PRINCIPAL COMMISSIONER OF vs. VENKATALAKSHMI TEXTILES PVT

TCA/562/2017HC Madras25 September 2020Bench: Hon`ble Dr Justice VINEET KOTHARI5 pages

AI SummaryWithdrawn

What did the High Court hold?

The High Court did not decide the substantial questions of law on merits. During the hearing, the learned Senior Standing Counsel for the Revenue brought to the court's notice Circular No. 17/2019 dated 8th August 2019 issued by the Central Board of Direct Taxes (CBDT). This circular 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/- (Rupees One Crore). As the tax effect in the instant cases was stated to be less than this monetary limit, the appeals filed by the Revenue were dismissed as withdrawn. The court explicitly stated that the substantial questions of law were kept open for determination in appropriate cases. No costs were awarded.

What were the facts?

The Revenue, represented by the Principal Commissioner of Income Tax 3, Coimbatore, filed two Tax Case Appeals (T.C.A. Nos. 562 & 563 of 2017) before the High Court of Judicature at Madras. These appeals challenged an order dated 9.11.2016 passed by the Income Tax Appellate Tribunal (ITAT), 'B' Bench, Chennai. The appeals pertained to Assessment Year 2006-2007 and concerned the assessee, M/s. Venkatalakshmi Textiles Pvt. Ltd., Tirupur. The core of the dispute revolved around the reopening of the assessment by the Assessing Officer (AO). The ITAT had ruled against the Revenue, finding the reopening to be bad in law. The appeals were filed under Section 260A of the Income Tax Act, 1961.

What were the issues?

The Tribunal was called upon to decide the following substantial questions of law: 1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the reopening of the assessment was bad in law when the assessee had failed to disclose fully and truly all material facts necessary for assessment in its return of income? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the reopening of the assessment was bad in law when the AO had reason to believe that income had escaped assessment? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that there was a 'change of opinion' by the AO, when the AO reopened the assessment to give effect to a new finding not available at the time of original assessment? 4. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in allowing the Cross Objection filed by the assessee, upholding that the reopening of assessment is bad in law? The Revenue contended that the reopening was justified. The assessee contended that the reopening was bad in law. The judgment does not explicitly detail the arguments of each side beyond the framing of the questions and the assessee's cross-objection.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

Judgt. dt. 25.9.2020 in T.C.A.562 & 563/2017 PCIT 3 V. Venkatalakshmi Textiles Pvt. Ltd. 1/5 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 25.9.2020 CORAM THE HON'BLE DR.JUSTICE VINEET KOTHARI AND THE HON'BLE MR.JUSTICE KRISHNAN RAMASAMY Tax Case (Appeal) Nos.562 and 563 of 2017 Principal Commissioner of Income Tax 3, No.63, Race Course Road, Coimbatore. Appellant Vs. M/s.Venkatalakshmi Textiles Pvt. Ltd., 335, Mangalam Road, Tirupur 641 604. PAN: AAA CV 7208 A Respondent Tax Case Appeals filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, 'B' Bench, Chennai, dated 9.11.2016 made in ITA No.1467/Mds/2016 and C.O.No.113/Mds/2016. For Appellant : Mr.T.R.Senthilkumar Senior Standing Counsel For Respondent : Ms.Indumathi for Mr.J.Balachander COMMON JUDGMENT (Delivered by DR.VINEET KOTHARI,J) These Tax Case Appeals have been filed by the Revenue, calling in question the correctness of the order passed by the Income Tax Appellate Tribunal, 'B' Bench, Chennai, dated 9.11.2016 made in ITA http://www.judis.nic.in Judgt. dt. 25.9.2020 in T.C.A.562 & 563/2017 PCIT 3 V. Venkatalakshmi Textiles Pvt. Ltd. 2/5 No.1467/Mds/2016 and C.O.No.113/Mds/2016, for the Assessment Year 2006-2007, by raising the following substantial questions of law: "(i) Whether on the facts and in the circumstances of the case, the Tribunal is Justified in law in holding that the reopening of the assessment was bad in law when the assessee had failed to disclose fully and truly all the material facts necessary for assessment in the Return of income filed by it? (ii) Whether on the facts and in the circumstances of the case, the Tribunal is Justified in law in holding that the reopening of the assessment was bad in law when the A.O had reason to believe that income had escaped assessment? (iii) Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that there was ‘change of opinion’ by the A.O., when the A.O. reopened the assessment to give effect to a new finding which was not available to the A.O at the time of completion of original assessment? (iv) Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in allowing the http://www.judis.nic.in Judgt. dt. 25.9.2020 in T.C.A.562 & 563/2017 PCIT 3 V. Venkatalakshmi Textiles Pvt. Ltd. 3/5 Cross Objection filed by the assessee upholding that the reopening of assessment is bad in law?" 2. When the matters are taken up for hearing, learned Senior Standing Counsel brought to our notice the Circular instruction issued by the Central Board of Direct Taxes vide Circular No.17/2019 dated 8th August 2019, 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). 3. In the instant cases, the tax effect is said to be less than the monetary limit imposed and therefore, the Appeals filed by the Revenue are dismissed, as withdrawn, keeping open the substantial questions of law for determination in appropriate cases. No costs. (V.K.,J.) (K.R.,J.) 25.9.2020 Index : Yes/No Internet : Yes/No ssk. http://www.judis.nic.in Judgt. dt. 25.9.2020 in T.C.A.562 & 563/2017 PCIT 3 V. Venkatalakshmi Textiles Pvt. Ltd. 4/5 To 1. Income Tax Appellate Tribunal, 'B' Bench, Chennai. 2. The Deputy Commissioner of Income Tax, Circle-1, Tirupur. 3. M/s.Venkatalakshmi Textiles Pvt. Ltd., 335, Mangalam Road, Tirupur 641 604. http://www.judis.nic.in Judgt. dt. 25.9.2020 in T.C.A.562 & 563/2017 PCIT 3 V. Venkatalakshmi Textiles Pvt. Ltd. 5/5 DR.VINEET KOTHARI, J. and KRISHNAN RAMASAMY, J. ssk. T.C.(A) Nos.562 & 563/2017 25.9.2020. http://www.judis.nic.in

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