PRINCIPAL COMMISSIONER OF vs. M/S.C.S.GARMENTS,

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TCA/91/2017HC Madras15 October 2024Bench: Honourable Mr Justice R. SURESH KUMAR4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal on the grounds that the matter was covered under the Low Tax Effect as per Circular No. 9/2024. The Court explicitly stated that the substantial questions of law arising in the appeal were kept open to be decided at a later point of time. Therefore, no finding was given on the merits of the two substantial questions of law. The operative direction was to dismiss the appeal, with no order as to costs. The ITAT's order deleting the disallowance on bogus purchases and the AO's reference to Section 40A(3) were not adjudicated upon by the High Court.

What were the facts?

The appeal was filed by the Principal Commissioner of Income Tax, Coimbatore (Revenue) against the order of the Income Tax Appellate Tribunal (ITAT), Madras "B" Bench, dated 31.08.2016. The ITAT had deleted a disallowance made by the Assessing Officer (AO) on account of bogus purchases. The assessee is M/s. C S Garments, Tirupur. The assessment year(s) are not explicitly stated but the dispute pertains to the AO's disallowance of purchases and the subsequent ITAT order. The procedural history involves the AO's disallowance, the assessee's appeal to the ITAT, and the Revenue's subsequent appeal to the High Court.

What were the issues?

The High Court had to decide two substantial questions of law: 1. Whether the Tribunal was right in deleting the disallowance made on account of bogus purchases without considering that the sundry creditors claimed in the books of account were also bogus, as evidenced by statements recorded under Section 131 of the Income Tax Act, 1961 from the sundry creditors? 2. Whether the Tribunal was right in holding that the AO made a casual reference about Section 40A(3) of the Act regarding the use of cash for purchase of raw material in the grey market, when the purchases were admittedly made in the grey market and the preponderance of probability indicated cash purchases? Contentions: Assessee: Not recorded in the judgment. Revenue: The Revenue argued that the matter was covered under the Low Tax Effect as per Circular No. 9/2024 dated 17.09.2024.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 131,Section 40A(3)

AI-generated summary — verify with the full judgment below

T.C.A.No.91 of 2017 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 15.10.2024 CORAM : THE HONOURABLE MR.JUSTICE R. SURESH KUMAR AND THE HONOURABLE MR.JUSTICE C. SARAVANAN T.C.A.No.91 of 2017 Principal Commissioner of Income Tax 3 No.63, Race Course Road Coimbatore 641 018. .. Appellant Vs. M/s. C S Garments 42, Karumarampalayam Mannarai, Tirupur – 641 607 PAN: AAC FC 0719 J .. Respondent Prayer: Appeal filed under Section 260-A of the Income Tax Act, 1961, against the order of Income Tax Appellate Tribunal Madras “B” Bench dated 31.08.2016 passed in I.T.A.No.583/Mds/2016. For the Appellant : Mr.Karthik Ranganathan Senior Standing Counsel For the Respondent : Ms.A.Sharren for Mr.R.Sivaraman JUDGMENT (Order of the Court was made by R.SURESH KUMAR, J.) The present tax case appeal was admitted on 20.02.2017 by this Court on the following substantial questions of law:- Page 1 of 4 https://www.mhc.tn.gov.in/judis T.C.A.No.91 of 2017 "1. Whether on the facts and in the circumstances of the case, the Tribunal is right in deleting the disallowance made on account of bogus purchases without considering the fact that the sundry creditors claimed in the books of account is bogus as the Assessing Officer had recorded statements under Section 131 from the sundry creditors and it was proven that the sundry creditors were lso bogus? 2. Whether the Tribunal right in holding that the A.O. Made casual reference about Section 40A(3) of the Act regarding the use of cash for purchase of raw material in the grey market, whereas the purchases are admittedly by the assessee made in the grey market and preponderance of probability clearly indicates that the purchases are made in cash?" 2. It is submitted by the learned Senior Standing Counsel appearing for the appellant Revenue that this matter is covered under the Low Tax Effect as per the recent Circular dated 17.09.2024, in Circular No.9/2024. Page 2 of 4 https://www.mhc.tn.gov.in/judis T.C.A.No.91 of 2017 3. Hence, this appeal stands dismissed, as covered under the low tax effect and the substantial questions of law arising in this appeal are kept open to be decided at the later point of time. There shall be no order as to costs. (R.S.K., J.) (C.S.N, J) 15.10.2024 Neutral Citation:Yes/No drm Page 3 of 4 https://www.mhc.tn.gov.in/judis T.C.A.No.91 of 2017 R. SURESH KUMAR, J. AND C. SARAVANAN

, J.

(drm) T.C.A.No.91 of 2017 15.10.2024 Page 4 of 4 https://www.mhc.tn.gov.in/judis

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