C.KISHANLAL vs. THE DEPUTY COMMISSIONER OF I

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TCA/348/2020HC Madras22 December 2020Bench: THE HON`BLE MR.JUSTICE T.S.SIVAGNANAM8 pages
AI SummaryRemanded

What did the High Court hold?

The High Court disposed of the appeals without deciding the substantial questions of law. This decision was based on the enactment of the Direct Tax Vivad Se Vishwas Act, 2020. The assessee had filed a declaration under Section 4 of this Act. The Court noted that no useful purpose would be served by keeping the appeals pending. The appeals were disposed of on the ground that the assessee had availed the benefit under the Vivad Se Vishwas Act. The Court granted liberty to the assessee to restore these appeals in the event the ultimate decision by the Department under the Act is not in their favour. If such a prayer is made, the Registry shall entertain it without insisting on a condonation of delay application. The substantial questions of law were left open.

What were the facts?

The assessee, Mr. C. Kishanlal, filed two Tax Case Appeals (TCAs) before the High Court of Judicature at Madras against an order of the Income Tax Appellate Tribunal (ITAT) dated 20.12.2018. These appeals pertained to Assessment Year 2006-07 and challenged the levy of penalties under Sections 271D and 271E of the Income Tax Act, 1961. The dispute involved amounts of Rs. 10,00,000/- and Rs. 3,00,000/-. The High Court admitted the appeals on substantial questions of law. However, the appeals were disposed of without deciding the substantial questions of law due to the enactment of the Direct Tax Vivad Se Vishwas Act, 2020. The assessee had filed a declaration under this Act.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the levy of penalty u/s 271D of the Income Tax Act, without appreciating that the amount of Rs.10,00,000/- was received as an advance for the sale of agricultural lands and not as a loan? (Assessee's contention: The amount was an advance for agricultural land sale, not a loan, making Section 271D inapplicable). 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in not considering that the appellant had a reasonable cause as stipulated u/s 273B to substantiate that the entire transaction was with respect to the sale of his agricultural land with adequate documents, and hence the levy of penalty u/s.271D will not be applicable? (Assessee's contention: Reasonable cause under Section 273B existed due to adequate documentation for the agricultural land sale). 3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the levy of penalty u/s 271E of the Income Tax Act, without appreciating that the amount of Rs.3,00,000/- was a repayment made with respect to the advance amount received for the sale of agricultural lands of the appellant? (Assessee's contention: The amount was a repayment of advance for agricultural land sale, making Section 271E inapplicable). 4. Whether, on the facts and in the circumstances of the case, the Tribunal was right in not considering that the appellant had a reasonable cause as stipulated u/s 273B to substantiate that the entire transaction was with respect to the sale of his agricultural land with adequate documents, and hence the levy of penalty u/s.271E will not be applicable? (Assessee's contention: Reasonable cause under Section 273B existed due to adequate documentation for the agricultural land sale). The Revenue's contentions were not explicitly recorded in the provided text.

Which sections of the Income-tax Act were involved?

Section 260A,Section 271D,Section 271E,Section 273B

AI-generated summary — verify with the full judgment below

T.C.A.Nos.348 & 351 of 2020 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 22.12.2020 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM and THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN T.C.A.Nos.348 & 351 of 2020 Mr.C.Kishanlal .. Appellant in both TCAs Versus The Deputy Commissioner of Income Tax, Central Circle – 3(3), Chennai – 34. .. Respondent in both TCAs Common Prayer:- Tax Case Appeals filed under Section 260-A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal, 'C' Bench, Chennai, made in I.T.A.No.2929/Chny/2017 and I.T.A.No.2930/Chny/2017 dated 20.12.2018 relating to the Assessment Year 2006-07. For Appellant : Mr.R.Sivaraman [in both TCAs] For Respondent : Mr.T.R.Senthilkumar Senior Standing counsel [in both TCAs] 1/8 https://www.mhc.tn.gov.in/judis/ T.C.A.Nos.348 & 351 of 2020 COMMON JUDGMENT [Order of the Court was made by

T.S.SIVAGNANAM

, J.]

These appeals filed by the assessee under Section 260A of the Income Tax Act, 1961 ('the Act' for brevity), is directed against the order dated 20.12.2018 passed by the Income Tax Appellate Tribunal, 'C' Bench, Chennai ('the Tribunal' for brevity) in I.T.A.No.2929/Chny/2017 and I.T.A.No.2930/Chny/2017 for the Assessment Year 2006-07. These appeals were admitted on 07.10.2020 on the following Substantial Questions of Law: “T.C.A.No.348 of 2020: 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the levy of penalty u/s 27ID of the Income Tax Act, without appreciating the fact that the amount of Rs.10,00,000/- has been received as an advance for the sale of agricultural lands of the Appellant and not as a loan? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in not considering that the appellant has had a reasonable cause as stipulated u/s 273B to substantiate that the entire transaction is with respect to the 2/8 https://www.mhc.tn.gov.in/judis/ T.C.A.Nos.348 & 351 of 2020 sale of his agricultural land with adequate documents and hence the levy of penalty u/s.271D will not be applicable. T.C.A.No.351 of 2020: 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the levy of penalty u/s 27IE of the Income Tax Act, without appreciating the fact that the amount of Rs.3,00,000/- is repayment made with respect to the advance amount received for the sale of agricultural lands of the appellant? and 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in not considering that the appellant has had a reasonable cause as stipulated u/s 273B to substantiate that the entire transaction is with respect to the sale of his agricultural land with adequate documents and hence the levy of penalty u/s.271E will not be applicable.” 2. We have heard Mr.R.Sivaraman, learned counsel for the appellant/assessee and Mr.T.R.Senthilkumar, learned Senior Standing counsel for the respondent/Revenue. 3/8 https://www.mhc.tn.gov.in/judis/ T.C.A.Nos.348 & 351 of 2020 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.

In terms of the said Act, the assessee has been given an option to put an end to the tax disputes, which may be pending at different levels either before the First Appellate Authority or before the Tribunal or before the High Court or before the Hon'ble Supreme Court of India. Under Section 2(j) “disputed tax” has been defined. In terms of Section 3, where a declarant means a person, who files a declaration under Section 4 on or before the last date files a declaration to the designated authority in accordance with the provisions of Section 4 in respect of tax arrears, then, notwithstanding anything contained in the Income Tax Act or any other law for the time being in force, the amount payable by the declarant shall be 4/8 https://www.mhc.tn.gov.in/judis/ T.C.A.Nos.348 & 351 of 2020 determined in terms of Section 3(a-c) thereunder. 5. The First Proviso to Section 3 states that in case, where an Appeal or Writ Petition or Special Leave Petition is filed by the Income Tax authority on any issue before the Appellate Forum, the amount payable shall be one-half of the amount in the table stipulated in Section 3 calculated on such issue, in such a manner as may be prescribed. The second proviso deals with the cases, where the matter is before the Commissioner (Appeals) or before the Dispute Resolution Panel. The third proviso deals with cases, where the issue is pending before the Income Tax Appellate Tribunal. The filing of the declaration is as per Section 4 of the Act and the particulars to be furnished are also mentioned in the Sub Sections of Section 4. Section 5 of the Act deals with the time and manner of the payment and Section 6 deals with Immunity from initiation of proceedings in respect of offence and imposition of penalty in certain cases. Section 9 of the Act deals with cases, where the Act 3 of 2020 will not be applicable. 5/8 https://www.mhc.tn.gov.in/judis/ T.C.A.Nos.348 & 351 of 2020 6. We are informed by the learned counsel for the appellant/assessee that the assessee has already filed the declaration under Section 4 of the Act. 7. 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 these appeals pending. At the same time, safeguarding 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. Accordingly, the Tax Case Appeals stand disposed of on the ground that the assessee has already filed a declaration 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 these appeals 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 appeals and on such request made by the assessee by filing a Miscellaneous 6/8 https://www.mhc.tn.gov.in/judis/ T.C.A.Nos.348 & 351 of 2020 Petition for Restoration, the Registry shall place such petition before the Division Bench for orders. 8. With this observation, the Tax Case Appeals stand disposed of with the aforementioned liberty and Consequently, the Substantial Questions of Law are left open. No costs. (T.S.S.,J) (V.B.S.,J) 22.12.2020 Kak Index: Yes / No Internet: Yes / No Speaking Order/Non-Speaking Order To The Income Tax Appellate Tribunal, 'C', Chennai. 7/8 https://www.mhc.tn.gov.in/judis/ T.C.A.Nos.348 & 351 of 2020 T.S.SIVAGNANAM, J. AND V.BHAVANI SUBBAROYAN, J. Kak T.C.A.No.348 & 351 of 2020 22.12.2020 8/8 https://www.mhc.tn.gov.in/judis/

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