THE PR COMMISSIONER OF INCOM vs. SHRI SUGANDHIBAI KUNDANMAL

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TCA/354/2020HC Madras05 November 2020Bench: Hon`ble Mr Justice T. S. SIVAGNANAM8 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court noted that the Direct Tax Vivad Se Vishwas Act, 2020, was enacted to provide for the resolution of disputed tax matters. The assessee had filed a declaration under Section 4 of this Act on November 3, 2020. Given this development, 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 benefit under the Vivad Se Vishwas Act. The Department was directed to process the application at the earliest and communicate the decision to the assessee. The assessee was granted liberty to restore the appeal in the event the ultimate decision on the declaration was not in their favour. The substantial questions of law were left open. No costs were awarded.

What were the facts?

The Revenue, represented by the Principal Commissioner of Income Tax, Chennai, filed a Tax Case Appeal before the High Court of Judicature at Madras against an order dated January 10, 2020, passed by the Income Tax Appellate Tribunal (ITAT), Madras 'A' Bench. The appeal pertained to Assessment Year 2010-11 and challenged the ITAT's decision to set aside the Assessing Officer's order for re-examination and remit the issue back to the Assessing Officer. The appeal was admitted on October 7, 2020, on substantial questions of law. Subsequently, the assessee filed a declaration under the Direct Tax Vivad Se Vishwas Act, 2020, on November 3, 2020.

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? 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, shifting the onus to the Revenue to bring on record the assessee's role in promoting the company, the relation of the assessee with promoters, and the role of inflating prices, which exercise had already been done by the Assessing Officer and SEBI? 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 to show that the said facts are true, and only thereafter the burden would shift to the Department? Assessee's Contentions: The assessee relied on the decisions in Kanhaiyal and Sons (HUF), Sunil Kumar Lalwani, and Aashesh Kumar Lalwani, arguing that the onus had shifted to the Revenue. The assessee also contended that the Assessing Officer and SEBI had already conducted the necessary examination. Revenue's Contentions: The Revenue argued that the Assessing Officer had duly examined all material and that the Tribunal's order was perverse, contrary to the principle of burden of proof.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 4

AI-generated summary — verify with the full judgment below

T.C.A.No.354 of 2020 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 05.11.2020 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM and THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN T.C.A.No.354 of 2020 The Principal Commissioner of Income Tax, Chennai. .. Appellant Versus Shri Sugandhibai Kundanmal .. Respondent Prayer:- Tax Case Appeal filed under Section 260-A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal, Madras 'A' Bench, Chennai made in I.T.A.No.3524/Chny/2018 dated 10.01.2020 relating to the Assessment Year 2010-11. For Appellant : Mr.T.Ravikumar Senior Standing counsel

For Respondent : Mr.P.Hari 1/8 http://www.judis.nic.in T.C.A.No.354 of 2020 JUDGMENT [Order of the Court was made by

T.S.SIVAGNANAM

, J.]

This appeal has been filed by the Revenue under Section 260 A of the Income Tax Act, 1961 ('the Act' for brevity), is directed against the order dated 10.01.2020 passed by the Income Tax Appellate Tribunal, Madras 'A' Bench, Chennai ('the Tribunal' for brevity) in I.T.A.No.3524/Chny/2018 for the Assessment Year 2010-11. This appeal was admitted on 07.10.2020 on the following Substantial Questions of Law: “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? 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 the decision in the case of Kanhaiyal and Sons (HUF) in ITA.No.1849/Chny/2014 Sunil Kumar Lalwani and that 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 2/8 http://www.judis.nic.in T.C.A.No.354 of 2020 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 and the SEBI? And 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 to show that the said facts are true and only thereafter the burden would shift to the Department?” 2. We have heard Mr.T.Ravikumar, learned Senior Standing counsel for the appellant/Revenue and Mr.P.Hari, learned counsel for the respondent/assessee. 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 3/8 http://www.judis.nic.in T.C.A.No.354 of 2020 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 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 4/8 http://www.judis.nic.in T.C.A.No.354 of 2020 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. 6. We are informed by the learned counsel for the respondent/assessee that the assessee has already filed the declaration under Section 4 of the Act on 03.11.2020. 5/8 http://www.judis.nic.in T.C.A.No.354 of 2020 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 this appeal 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 Appeal stands 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 this 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. 8. With this observation, the Tax Case Appeal stands disposed of 6/8 http://www.judis.nic.in T.C.A.No.354 of 2020 with the aforementioned liberty and Consequently, the Substantial Questions of Law are left open. No costs. (T.S.S.,J) (V.B.S.,J) 05.11.2020 Kak Index: Yes / No Internet: Yes / No Speaking Order/Non-Speaking Order To The Income Tax Appellate Tribunal, 'A' Bench, Chennai. T.S.SIVAGNANAM, J. AND 7/8 http://www.judis.nic.in T.C.A.No.354 of 2020 V.BHAVANI SUBBAROYAN, J. Kak T.C.A.No.354 of 2020 05.11.2020 8/8 http://www.judis.nic.in

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