismissal simpliciter by the Hon'ble Supreme Court in the case of PCIT V.Meeta Guttia (96 Taxmann.com 468) without taking cognizance of the well settled ratio that SLP dismissal simpliciter has no binding effect, as laid down in the cases of CIT V. Geetha Ramakrishna Mills (P) Ltd., (288 ITR 489) (mad.) and Kunhayammed V. State of Kerala (245 ITR 360) (SC)?

(v) Whether on the facts and in the circumstances of the case, the ITAT was correct in law in directing the assessing officer to allow the assessee's claim of purchases of diamonds?

(vi) Whether on the facts and in the circumstances of the case, the ITAT was correct in law in failing to appreciate that some of the concerns form whom the assessee claimed to have purchased the diamonds had been operated by Shri.Banwarilal and his sons, who were providing accommodation entries to various entitlies, by issuing invoices, through various benami concerns operated by them, without actually supplying the goods?

(vii) Whether the ITAT was correct in law in observing that there is nothing erroneous in an assessee purchasing the goods from someone and getting the bills from another, which would defeat the intent and purpose of the profit & Loss account to reflect the true state of affairs of a business entity? " Page 3/6 https://www.mhc.tn.gov.in/judis T.C.A.Nos.303, 304, 307, 308, 309 and 311 to 315 of 2020 3. When the matters were taken up for consideration, the learned counsel for the appellant / Revenue brought to the notice of this court the Circular No.17/2019 dated 08.08.2019 issued by the Central Board Direct Taxes, wherein, it is stipulated that appeals shall not be filed/pursued by the Department before the High Court in cases where the tax effect does not exceed Rs.1,00,00,000/- (Rupees One Crore). It is also submitted that the tax effect in these appeals is less than the threshold limit. 4. In the light of the aforesaid submissions made by the learned counsel for the appellant / Revenue, the present appeals, wherein, the tax effect is said to be less than the monetary limit imposed, are dismissed as withdrawn, keeping open the substantial questions of law for determination in appropriate cases. No costs. (R.M.D., J.) (M.S.Q., J.) 23.08.2022

Internet : Yes

Index : Yes / No av Page 4/6 https://www.mhc.tn.gov.in/judis T.C.A.Nos.303, 304, 307, 308, 309 and 311 to 315 of 2020 To 1. The Income Tax Appellate Tribunal, “C” Bench, Chennai. 2. Principal Commissioner of Income Tax Central 1 No.108, Mahatma Gandhi Road, Chennai 600 034. 3. The Assistant Commissioner of Income-tax, Central Circle - 3(3), Chennai. 4. The Commissioner of Income Tax (Appeals)-19, Chennai. Page 5/6 https://www.mhc.tn.gov.in/judis T.C.A.Nos.303, 304, 307, 308, 309 and 311 to 315 of 2020 R. MAHADEVAN, J. and MOHAMMED SHAFFIQ, J. av T.C.A.Nos.303, 304, 307, 308, 309 and 311 to 315 of 2020 23.08.2022 Page 6/6 https://www.mhc.tn.gov.in/judis

More judgments on Section 153A

All 18,957 judgments and leading authorities on Section 153A →

Recent GST High Court judgments

Search GST case law →