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

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TCA/395/2015HC Madras29 October 2024Bench: Honourable Mr Justice R. SURESH KUMAR5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court noted the submission by the Revenue's Senior Standing Counsel that, as per CBDT's Circular No. 9 of 2024 dated September 17, 2024, the tax effect in this case is below the monetary limit imposed for filing appeals. Consequently, the Court decided to dispose of the appeal without adjudicating on the substantial questions of law. The Court stated that the substantial questions of law raised in the appeal would be kept open for adjudication at an appropriate stage. Therefore, the appeal was dismissed for low tax effect, with no order as to costs. The connected miscellaneous petition was also closed.

What were the facts?

The Revenue has filed a Tax Case Appeal before the High Court of Judicature at Madras, challenging an order passed by the Income Tax Appellate Tribunal (ITAT), Chennai, dated May 18, 2011. The appeal pertains to Assessment Year 2005-06. The ITAT had passed an order in ITA No. 1803/Mds/2010. The appeal raises several substantial questions of law concerning additions made by the Assessing Officer, which were deleted by the ITAT. These deletions relate to unaccounted Fixed Deposits (FDRs), interest on FDRs, bank accounts operated in the name of weavers, and unaccounted stock. The Revenue also challenged the quashing of proceedings under Section 263 by the ITAT.

What were the issues?

The Tribunal was called upon to decide the following substantial questions of law: 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 on 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 linked to 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, 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. Assessee's Contentions: Not recorded in the judgment. Revenue's Contentions: The Revenue argued that the ITAT erred in deleting the additions related to unaccounted FDRs and interest thereon, as the assessee failed to prove the source. They also contended that additions related to weaver bank accounts and unaccounted stock were wrongly deleted, especially when the assessee's own records showed deficits. The Revenue further argued that the ITAT was incorrect in quashing proceedings under Section 263.

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.395 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.395 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, Chennai - 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.1803/Mds/2010 for the assessment year 2005-06. For Appellant : Mrs.R.Hemalatha Senior Standing Counsel For Respondent : Mr.K.Ravi

1/5 https://www.mhc.tn.gov.in/judis T.C.A.No.395 of 2015 J U D G M E N T (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 2/5 https://www.mhc.tn.gov.in/judis T.C.A.No.395 of 2015 deleting the additions when the assessee has operated bank account in the name of weavers and found the 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 3/5 https://www.mhc.tn.gov.in/judis T.C.A.No.395 of 2015 for low tax effect, keeping open the substantial questions of law for adjudication 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 (2/2) 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.395 of 2015 R.SURESH KUMAR, J. and C.SARAVANAN, J. vji T.C.A.No.395 of 2015 and M.P.No.1 of 2015 29.10.2024 (2/2) 5/5 https://www.mhc.tn.gov.in/judis

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