PRINCIPAL COMMISSIONER OF vs. C. SAMPATH KUMAR

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TCA/80/2018HC Madras28 August 2019Bench: Hon`ble Mr Justice T. S. SIVAGNANAM5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the Revenue on the ground of low tax effect. The Revenue's counsel submitted that the appeal was not being pursued due to Circular No. 17/2019 issued by the CBDT, which increased the monetary limit for filing or pursuing appeals before the High Court to Rs. 1 Crore. The tax effect in this case was stated to be less than this threshold limit. Consequently, the appeal was dismissed without deciding the substantial questions of law, which were expressly left open. The Revenue was granted liberty to seek restoration of the appeal if the tax effect was found to be above the threshold limit. No costs were awarded.

What were the facts?

The Revenue, represented by the Principal Commissioner of Income Tax, filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated 20.04.2017 passed by the Income Tax Appellate Tribunal (ITAT), Chennai 'A' Bench. The appeal pertained to block assessment years 1986-87 to 1995-96 and part of 1996-97. The ITAT had deleted additions made by the Assessing Officer concerning undisclosed salary income, difference in credit balance in a company's books, repayment of loan, commission received, a transaction with Shri. Palaniappan Ramasamy, and foreign currency held at the time of search. The Revenue's appeal was listed for hearing before the High Court of Judicature at Madras.

What were the issues?

The Tribunal had to decide five substantial questions of law framed by the Revenue: 1. Whether the ITAT was justified in deleting additions towards undisclosed salary income and difference of credit balance in the books of M/s. Domore Tools and Accessories Pvt. Ltd., on the ground that these additions did not emanate from search material, despite being attributable to evidence found during the search and the assessee not filing returns for the block period (under Section 132 of the Income Tax Act)? 2. Whether the ITAT was justified in deleting additions for repayment of loan to Shri. Nadathur Varadhan, by stating such addition could only be made in the hands of Shri. A.N. Dyaneswaran, when the ITAT itself had deleted additions on this account in the case of Shri. A.N. Dyaneswaran? 3. Whether the ITAT was justified in deleting additions of Rs. 13,56,340/- for commission received, on the ground of no material, when the assessment order indicated the addition was based on analysis of seized documents (under Section 271(1)(c) of the Income Tax Act)? 4. Whether the ITAT was justified in deleting additions of Rs. 30 lakhs for a transaction with Shri. Palaniappan Ramasamy, ignoring evidence of stamped receipts found with the assessee during the search? 5. Whether the ITAT was justified in deleting additions for undisclosed income from foreign currency held at the time of search, by ignoring the assessee's failure to prove the source and by ignoring the presumptive provisions of Section 132(4A) of the Income Tax Act? The Revenue argued that the ITAT's deletions were not justified. The assessee's arguments are not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 260A,Section 132,Section 132(4A),Section 271(1)(c)

AI-generated summary — verify with the full judgment below

TCA.No.80 of 2018 In the High Court of Judicature at Madras Dated : 28.08.2019 Coram : The Honourable Mr.Justice T.S.SIVAGNANAM and The Honourable Mrs.Justice V.BHAVANI SUBBAROYAN Tax Case Appeal No.80 of 2018 Principal Commissioner of Income Tax Central 2, No.108, Mahatma Gandhi Road, Chennai. ...Appellant Vs Shri.C.Sampath Kumar PAN: 24704-S ...Respondent APPEAL under Section 260A of the Income Tax Act, 1961 against the order dated 20.04.2017 made in ITA.No.54/MDS/2005 on the file of the Income Tax Appellate Tribunal, Chennai 'A' Bench for the Block assessment years 1986-87 to 1995-96 and part of 1996-97. For Appellant : Mr.T.R.Senthilkumar, SSC assisted by Ms.K.G.Usharani For Respondent : Mr.A.S.Sriraman for Mr.S.Sridhar JUDGMENT (Judgment was delivered by T.S.Sivagnanam,J.) We have heard Mr.T.R.Senthilkumar, learned Senior Standing Counsel, assisted by Ms.K.G.Usharani, learned counsel appearing for the appellant/revenue and Mr.A.S.Sriraman, learned counsel for Mr.S.Sridhar, learned counsel appearing for the respondent/assessee. 1/5 http://www.judis.nic.in TCA.No.80 of 2018 2.This appeal, filed by the Revenue under Section 260A of the Income Tax Act, 1961 is directed against the order dated 20.04.2017 made in ITA.No.54/MDS/2005 on the file of the Income Tax Appellate Tribunal, Chennai 'A' Bench for the Block assessment years 1986-87 to 1995-96 and part of 1996-97. 3.The appeal has been filed by raising the following substantial questions of law : “1.Whether the ITAT is justified in law in deleting the addition made by the assessing officer towards undisclosed salary income and difference of credit balance in his account in the books of company M/s.Domore Tools and Accessories Pvt. Ltd., on the ground that these additions do not emanate from Search material, by ignoring the fact that these additions are attributable to evidence found during the course of search operation and the assessee had not filed return of income for any of the assessment years involved in the block period? 2.Whether the ITAT is justified in law in deleting the addition made by the assessing officer towards undisclosed income on account of repayment of loan to Shri.Nadathur Varadhan, on the ground that the addition on this account, if any, can be made only in the hands of Shri.A.N.Dyaneswaran, by ignoring the fact that the same Hon'ble ITAT has deleted the addition made on this account, on substantial basis, in the case of Shri.A.N.Dyaneswaran? 3.Whether on the facts and circumstances of the case, the Hon'ble ITAT is justified in law in deleting the addition 2/5 http://www.judis.nic.in TCA.No.80 of 2018 made by the assessing officer towards undisclosed income on account of commission received by the assessee of Rs.13,56,340/- on the ground there is no material to indicate the same, whereas, as per para 6 of the assessment order, the addition was based on analysis of the seized documents? 4.Whether on the facts and circumstances of the case, the ITAT is justified in law in deleting the addition made by the assessing officer towards undisclosed income of Rs.30 lakhs of transaction entered into by Shri.Palaniappan Ramasamy with the assessee, by ignoring the evidence of stamped receipts found with the assessee at the time of search? 5.Whether on the facts and circumstances of the case, the ITAT is justified in law in deleting the addition made by the assessing officer towards undisclosed income on account of money held in the form of foreign currency at the time of search, by ignoring the fact that the assessee failed to prove the source of such money with documentary evidence and also by ignoring the presumptive provisions of Section 132(4A) of I.T.Act?" 4.The learned Senior Standing Counsel for the appellant submits that the above appeal is not pursued by the Revenue on account of the low tax effect in terms of Circular No.17/2019 dated 08.8.2019 issued by the Central Board of Direct Taxes. By the said Circular, the monetary limit for filing or pursuing an appeal before the High Court has been increased to Rs.1 Crore. It is further submitted that the tax effect in this case is less than the threshold limit. 3/5 http://www.judis.nic.in TCA.No.80 of 2018 5.In the light of the said submissions, the above tax case appeal is dismissed on account of the low tax effect. The substantial questions of law framed are left open. In the event the tax effect is above the threshold limit fixed in the said circular, liberty is granted to the Revenue to make a mention to this Court to restore the appeal to be heard and decided on merits. No costs. (T.S.S.J.) (V.B.S.J.) 28.08.2019 cse Speaking (or) Non Speaking Order Index : Yes (or) No To 1.M/s.CAI Industries P. Ltd., 1547-A, Avinashi Road, Peelamedu, Coimbatore - 641 004. 2.The Income Tax Appellate Tribunal, Chennai 'A' Bench. 4/5 http://www.judis.nic.in TCA.No.80 of 2018 T.S.SIVAGNANAM,J. AND V.BHAVANI SUBBAROYAN,J. cse TCA.No.80 of 2018 28.08.2019 5/5 http://www.judis.nic.in

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