COMMISSIONER OF INCOME TAX vs. SRI GANAPATHY SILKS

TCA/824/2019HC Madras13 November 2019Bench: Hon`ble Mr Justice N. KIRUBAKARAN6 pages

AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the Tax Case Appeal on the ground of tax effect. The Court noted the submission by the Revenue that the tax effect was less than Rs. 1 crore and referred to Circular No. 17/2019 dated 08.08.2019, which enhances the monetary limit for filing appeals before the High Court to Rs. 1 crore. The Court extracted paragraph 2 of the circular, detailing the enhanced monetary limits. Consequently, the appeal was dismissed. However, the substantial questions of law framed were left open. Liberty was granted to the Revenue to seek restoration of the appeal if the tax effect is found to be above the limit fixed in the circular, to be heard and decided on merits. No costs were awarded.

What were the facts?

The Revenue, Commissioner of Income Tax, Centre Circle – III, Madurai, filed a Tax Case Appeal against an order dated 22.07.2016 passed by the Income Tax Appellate Tribunal (ITAT), Madras 'C' Bench. The ITAT's order had reversed an earlier order of the Commissioner of Income Tax, which itself had reversed an assessment order concerning the assessee, M/s. Sri Ganapathy Silks, for the assessment year 2008-09. The appeal concerns purchases made by the assessee through M/s. Yogesh Trading Company, represented by Sri Narayana Agencies, Coimbatore. The amount in dispute, referred to as the 'tax effect', was stated to be less than Rs. 1 crore.

What were the issues?

1. Whether, on the facts and in the circumstances of the case and in law, the Income Tax Appellate Tribunal was right in holding that purchases made by the assessee through M/s. Yogesh Trading Company, represented by Sri Narayana Agencies, Coimbatore, were genuine and that Sri Narayana Agencies existed at the address provided by the assessee. (Question of law) 2. Whether, on the facts and in the circumstances of the case and in law, the Income Tax Appellate Tribunal was right in holding that M/s. Yogesh Trading Company received money from the assessee firm routed through the bank account, when the parties to whom payments were made were not ascertainable or identifiable from the bank statement. (Question of law) Assessee's contentions: Not recorded. Revenue's contentions: The tax effect in this case is less than Rs. 1 crore, which is covered by Circular No. 17/2019 dated 08.08.2019 issued by the CBDT. As per this circular, the monetary limit for filing an appeal before the High Court is Rs. 1 crore. Therefore, the appeal should be dismissed.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

T.C.A.No.824 of 2019 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 13.11.2019 CORAM : THE HONOURABLE MR.JUSTICE N.KIRUBAKARAN and THE HONOURABLE MR.JUSTICE P.VELMURUGAN T.C.A.No.824 of 2019 Commissioner of Income Tax, Centre Circle – III, Madurai 625 002.

... Appellant Vs M/s.Sri Ganapathy Silks, C/o.Pass Associates, No.90, Armenian Street, 4th Floor, Orient Chambers, Chennai 600 001. PAN: AADFS 6190 E

...Respondent PRAYER: Tax Case Appeal filed under Section 260A of Income Tax Act, 1961 against the order dated 22.07.2016 in ITA No.452/Mds/2016 on the file of the Income Tax Appellate Tribunal Madras 'C' Bench for the assessment year 2008-09. For Appellant : Mr.M.Swaminathan For Respondent : Mr.Ashok Pathy for M/s.Pass Asso. 1/6 http://www.judis.nic.in T.C.A.No.824 of 2019

J U D G M E N T (Order of the Court was delivered by N.KIRUBAKARAN, J)

This Tax Case Appeal has been filed against the order passed by the Income Tax Appellate Tribunal dated 22.07.2016 reversing the order of the Commissioner of Income Tax, who in fact allowed the appeal filed by the assessee reversing the assessment order in respect of the assessee. 2.Though many substantial questions of law have been raised, the following questions of law are framed with regard to the purchase made through M/s.Yogesh Trading Company represented through Sri Narayana Agencies, Coimbatore by the assessee: “(i)Whether on the facts and in the circumstances fo the case and in law, the Income Tax Appellate Tribunal right in holding that purchases are genuine and were routed through M/s.Sri Narayana Agencies, Coimbatore existed at the address given by the assessee. 2/6 http://www.judis.nic.in T.C.A.No.824 of 2019 (ii)Whether on the facts and in the circumstances of the case and in law, the Income Tax Appellate Tribunal was right in holding that M/s.Yogesh Trading Company has received money from the assessee firm routed through the bank account, when it can be seen that the party to whom the payments were made are not ascertainable nor identifiable from the bank statement.” 3.When the matter is called today, Mr.M.Swaminathan, learned Senior 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, 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 case has to be dismissed. 3/6 http://www.judis.nic.in T.C.A.No.824 of 2019 4.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" 5.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, the Tax Case Appeal is dismissed on account of tax 4/6 http://www.judis.nic.in T.C.A.No.824 of 2019 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 appeal to be heard and decided on merits. No costs. (N.K.K.,J.) (P.V.,J.) 15.11.2019 ay

To Commissioner of Income Tax, Centre Circle – III, Madurai 625 002. 5/6 http://www.judis.nic.in T.C.A.No.824 of 2019 N.KIRUBAKARAN, J. and P.VELMURUGAN, J. ay

T.C.A.No.824 of 2019 Dated:13.11.2019 6/6 http://www.judis.nic.in

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