THE COMMISSIONER OF INCOME vs. M/S. TACEL SANITARY WARE PV

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TCA/860/2019HC Madras26 August 2022Bench: Hon`ble Mr Justice R. MAHADEVAN4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court did not decide the substantial questions of law on merits. Instead, the Court took note of the Circular No. 17/2019 issued by the Central Board of Direct Taxes, which mandates that appeals shall not be filed or pursued by the Department before the High Court in cases where the tax effect does not exceed Rs. 1,00,00,000/-. The Revenue submitted that the tax effect in the present appeal was less than this stipulated threshold limit. In light of this submission, the High Court dismissed the appeal as withdrawn, stating that the substantial questions of law were kept open for determination in an appropriate case. No costs were awarded.

What were the facts?

The Commissioner of Income Tax, Pudhucherry (the Revenue) filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated 28.02.2013 passed by the Income Tax Appellate Tribunal, Chennai, in I.T.A.No.868/Mds/2012. This order pertained to assessment year 2006-07 and concerned M/s. Tacel Sanitary Ware Pvt. Ltd. (the assessee). The High Court admitted the appeal on substantial questions of law. During the hearing, the Revenue brought to the court's notice CBDT Circular No. 17/2019, which stipulates that appeals shall 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 this appeal was below this threshold.

What were the issues?

The High Court had to decide the following substantial questions of law: 1. Whether, on the facts and in the circumstances of the case, the onus is on the assessee to prove the genuineness of the transaction relating to share application money, especially when the assessee had not satisfactorily discharged the onus cast on it, and therefore, liable to be taxed under Section 68 of the Income Tax Act? 2. Whether, on the facts and circumstances of the case, the Tribunal was right in setting aside the order of the CIT (A), especially when the shareholders had not satisfactorily explained the source for their investment? The Revenue contended that the onus was on the assessee to prove the genuineness of share application money and that the assessee had failed to discharge this onus, making the amount taxable under Section 68. The Revenue also argued that the shareholders had not satisfactorily explained the source of their investment, and therefore, the Tribunal was wrong in setting aside the CIT(A)'s order. The judgment does not record specific arguments from the assessee's side regarding these questions.

Which sections of the Income-tax Act were involved?

Section 260A,Section 68

AI-generated summary — verify with the full judgment below

T.C.A.No.860 of 2019 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 26.08.2022 CORAM : THE HON'BLE MR. JUSTICE R. MAHADEVAN AND THE HON'BLE MR. JUSTICE MOHAMMED SHAFFIQ T.C.A.No.860 of 2019 The Commissioner of Income Tax, Pudhucherry. ... Appellant Versus M/s.Tacel Sanitary Ware Pvt. Ltd., R.S.No.120/6, Anna Nagar, Kattukudalore Road, Vriddhachalam - 606 001, Cuddalore District. ... Respondent Appeal preferred under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal, “A” Bench, Chennai, dated 28.02.2013 in I.TA.No.868/Mds/2012. For Appellant : Mr.J.Narayanaswamy Senior Standing Counsel Page 1/4 https://www.mhc.tn.gov.in/judis T.C.A.No.860 of 2019 J U D G M E N T (Judgment was delivered by R.MAHADEVAN, J.) This tax case appeal has been filed by the appellant / Revenue, challenging the order dated 28.02.2013 passed by the Income Tax Appellate Tribunal, 'A' Bench, Chennai in I.T.A.No.868/Mds/2012, relating to the assessment year 2006-07. 2. By order dated 22.01.2020, this court admitted the aforesaid tax case appeal on the following substantial questions of law: "(i) Whether on the facts and in the circumstances of the case, the onus is on the assessee to prove the genuineness of the transaction relating to share application money especially when the assesee had not satisfactorily discharged the onus cast on it and therefore, liable to be taxed under Section 68 of the Income Tax Act? (ii) Whether on the facts and circumstances of the case, the Tribunal was right in setting aside the order of CIT (A), especially when the shareholders had not satisfactorily explained the source for their investment? " 3. When the matter was taken up for consideration, the learned counsel Page 2/4 https://www.mhc.tn.gov.in/judis T.C.A.No.860 of 2019 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 appeal 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 this appeal is less than the threshold limit. 4. In the light of the aforesaid submissions made by the learned counsel for the appellant / Revenue, the present appeal, wherein, the tax effect is said to be less than the monetary limit imposed, is dismissed as withdrawn, keeping open the substantial questions of law for determination in an appropriate case. No costs. (R.M.D., J.) (M.S.Q., J.) 26.08.2022 r n s

Internet : Yes.

Index : Yes / No. Page 3/4 https://www.mhc.tn.gov.in/judis T.C.A.No.860 of 2019 R. MAHADEVAN, J. and MOHAMMED SHAFFIQ, J. r n s To 1. The Income Tax Appellate Tribunal, 'A' Bench, Chennai. 2. The Commissioner of Income Tax, (Appeals)-XII, Chennai. 3. The Income Tax Officer, Ward-I(1), Cuddalore. T.C.A.No.860 of 2019 26.08.2022 Page 4/4 https://www.mhc.tn.gov.in/judis

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