THE COMMISSIONER OF INCOME T vs. SHRI PRASANCHADN DAGA

TCA/344/2020HC Madras07 January 2021Bench: Hon`ble Mr Justice T. S. SIVAGNANAM5 pages

AI SummaryAllowed

What did the High Court hold?

The High Court allowed the appeal filed by the Revenue. It noted that an identical issue had been considered by a Division Bench of the same High Court in the case of CIT Vs. Manish D.Jain [HUF] [(2020) 122 Taxmann.com 180], which was decided in favour of the Revenue. Following this precedent, the High Court set aside the impugned order passed by the ITAT and answered the substantial questions of law in favour of the Revenue. The reasoning implicitly accepts the Revenue's argument that the ITAT had erred in remitting the matter back to the Assessing Officer and in shifting the burden of proof. The operative direction is to set aside the ITAT's order. No issue was expressly left undecided.

What were the facts?

The Revenue, represented by the Commissioner of Income Tax, Chennai, filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated July 2, 2019, passed by the Income Tax Appellate Tribunal (ITAT), Chennai. The ITAT's order pertained to assessment year 2011-12 and had set aside the Assessing Officer's order for re-examination. The assessee, Shri Prasanchand Daga, was served but did not appear before the High Court. The Revenue argued that the ITAT's order was erroneous as the Assessing Officer had already conducted a thorough examination of the material. The Revenue also contended that the ITAT wrongly shifted the onus to the Revenue to prove the assessee's role in promoting a company and inflating prices, despite the Assessing Officer having already undertaken such an exercise.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in setting aside the well-reasoned order passed by the Assessing Officer for re-examination, especially when the Assessing Officer had duly examined all the material placed while passing the assessment order? (Question of law) 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in remitting the issue back to the file of the Assessing Officer by quoting decisions in Kanhaiyal and Sons (HUF) and Sunil Kumar Lalwani, wherein the onus was shifted to the Revenue to bring on record the assessee's role in promoting the company, relation with promoters, and price inflation, which exercise had already been done by the Assessing Officer and SEBI? (Question of mixed law and fact, turning on the interpretation of onus and evidence) 3. Is not the finding of the Tribunal perverse, especially when the decision of the Tribunal is contrary to the time-tested principle that the person who asserts a fact has to discharge the initial burden cast upon him, and only thereafter would the burden shift to the Department? (Question of law) Assessee's contentions: Not recorded as no appearance was made. Revenue's contentions: The Tribunal erred in setting aside the Assessing Officer's order for re-examination when it was well-reasoned and based on due examination of material. The Tribunal wrongly shifted the onus to the Revenue to prove the assessee's role in company promotion and price inflation, an exercise already completed by the Assessing Officer and SEBI. The Tribunal's finding is perverse and contrary to the principle of burden of proof, where the initial onus lies on the party asserting a fact.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

Heard together (2 matters)

I.T.A.No.2501/Chny/2018

ITA.No.1849/Chny/2014

Read from the judgment's own cause title. This page is filed under one of them.

TCA.No.344 of 2020 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 07.1.2021 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM and THE HONOURABLE MS.JUSTICE R.N.MANJULA Tax Case Appeal No.344 of 2020

The Commissioner of Income Tax, Chennai ...Appellant Vs Shri Prasanchand Daga ...Respondent APPEAL under Section 260A of the Income Tax Act, 1961 against the order dated 02.7.2019 passed by the Income Tax Appellate Tribunal, Madras 'D'-SMC Bench, Chennai made in I.T.A.No.2501/ Chny/2018 for the assessment year 2011-12. For Appellant: Mrs.R.Hemalatha, SSC

Respondent: served and no appearance Judgment was delivered by

T.S.SIVAGNANAM

This appeal has been filed by the Revenue under Section 260A of the Income Tax Act, 1961 ('the Act' for brevity) challenging the order dated 02.7.2019 made in I.T.A.No.2501/Chny/2018 on the file of the 1/5 https://www.mhc.tn.gov.in/judis/ TCA.No.344 of 2020 Income Tax Appellate Tribunal, Chennai, 'D'-SMC Bench ('the Tribunal' for brevity) for the assessment year 2011-12. 2. The appeal was admitted on 01.10.2020 on the following substantial questions of law : “i. Whether, on the facts and in the circumstances of the case, the Tribunal was right in setting aside the well reasoned order passed by the Assessing Officer for re- examination especially when the Assessing Officer had duly examined all the material placed while passing the assessment order ? ii. Whether, on the facts and in the circumstances of the case, the Tribunal was right in remitting the issue back to the file of the Assessing Officer by quoting the decision in the case of Kanhaiyal and Sons (HUF) in ITA.No.1849/Chny/2014, Sunil Kumar Lalwani and Aashesh Kumar Lalwani wherein the onus has been shifted to the Revenue with a direction that the Assessing Officer is to bring on record the role of the assessee in promoting the company and the relation of the assessee, if any with that of the promoters and role of inflating of prices, etc., which exercise had already been done by the Assessing Officer 2/5 https://www.mhc.tn.gov.in/judis/ TCA.No.344 of 2020 and the SEBI? And iii. Is not the finding of the Tribunal perverse especially when the decision of the Tribunal is contrary to the time tested principle that the person, who asserts a fact has to discharge the initial burden cast upon him to show that the said facts are true and only thereafter the burden would shift to the Department ?” 3. We have heard Mrs.R.Hemalatha, learned Senior Standing Counsel appearing for the appellant/Revenue. Though the respondent was served and his name printed in the cause list, none appears for him. 4. The learned Senior Standing Counsel appearing for the appellant/Revenue submits that an identical issue has been considered by a Division Bench of this Court, to which, one of us (TSSJ) was a party, in the decision in the case of CIT Vs. Manish D.Jain [HUF] [reported in (2020) 122 Taxmann.com 180] and the issue has been answered in favour of the Revenue. 3/5 https://www.mhc.tn.gov.in/judis/ TCA.No.344 of 2020 5. In the light of the said decision, the above tax case appeal is allowed, the impugned order passed by the Tribunal is set aside and the substantial questions of law framed are answered in favour of the Revenue. 07.1.2021 To The Income Tax Appellate Tribunal, 'D'-SMC Bench, Chennai. RS 4/5 https://www.mhc.tn.gov.in/judis/ TCA.No.344 of 2020 T.S.SIVAGNANAM,J AND R.N.MANJULA,J RS TCA.No.344 of 2020 07.1.2021 5/5 https://www.mhc.tn.gov.in/judis/

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