PRINCIPAL COMMISSIONER OF IN vs. M/S.K.V.EDUCATION TRUST,

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TCA/506/2021HC Madras15 November 2021Bench: Hon`ble Mr Justice R. MAHADEVAN6 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court dismissed the appeals as withdrawn. The dismissal was based on the submission by the Revenue's counsel regarding CBDT Circular No. 17/2019, which stipulates that appeals shall not be filed or pursued by the Department before the High Court if the tax effect does not exceed Rs. 1,00,00,000/-. The Revenue stated that the tax effect in these appeals was less than the prescribed threshold limit. Consequently, the appeals were dismissed as withdrawn, with the court explicitly stating that the substantial questions of law were kept open for determination in appropriate cases. No costs were imposed, and connected miscellaneous petitions were closed.

What were the facts?

The Revenue filed seven appeals before the High Court of Judicature at Madras challenging the common order dated January 31, 2018, passed by the Income Tax Appellate Tribunal (ITAT), 'D' Bench, Chennai. These appeals pertained to assessment years 2002-03 to 2008-09 and concerned additions made by the Assessing Officer (AO) which were deleted by the ITAT. The assessee is M/s. K.V. Education Trust. The appeals were filed under Section 260A of the Income Tax Act, 1961. During the hearing, the Revenue's counsel brought to the court's notice CBDT Circular No. 17/2019, which stipulates that appeals should not be filed or pursued if the tax effect does not exceed Rs. 1,00,00,000/-. The Revenue submitted that the tax effect in these appeals was below this threshold.

What were the issues?

The High Court was to decide the following substantial questions of law: 1. Whether the ITAT was correct in deleting additions made by the AO on account of less income shown in the return filed under Section 153A compared to the original return, by allowing the benefit of telescoping despite no proper reconciliation being furnished to the AO? 2. Whether the ITAT was correct in deleting additions made by the AO on account of differences in cash balance in the return filed under Section 153A compared to the original return, by allowing telescoping with the building fund despite no proper reconciliation being furnished to the AO? 3. Whether the ITAT was correct in deleting additions made by the AO on account of Bank Excess claim by holding that books of account were examined by the CIT(A), despite the books not being produced before the AO during assessment or remand proceedings, thus violating principles of natural justice? 4. Whether the ITAT was correct in deleting additions made by the AO on account of disallowance of general and administrative expenses by holding that books of account were examined by the CIT(A), despite the books not being produced before the AO during assessment or remand proceedings, thus violating principles of natural justice? 5. Whether the ITAT was correct in deleting additions made by the AO on account of investment in fixed assets by holding that books of account were not produced before the AO during assessment or remand proceedings, thus violating principles of natural justice? 6. Whether the ITAT was correct in upholding the CIT(A)'s deletion of amounts added for reduction in fee receivable shown in original returns and those filed pursuant to Section 153A notice, even though no reconciliation was provided by the assessee? 7. Whether the ITAT was correct in deleting additions made by the AO on account of capitation fee by allowing telescoping with the building fund despite no proper reconciliation being furnished to the AO? The Revenue contended that the ITAT erred in allowing telescoping and deleting additions without proper reconciliation, and in some cases, by holding that books were examined by the CIT(A) when they were not produced before the AO, thus violating natural justice. The judgment does not record specific arguments from the assessee on each issue, but their position would be in support of the ITAT's order.

Which sections of the Income-tax Act were involved?

Section 260A,Section 153A

AI-generated summary — verify with the full judgment below

Tax Case Appeal Nos.506, 511, 512, 516, 518, 519 & 520 of 2021 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 15.11.2021 CORAM : THE HON'BLE MR. JUSTICE R. MAHADEVAN AND THE HON'BLE MR. JUSTICE MOHAMMED SHAFFIQ Tax Case Appeal Nos.506, 511, 512, 516, 518, 519 & 520 of 2021 and CMP.Nos. 17344, 17973, 17345, 17339, 17346 and 17337 of 2021 Principal Commissioner of Income Tax (Exemptions) Corporate Circle -2 (2) Nungambakkam, Chennai - 600 034.

...Appellant in all Cases -vs- M/s. K.V. Education Trust, Cheruppaloor, Kulasekaram, Kanyakumari - 629 161. PAN: AAATK4688A ...Respondent in all Cases Tax Case Appeals filed under Section 260A of the Income Tax Act, 1961 against the common order dated 31.01.2018 passed by the Income Tax Appellate Tribunal, Madras “D” Bench, in I.T.A.Nos.1709, 1710, 1711, 1712, 1713, 1714 and 1715 /CHNY/2010. For Appellant : Mr.Karthik Ranganathan (in all cases) For Respondent : Mr. Narayanasamy (in all cases)

1/6 https://www.mhc.tn.gov.in/judis Tax Case Appeal Nos.506, 511, 512, 516, 518, 519 & 520 of 2021 COMMON JUDGMENT (Judgment was delivered by R. MAHADEVAN, J.) These tax case appeals have been filed by the appellant / Revenue, calling in question the correctness of the order dated 31.01.2018 passed by the Income Tax Appellate Tribunal, 'D' Bench, Chennai, in I.T.A.Nos.1709, 1710, 1711, 1712, 1713, 1714 and 1715 /CHNY/2010, relating to the assessment years 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08 and 2008-09, by raising 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 right in deleting the addition made by the AO on account of less income shown in return filed U/s 153A in comparison to the original return filed by allowing the benefit of telescoping to the assessee despite the fact that no proper reconciliation was furnished to the AO? (ii) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is right in deleting the addition made by the AO on account of difference in cash balance shown in return filed U/s 153A in comparison to the original return filed 2/6 https://www.mhc.tn.gov.in/judis Tax Case Appeal Nos.506, 511, 512, 516, 518, 519 & 520 of 2021 by allowing the benefit of telescoping of the same with the building fund despite the fact that no proper reconciliation was furnished to the AO? (iii) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is right in deleting the addition made by the AO on account of Bank Excess claim by holding that the books of account were examined by the CIT (A) despite the fact that the books of account were not produced before the AO during assessment as well as remand proceedings to examine assesse's claim and hence this is in violation of the principles of natural justice? (iv) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is right in deleting the addition made by the AO on account of disallowance of general and administrative expenses by holding that the books of account were examined by the CIT (A) despite the fact that the books of account were not produced before the AO during assessment as well as remand proceedings to examine the assesse's claim and hence this is in violation of the principles of natural justice? 3/6 https://www.mhc.tn.gov.in/judis Tax Case Appeal Nos.506, 511, 512, 516, 518, 519 & 520 of 2021 (v) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is right in deleting the addition made by the AO on account of investment in fixed assets by holding that the books of account were not produced before the AO during assessment as well as remand proceedings to examine the assesse's claim and hence this is in violation of the principles of natural justice? (vi) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is right in upholding the CIT(A)'s decision of deletion of amount added for reduction in fee receivable shown in original returns and those filed pursuant to notice issued u/s 153A of the IT Act even though no reconciliation was provided by the assessee? (vii) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT is right in deleting the addition made by the AO on account of capitation fee by allowing telescoping of the same with building fund despite the fact that no proper reconciliation was furnished to the AO? 4/6 https://www.mhc.tn.gov.in/judis Tax Case Appeal Nos.506, 511, 512, 516, 518, 519 & 520 of 2021 2. When the matters were taken up for consideration, the learned counsel for the appellant / Revenue brought to the notice of this court the Circular No.17/2019 dated 08.08.2019 issued by the Central Board Direct Taxes, wherein, it is stipulated that appeals shall not be filed/pursued by the Department before the High Court in cases where the tax effect does not exceed Rs.1,00,00,000/- (Rupees One Crore). It is also submitted that the tax effect in these appeals is less than the threshold limit. 3. In the light of the aforesaid submissions made by the learned counsel for the appellant / Revenue, the present appeals, wherein, the tax effect is said to be less than the monetary limit imposed, are dismissed as withdrawn, keeping open the substantial questions of law for determination in appropriate cases. No costs. Consequently, connected miscellaneous petitions are closed. [R.M.D,J.] [M.S.Q, J.] 15.11.2021

Internet : Yes

Index : Yes / No av 5/6 https://www.mhc.tn.gov.in/judis Tax Case Appeal Nos.506, 511, 512, 516, 518, 519 & 520 of 2021 R. MAHADEVAN, J. AND MOHAMMED SHAFFIQ, J. av To 1. Principal Commissioner of Income Tax (Exemptions) Corporate Circle -2 (2) Nungambakkam, Chennai - 600 034. 2. The Income Tax Appellate Tribunal, Madras “D” Bench. 3.The Assistant Commissioner of Income Tax, Central Circle I, Madurai. 4.The Commissioner of Income Tax (Appeals)-II Madurai. Tax Case Appeal Nos.506, 511, 512, 516, 518, 519 & 520 of 2021 and CMP.Nos. 17344, 17973, 17345, 17339, 17346 and 17337 of 2021 15.11.2021 6/6 https://www.mhc.tn.gov.in/judis

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