PRINCIPAL COMMISSIONER OF vs. N. SASIKALA

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TCA/313/2018HC Madras04 August 2022Bench: Hon`ble Mr Justice R. MAHADEVAN4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court did not decide the substantial questions of law on their merits. The learned counsel for the appellant (Revenue) brought to the court's notice CBDT Circular No. 17/2019, which stipulates that appeals shall not be filed or pursued before the High Court if the tax effect does not exceed Rs.1,00,00,000/-. It was submitted that the tax effect in this appeal was less than the threshold limit. Consequently, the High Court, in light of the submission regarding the tax effect being below the monetary limit, dismissed the appeal as withdrawn. The court explicitly kept the substantial questions of law open for determination in an appropriate case. No costs were awarded.

What were the facts?

The Revenue, Principal Commissioner of Income Tax 2, Chennai, filed a Tax Case Appeal before the High Court of Judicature at Madras, challenging an order dated 01.08.2016 passed by the Income Tax Appellate Tribunal (ITAT), Madras “B” Bench. The appeal pertains to assessment year 1996-97 and concerns the Wealth Tax Act, 1957. The ITAT's order was in Appeal No. WTA.No.14/Mds/2008. The assessee is Smt. N. Sasikala. The Revenue's appeal raised substantial questions of law regarding the valuation of immovable properties, allowance of a liability against jewellery, and computation of the value of the assessee's interest in a partnership firm. The respondent assessee did not appear before the High Court.

What were the issues?

The Tribunal had to decide three substantial questions of law: 1. Whether the Tribunal was correct in directing the Assessing Officer to value the assessee's immovable properties by invoking Section 7 and Schedule III of the Wealth Tax Act, at the assessee's option, despite the Assessing Officer having used the assessee's declared value for some properties and the assessee not disclosing the value of another property. 2. Whether the Tribunal was correct in directing the Assessing Officer to allow a liability of Rs.40 lakhs against jewellery, ignoring the assessee's failure to prove that this liability was incurred in relation to the purchase of gold jewellery as against taxable wealth. 3. Whether the Tribunal was correct in directing the Assessing Officer to compute the value of the assessee's interest in a partnership firm under Section 7(1) read with Schedule-III-15&16 Part-E of the Wealth Tax Act, without examining the merits of the unproven liabilities shown by some firms against assets. The Revenue contended that the Tribunal erred in its directions on property valuation, liability allowance, and partnership interest computation. The Assessee did not present any arguments.

Which sections of the Income-tax Act were involved?

Section 7,Section 7(1)

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TCA.No.313 of 2018 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 04.08.2022 CORAM

THE HONOURABLE MR. JUSTICE R. MAHADEVAN and THE HONOURABLE MR. JUSTICE MOHAMMED SHAFFIQ T.C.A.No. 313 of 2018 Principal Commissioner of Income Tax 2 No.108, Mahatma Gandhi Road, Chennai.

.. Appellant Versus Smt.N. Sasikala, 36, Poes Garden, Chennai 600 086.

.. Respondent Tax Case Appeal filed under Section 35 of the Wealth Tax Act, 1957 against the order of the Income Tax Appellate Tribunal Madras “B” Bench, dated 01.08.2016 passed in WTA.No.14/Mds/2008 for the assessment year 1996-97. For Appellant : Mr.S.Rajesh for Mr.Karthik Ranganathan Standing Counsel For Respondent : No appearance 1/4 https://www.mhc.tn.gov.in/judis TCA.No.313 of 2018 JUDGMENT (Judgment of the Court was delivered by R. MAHADEVAN, J.) This Tax Case Appeal has been filed by the appellant / revenue, questioning the correctness of the order dated 01.08.2016 passed by the Income Tax Appellate Tribunal Madras “B” Bench, in WTA. No.14/Mds/2008 for the assessment year 1996-97, on the following substantial questions of law;

' 1. Whether the Appellate Tribunal was correct in directing the Assessing Officer to value the immovable properties of the assessee by invoking the provisions of Section 7 and schedule III of W.T.Act, at the option of the assessee, by ignoring the fact that the Assessing Officer adopted the value of the four immovable properties at the value declared by the assessee himself and the value of the other property was not at all disclosed by the assessee? 2. Whether the Appellate Tribunal was correct in directing the Assessing Officer to allow the liability of Rs.40 lakhs against the jewellery possessed by the assessee by ignoring the fact that the assessee failed to prove that 2/4 https://www.mhc.tn.gov.in/judis TCA.No.313 of 2018 the liability of Rs.40 lakhs was incurred in relation to purchase of gold jewellery as against this taxable wealth? 3. Whether the learned appellate Tribunal was correct in directing the Assessing Officer to compute the value of assessee's interest of the partnership Firm in accordance with Section 7(1) read with schedule-III- 15&16 Part-E of the Wealth Tax Act without going into the merits of the fact that the liability, shown by some of these firms against assets, is not proved? 2. When the matter was 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 this appeal is less than the threshold limit. 3. In the light of the aforesaid submissions made by the learned counsel for the appellant / Revenue, the present appeal, wherein, the tax effect is said to 3/4 https://www.mhc.tn.gov.in/judis TCA.No.313 of 2018 be less than the monetary limit imposed, is dismissed as withdrawn, keeping R. MAHADEVAN, J. and MOHAMMED SHAFFIQ, J. msr open the substantial questions of law for determination in an appropriate case. No costs. [R.M.D,J.] [M.S.Q., J.] 04.08.2022 msr

Index : Yes / No To 1. The Deputy Commissioner of Wealth Tax, Central Circle II (2), Chennai-34. 2. The Commissioner of Wealth Tax (Appeals)-I Chennai-34 3. The Income Tax Appellate Tribunal Madras “B” Bench, Chennai. T.C.A.No. 313 of 2018 4/4 https://www.mhc.tn.gov.in/judis

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