COMMISSIONER OF INCOME TAX vs. M/S.HANDLOOM HERITAGE LIMITED

PDF · subscribers
TCA/390/2015HC Madras29 October 2024Bench: Honourable Mr Justice R. SURESH KUMAR5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court did not adjudicate on the substantial questions of law. The Revenue's counsel brought to the court's notice CBDT's Circular No. 9 of 2024, stating that the tax effect in the instant case was below the monetary limit imposed by the circular. Consequently, the Revenue requested that the appeal be disposed of, keeping the substantial questions of law open for future adjudication. The High Court recorded this submission and dismissed the Tax Case Appeal on the grounds of low tax effect. The substantial questions of law were explicitly kept open for adjudication at an appropriate stage. No order was made as to costs. The connected miscellaneous petition was also closed.

What were the facts?

The Revenue, Commissioner of Income Tax, Central Circle-II, Chennai, filed a Tax Case Appeal before the High Court of Judicature at Madras, challenging an order of the Income Tax Appellate Tribunal (ITAT), Chennai, dated May 18, 2011. The appeal pertains to Assessment Year 2005-06 and concerns additions made by the Assessing Officer, which were subsequently deleted by the ITAT. The specific additions deleted by the ITAT related to unaccounted Fixed Deposits (FDRs), the interest portion of these FDRs, alleged unaccounted income from bank accounts operated in the name of weavers, and unaccounted stock. The Revenue also challenged the quashing of proceedings under Section 263 of the Income Tax Act, 1961.

What were the issues?

The Tribunal had to decide the following substantial questions of law raised by the Revenue: 1. Whether the ITAT was correct in deleting additions on account of unaccounted FDRs when the assessee did not prove the source. 2. Whether the ITAT was correct in deleting the interest portion of unaccounted FDRs when the source was not proved. 3. Whether the ITAT was correct in holding that a contract between the FDR holder and the banker must be proven sham and the monies to have originated from the assessee for additions to be sustainable. 4. Whether the ITAT was correct in deleting additions when the assessee operated bank accounts in the name of weavers and these were found to be unaccounted income. 5. Whether the ITAT was correct in quashing proceedings under Section 263. 6. Whether the ITAT was correct in deleting additions on account of un-accounted stock when the assessee did not maintain proper stock statements/books. 7. Whether the ITAT was correct in deleting additions on account of unaccounted stock when the stock statement working showed a deficit. The Revenue contended that the ITAT erred in deleting these additions. The assessee's arguments are not explicitly detailed in the provided text, but it can be inferred they argued against the additions. The Revenue relied on the fact that the source of FDRs was not proved and that bank accounts in the name of weavers represented unaccounted income. The Revenue also questioned the ITAT's reasoning regarding the FDR contract and the sustainability of additions when stock records were inadequate.

Which sections of the Income-tax Act were involved?

Section 260A,Section 263

AI-generated summary — verify with the full judgment below

T.C.A.No.390 of 2015 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 29.10.2024 CORAM THE HONOURABLE MR.JUSTICE R.SURESH KUMAR and THE HONOURABLE MR.JUSTICE C.SARAVANAN T.C.A.No.390 of 2015 and M.P.No.1 of 2015 The Commissioner of Income Tax, Central Circle-II, Chennai - 600 034. ... Appellant -Vs- M/s.Handloom Heritage Limited, No.37, Rajamannar Street, T.Nagar, Chenai - 600 017. PAN:AAACH0890A ... 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 'B' Bench, Chennai dated 18.05.2011 in I.T.A.No.1798/Mds/2010 for the assessment year 2005-06. For Appellant : Mrs.R.Hemalatha Senior Standing Counsel For Respondent : Mr.K.Ravi J U D G M E N T 1/5 https://www.mhc.tn.gov.in/judis T.C.A.No.390 of 2015 (Judgment of the Court was delivered by R.SURESH KUMAR, J.) This Tax Case Appeal has been filed by the Revenue calling in question the correctness of the order passed by the Income Tax Appellate Tribunal, Chennai by raising the following substantial questions of law: 1. Whether on the facts and in circumstance of the case the Income Tax Appellate Tribunal was right in deleting the addition on account of unaccounted FDR in the name of the assessee when the source for the same is not proved by the assessee? 2. Whether on the facts and in the circumstance of the case the Income Tax Appellate Tribunal was right in deleting the interest portion on the account of unaccounted FDR in the name of the assessee when the source of the same is not proved by the assessee? 3. Whether on the facts and in the circumstance of the case the Income Tax Appellate Tribunal was right in holding that there is a contract between the Fixed Deposit holder and the banker and unless this contract is proven to be a sham and that those monies came from the assessee, the addition on account of the alleged unaccounted fixed deposits is not sustainable? 4. Whether on the facts and in the circumstance of the case the Income Tax Appellate Tribunal was right in deleting the additions when the assessee has operated bank account in the name of weavers and found the 2/5 https://www.mhc.tn.gov.in/judis T.C.A.No.390 of 2015 same to be unaccounted income of the assessee? 5. Whether on the facts and in the circumstance of the case the Income Tax Appellate Tribunal was right in quashing the proceedings u/s.263? 6. Whether on the facts and in the circumstance of the case the Income Tax Appellate Tribunal was right in deleting the addition made on account of un-accounted stock when the assessee itself has not maintained proper stock statement / book? 7. Whether on the facts and in the circumstance of the case the Income Tax Appellate Tribunal was right in deleting the addition made on account of unaccounted stock when the stock statement working as per the books shows deficit stock? 2. It is brought to our notice by the learned Senior Standing Counsel for the appellant Revenue that in the instant case, as per the CBDT's Circular No.9 of 2024 dated 17.09.2024 the tax effect is said to be less than the monetary limit imposed and therefore, the appeal can be disposed of, keeping the substantial questions of law raised in this appeal open for adjudication at a later point of time. 3. Recording the aforesaid submission made by the learned Senior Standing Counsel for the appellant Revenue, this Tax Case Appeal is dismissed for low tax effect, keeping open the substantial questions of law for adjudication 3/5 https://www.mhc.tn.gov.in/judis T.C.A.No.390 of 2015 at appropriate stage. However, there shall be no order as to costs. Consequently, connected miscellaneous petition is closed. (R.S.K., J.) (C.S.N., J.) 29.10.2024 (1/2) NCC : Yes / No Index : Yes / No Speaking Order : Yes / No vji To The Income Tax Appellate Tribunal 'B' Bench, Chennai. 4/5 https://www.mhc.tn.gov.in/judis T.C.A.No.390 of 2015 R.SURESH KUMAR, J. and C.SARAVANAN, J. vji T.C.A.No.390 of 2015 and M.P.No.1 of 2015 29.10.2024 (1/2) 5/5 https://www.mhc.tn.gov.in/judis

More judgments on Section 263

All 13,616 judgments and leading authorities on Section 263 →

Recent GST High Court judgments

Search GST case law →