PRINCIPAL COMMISSIONER OF IN vs. SREE GOPALAKRISHNA FABRICS

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TCA/443/2019HC Madras22 January 2020Bench: Hon`ble Mr Justice N. KIRUBAKARAN6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the Tax Case Appeals on the grounds of tax effect, citing Circular No. 17/2019 dated 08.08.2019, which sets a monetary limit of Rs. 1 crore for filing appeals before the High Court. The Court noted that the tax effect in these appeals was less than Rs. 1 crore. Consequently, the appeals were dismissed without deciding the substantial questions of law framed. The Court granted liberty to the Revenue to seek restoration of the appeals if the tax effect is found to be above the prescribed limit, allowing them to be heard and decided on merits. The substantial questions of law were expressly left open.

What were the facts?

The appeals were filed by the Principal Commissioner of Income Tax against the orders of the Income Tax Appellate Tribunal (ITAT) dated 27.11.2015. The ITAT had allowed the appeals filed by the assessee, M/s. Sree Gopalakrishna Fabrics, and dismissed the appeals filed by the Revenue as infructuous. The assessment years involved are 2005-06, 2006-07, 2007-08, 2008-09, and 2009-10. The Revenue's appeals were admitted on substantial questions of law concerning the interpretation of Section 153A of the Income Tax Act and the validity of additions made based on sworn statements.

What were the issues?

1. Whether the Appellate Tribunal erred in concluding that assessment under Section 153A of the Income Tax Act requires incriminating material, disregarding the principle that the 'total income' should be determined under the new search assessment procedure. 2. Whether the Appellate Tribunal's narrow interpretation of Section 153A is legally valid. 3. Whether the Appellate Tribunal was correct in not confirming additions for assessment years 2005-06 to 2008-09, while confirming additions for assessment year 2010-11 based on similar evidence. 4. Whether the Appellate Tribunal was correct in deleting additions when a sworn statement, considered valid evidence, was not properly retracted. Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The tax effect in these appeals is less than Rs. 1 crore, which is below the monetary limit for filing appeals before the High Court as per Circular No. 17/2019 dated 08.08.2019. Therefore, the appeals should be dismissed.

Which sections of the Income-tax Act were involved?

Section 153A,Section 260A

AI-generated summary — verify with the full judgment below

T.C.A.No.443 of 2019 & batch IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 22.01.2020 CORAM : THE HONOURABLE MR.JUSTICE N.KIRUBAKARAN and THE HONOURABLE MR.JUSTICE P.VELMURUGAN T.C.A.Nos.443, 445, 451, 453, 454, 456 & 459 of 2019 Principal Commissioner of Income Tax, Central 2, No.108, Mahatma Gandhi Road, Chennai 600 034.

... Appellant in all appeals Vs M/s.Sree Gopalakrishna Fabrics, No.64, Pulikuthi Main Road, Guhai, Salem - 6. PAN: AALFS 8236P

...Respondent in all appeals COMMON PRAYER: Tax Case Appeals filed under Section 260A of Income Tax Act, 1961 against the order dated 27.11.2015 in I.T.A.Nos.788 to 792/Mds/2015 and I.T.A.Nos.994 & 995/Mds/2015 on the file of the Income Tax Appellate Tribunal, 'D' Bench, Chennai for the assessment years 2005-06, 2006-07, 2007-08, 2008-09 & 2009-10. For Appellant : Mrs.K.G.Usha Rani, Junior Standing Counsel. For Respondent : Mr.M.P.Senthil Kumar. 1/6 http://www.judis.nic.in T.C.A.No.443 of 2019 & batch C O M M O N J U D G M E N T (Judgment of the Court was delivered by N.KIRUBAKARAN, J) These tax case appeals have been filed against the order of the Income Tax Appellate Tribunal dated 27.11.2015 in I.T.A.Nos.788 to 792/Mds/2015 and I.T.A.Nos.994 & 995/Mds/2015 in allowing the appeals filed by the assessee by which the appeals filed by the Revenue have been dismissed as infructuous. 2.Heard Mrs.K.G.Usha Rani, learned Junior Standing Counsel for the appellant. 3.These tax case appeals in T.C.A.Nos.445, 451, 459, 456 & 453 of 2019 are admitted on the following substantial questions of law: "(i)Whether the Appellate Tribunal is correct in law in reaching to the conclusion that assessment can be done u/s 153 A of the Income Tax Act only based on incriminating material ignoring the fact that under new procedure of search assessment, it is the "total income" that is to be determined and not merely the income relating to seized material found during the search? 2/6 http://www.judis.nic.in T.C.A.No.443 of 2019 & batch (ii)Whether the narrow interpretation given by the Hon'ble Appellate Tribunal to the provisions of Section 153A can be held to be valid in law?"

and T.C.A.Nos.454 & 443 of 2019 are admitted on the following substantial questions of law: "(i)Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is correct in not confirming the additions made in the Asst. Years 2005-06, 2006-07, 2007-08 & 2008-09 whereas the same Appellate Tribunal confirmed the additions made for the Asst.Year 2010 - 2011 based on the same statement and evidences? (ii)Whether the Appellate Tribunal right in deleting the additions when the sworn statement made under oath is a valid evidence and same cannot be retracted without proper material evidence for such retraction?"

4.

Mrs.K.G.Usha Rani, learned Junior Standing Counsel appearing on behalf of the appellant would submit that the tax effect in this case is less than Rs.1 crore and is covered by Circular No.17/2019 dated 08.08.2019 issued by the Director, Central Board of Direct Taxes, 3/6 http://www.judis.nic.in T.C.A.No.443 of 2019 & batch Department of Revenue, Ministry of Finance, Government of India, Delhi. As per the said circular, the monetary limit to file an appeal before the High Court is fixed at Rs.1 crore. In this case, tax effect is less than Rs.1 crore and therefore, the appeals have to be dismissed. 5.This Court perused the circular dated 08.08.2019 and Paragraph No.2 of the Circular, which prescribes monetary limit for filing appeal. Paragraph No.2 is usefully extracted as follows: "2.As a step towards further management of litigation, it has been decided by the Board that monetary limits for filing of appeals in income-tax cases be enhanced further through amendment in Para 3 of the Circular mentioned above and accordingly, the table for monetary limits specified in Para 3 of the Circular shall read as follows: S.No. Appeals / SLPs in Income-tax matters Monetary Limit (Rs.) 1. Before Appeallate Tribunal 50,00,000 2. Before High Court 1,00,00,000 3. Before Supreme Court 2,00,00,000" 4/6 http://www.judis.nic.in T.C.A.No.443 of 2019 & batch 6.In view of the submissions made by the learned counsel appearing on behalf of the appellant and also in view of the Circular No.17/2019 dated 08.08.2019 issued by the Director, Central Board of Direct Taxes, Delhi, these Tax Case Appeals are dismissed on account of tax effect. However, the substantial questions of law framed are left open. In the event the tax effect is above the limit fixed in the said circular, liberty is granted to the Revenue to make a mention to this Court to restore the appeals to be heard and decided on merits. No costs. Consequently, connected miscellaneous petitions are closed.

(N.K.K.,J.) (P.V.,J.) 22.01.2020 ay To Principal Commissioner of Income Tax, Central 2, No.108, Mahatma Gandhi Road, Chennai 600 034.

5/6 http://www.judis.nic.in T.C.A.No.443 of 2019 & batch N.KIRUBAKARAN, J. and P.VELMURUGAN, J. ay T.C.A.Nos.443, 445, 451, 453, 454, 456 & 459 of 2019 Dated:22.01.2020 6/6 http://www.judis.nic.in

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