M/S TUBE INVESTMENTS OF INDIA vs. THE ASSISTANT COMMISSIONER

TCA/844/2019HC Madras20 April 2021Bench: Hon`ble Mr Justice M.DURAISWAMY7 pages

AI SummaryRemanded

What did the High Court hold?

The High Court did not decide the substantial questions of law. It noted the enactment of the Direct Tax Vivad Se Vishwas Act, 2020, and was informed that the assessee had filed the necessary forms under this Act. Consequently, the Court found no useful purpose in keeping the appeal pending. The appeal was disposed of on the ground that the assessee had availed the benefit under the Vivad Se Vishwas Act. The Court granted liberty to the assessee to restore the appeal if the ultimate decision under the Act was not in their favour. The substantial questions of law were left open. No costs were awarded.

What were the facts?

The assessee, M/s. Tube Investments of India Ltd., filed an appeal before the High Court of Judicature at Madras against an order dated 09.01.2009 passed by the Income Tax Appellate Tribunal (ITAT), Madras "C" Bench. The appeal pertains to Assessment Year 1998-99. The assessee challenged additions made by the Assessing Officer and confirmed by the ITAT, which were based on documents found during a survey. The Revenue is the respondent. The High Court noted that the Government of India enacted the Direct Tax Vivad Se Vishwas Act, 2020, to resolve disputed tax matters. The assessee informed the court that they had filed the requisite forms under this Act on 30.01.2021.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the Tribunal's order confirming additions made solely based on uncorroborated loose papers and a third-party letter found during a survey was perverse, especially when the audited books were not rejected. 2. Whether the Tribunal was correct in confirming additions for alleged lease syndication charges based only on a noting on a loose paper, despite the amount being accounted for and offered to tax. 3. Whether the Tribunal was correct in holding alleged lump sum lease rent for land taxable based solely on a letter from the Chairman of M/s. Wescare, without corroborating evidence or examination of the Chairman. 4. Whether the Tribunal was correct in holding an amount received from M/s. Das Lagarway Ltd., accounted for and adjusted against trade debts of M/s. Arun Pipes, as taxable income when it resulted in a lesser bad debt deduction claim. 5. Whether the Tribunal was justified in confirming additions by ignoring the possibility of double addition, where amounts in letters from Wescare (India) Limited and Das Lagarway Windturbines Limited might refer to the same transaction. 6. Without prejudice, whether the Tribunal, having held an amount adjusted against dues from M/s. Arun Pipes as taxable, ought to have increased the eligible bad debt deduction by the same amount. The assessee argued that the additions were based on uncorroborated evidence and that the audited books were accepted. The revenue's contentions are not explicitly recorded in the provided text.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

Tax Case Appeal No.844 of 2019 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 20.04.2021 CORAM THE HON'BLE MR.JUSTICE M. DURAISWAMY AND THE HON'BLE MRS.JUSTICE R. HEMALATHA Tax Case Appeal No.844 of 2019 M/s.Tube Investments of India Ltd., Dare House, 234, NSC Bose Road, Chennai – 600 001.

... Appellant Vs.

The Assistant Commissioner of Income Tax, Company Circle-III(2), Chennai – 600 034. ... Respondent Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Madras “C” Bench, dated 09.01.2009 passed in I.T.A.No.1454/Mds/2007. For Appellant : Mr.R.Venkata Narayanan for M/s.Subbaraya Aiyar Padmanabhan

For Respondent : Mr.T.Ravikumar

Senior Standing Counsel

Page 1/7 http://www.judis.nic.in Tax Case Appeal No.844 of 2019 J U D G M E N T (Delivered by M. DURAISWAMY, J) The appeal filed by the assessee under Section 260A of the Income Tax Act, 1961 ('the Act' for brevity), is directed against the order, dated 09.01.2009, passed by the Income Tax Appellate Tribunal, Madras “C” Bench, Chennai ('the Tribunal' for brevity) in I.T.A.No.1454/Mds/2007 for the Assessment Year 1998-99. The appellant/assessee has raised the following Substantial Questions of Law in the above appeal : “1.Whether on the facts and circumstances of the case the order of the Tribunal is perverse in confirming the impugned additions made by assessing officer solely based on uncorroborated loose paper and letter of third party found during course of survey when he has not rejected the audited books results and accepted the same? 2.Whether on the facts and circumstances of the case the Tribunal was right in law in confirming the addition made by assessing officer towards alleged lease syndication charges merely on the basis of a noting on loose paper impounded in the Survey, as against the actual amount received and accounted by the appellant and offered to tax in absence of corroborative evidence? Page 2/7 http://www.judis.nic.in Tax Case Appeal No.844 of 2019 3.Whether on the facts and circumstances of the case the Tribunal was right in law in holding the alleged lump sum lease rent for land is taxable in the hands of the assessee solely on the basis of the letter given by the Chairman of M/s.Wescare without bringing any corroborating evidence or without examining the Chairman of M/s. Wescare and conducting any enquiry with M/s. Wescare for verification? 4.Whether on the facts and circumstances of the case the Tribunal was right in law in holding that the amount received from M/s.Das Lagarway Ltd, duly accounted and adjusted against the account of M/s. Arun Pipes in respect of trade debts, is liable to be taxed in the hands of appellant as unaccounted income when after such adjustment the appellant has claimed lesser deduction of bad debt written off in respect of receivables from M/s. Arun Pipes? 5.Whether the Tribunal is justified in confirming the additions by ignoring the possibility that the amount referred to in letter dt 29.07.98 of Wescare (India) Limited and in the letter dt 14.02.2006 of M/s. Das Lagarway Windturbines Limited is one and the same and assessing it as income would amount to double addition? Page 3/7 http://www.judis.nic.in Tax Case Appeal No.844 of 2019 6.Without prejudice, Whether the Tribunal having held that the sum of Rs.1.2 crores adjusted against the dues from M/s. Arun Pipes as taxable ought to have held that as consequence the debt due from M/s.Arun Pipes which has been written off and eligible for deduction should be increased by the same amount of Rs.1.20 crores?” 2. We have heard Mr.R.Venkata Narayanan for M/s.Subbaraya Aiyar Padmanabhan, learned counsel for the appellant/ assessee and Mr.T.Ravikumar, learned Senior Standing Counsel for the respondent/Revenue. 3. It may not be necessary for this Court to decide the Substantial Questions of Law framed for consideration on account of certain subsequent developments. The Government of India enacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of 2020) to provide for resolution of disputed tax and for matters connected therewith or incidental thereto. The Act of the Parliament received the assent of the President on 17th March 2020 and published in the Gazette of India on 17th March 2020. Page 4/7 http://www.judis.nic.in Tax Case Appeal No.844 of 2019 4. We are informed by the learned counsel for the appellant/assessee that the assessee has already filed the requisite Forms 1 & 2 on 30.01.2021 under Section 4 of the Act. 5. In the light of the fact that the assessee has already availed the benefit under the Act, no useful purpose would be served in keeping the appeal pending. At the same time, safeguarding the interest of the assessee in the event the order to be passed by the Department under the Act is not in favour of the assessee. Accordingly, the Tax Case Appeal stands disposed of on the ground that the assessee has already filed the requisite Forms 1 & 2 and the Department shall process the application at the earliest in accordance with the said Act and communicate the decision to the assessee at the earliest. As observed, the assessee is given liberty to restore the appeal in the event the ultimate decision to be taken on the declaration filed by the assessee under Section 4 of the said Act is not in favour of the assessee. If such a prayer is made, the Registry shall entertain the prayer without insisting upon any application to be filed for condonation of delay in restoration of the appeal and on such request made by the assessee by filing a Miscellaneous Petition for Restoration, the Registry shall place such petition before the Division Bench for Page 5/7 http://www.judis.nic.in Tax Case Appeal No.844 of 2019 orders. 6. With this observation, the Tax Case Appeal stands disposed of with the aforementioned liberty and consequently, the Substantial Questions of Law are left open. No costs. [M.D., J.] [R.H., J.] 20.04.2021

Index : Yes/No Internet : Yes mkn To 1.The Income Tax Appellate Tribunal, Madras “C” Bench 2.The Assistant Commissioner of Income Tax, Company Circle-III(2), Chennai – 600 034. Page 6/7 http://www.judis.nic.in Tax Case Appeal No.844 of 2019 M. DURAISWAMY, J. and R. HEMALATHA, J. mkn Tax Case Appeal No.844 of 2019

20.04.2021 Page 7/7 http://www.judis.nic.in

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