THE COMMISSIONER OF INCOME T vs. POORVIKA MOBILES PVT.LTD

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TCA/885/2018HC Madras28 August 2019Bench: Hon`ble Mr Justice T. S. SIVAGNANAM4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the Revenue. The dismissal was based on the Revenue's submission that the appeal was not being pursued due to low tax effect, as per Circular No. 17/2019 of the Central Board of Direct Taxes, which increased the monetary limit for filing appeals before the High Court to Rs. 1 Crore. The Court noted that the tax effect in this case was below the threshold limit. Consequently, 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 was found to be above the threshold limit. No costs were awarded.

What were the facts?

The Commissioner of Income Tax, Chennai (the Revenue) filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated 12.06.2018 passed by the Income Tax Appellate Tribunal (ITAT), Chennai 'B' Bench. The appeal pertains to assessment year 2013-14 and challenges the ITAT's deletion of a penalty levied under Section 271(1)(c) of the Act against M/s. Poorvika Mobiles Pvt. Ltd. (the assessee). The Revenue's appeal was admitted by the High Court on 04.12.2018. The assessee did not appear before the High Court.

What were the issues?

1. Whether the Tribunal was right in deleting the penalty levied under Section 271(1)(c), especially when the assessee had offered additional income by filing a revised return, which would have otherwise escaped taxation but for a survey action initiated by the Department? (Question of law and fact, concerning Section 271(1)(c)). 2. Whether the Tribunal ought to have applied the decision of the Apex Court in Prasanna Dugar vs. CIT, which upheld the Kolkata High Court's view that penalty under Section 271(1)(c) was justified even if the assessee voluntarily disclosed and paid tax subsequent to search action? (Question of law, concerning Section 271(1)(c) and judicial precedent). Assessee's arguments: Not recorded. Revenue's arguments: The Revenue contended that the Tribunal erred in deleting the penalty. They argued that the assessee's voluntary disclosure of income via a revised return, prompted by a survey, indicated concealment of income. They also relied on the Supreme Court's decision in Prasanna Dugar vs. CIT, which supports levying penalty in such circumstances.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

TCA.No.885 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.885 of 2018 The Commissioner of Income Tax, Chennai. ...Appellant Vs M/s.Poorvika Mobiles Pvt. Ltd., No.30, Arcot Road, Kodambakkam, Chennai - 600 024. PAN: AAECP9975G ...Respondent APPEAL under Section 260A of the Income Tax Act, 1961 against the order dated 12.06.2018 made in ITA.No.3097/MDS/2017 on the file of the Income Tax Appellate Tribunal, Chennai 'B' Bench for the assessment year 2013-14. For Appellant : Mr.T.Ravikumar, SSC and Ms.R.Hemalatha, SSC For Respondent : No appearance JUDGMENT (Judgment was delivered by T.S.Sivagnanam,J.) We have heard Mr.T.Ravikumar, learned Senior Standing Counsel, and Ms.R.Hemalatha, learned Senior Standing Counsel appearing for the appellant/revenue. 1/4 http://www.judis.nic.in TCA.No.885 of 2018 2.This appeal, filed by the Revenue under Section 260A of the Income Tax Act, 1961 is directed against the order dated 12.06.2018 made in ITA.No.3097/MDS/2017 on the file of the Income Tax Appellate Tribunal, Chennai 'B' Bench for the assessment year 2013-14. 3.The appeal was admitted on 04.12.2018 on the following substantial question of law : "i.Whether the Tribunal was right in deleting the penalty levied under Section 271(1)(c) especially when the assessee had offered additional income by filing a revised return, which would have escaped taxation but for the survey action initiated by the Department? and ii.Whether the Tribunal ought to have applied the decision of the Apex Court in the case of Prasanna Dugar vs. CIT [reported in 70 Taxman.com page 175] wherein the judgment of the Kolkata High Court has been upheld, which had stated that even if the assessee voluntarily disclosed and paid tax subsequent to search action, penalty levied under Section 271(1)(c) was justified?" 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 2/4 http://www.judis.nic.in TCA.No.885 of 2018 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. 5.In the light of the said submissions, the above tax case appeal is dismissed on account of the low tax effect. The substantial question of law framed is 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.Poorvika Mobiles Pvt. Ltd., No.30, Arcot Road, Kodambakkam, Chennai - 600 024. 2.The Income Tax Appellate Tribunal, Chennai 'B' Bench. 3/4 http://www.judis.nic.in TCA.No.885 of 2018 T.S.SIVAGNANAM,J. AND V.BHAVANI SUBBAROYAN,J. cse TCA.No.885 of 2018 28.08.2019 4/4 http://www.judis.nic.in

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