Tca/21/2009 Of Commissioner Of Income Tax v. M/S Manmandir Sarees P Ltd

IN THE HIGH COURT OF JUDICATURE AT MADRAS THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMandTHE HONOURABLE MR.JUSTICE N.SATHISH KUMAR Tax Case (Appeal) No.21 of 2009 Commissioner of Income Tax,Central II, Chennai-34. ... Appellant /Appellant -vs- M/s.Manmandir Sarees (P) Ltd.,Kakani Towers,15, Khadar Nawaz Khan Road,Chennai-600 006. ... Respondent/Respondent Tax Case Appeal filed under Section 260A of the Income TaxAct, 1961 against the order of the Income Tax Appellate Tribunal“B” Bench, Chennai, dated 11.07.2008 in I.T.A.No.2360/Mds/2007,for the assessment year 2005-06, and this appeal preferredagainst the order dated 28.08.2007 made in Appeal No.CIT(A)/CHE/337/06-07 on the file of the Commissioner of Income Tax(Appeals)II, Chennai, No.46, Mahatma Gandhi Salai, Nungambakkam,Chennai-34 and this appeal preferred against the order dated27.12.2006 made in PANO.AAACM4622R for the Assessment year 2005-2006 on the file of the Assistant Commissioner of Income TaxCentral Circle II 5(i/c), Chennai. (Delivered by T.S.Sivagnanam, J.) This appeal, by the appellant/Revenue, is directedagainst the order of the Income Tax Appellate Tribunal “B”Bench, Chennai, dated 11.07.2008, in I.T.A.No.2360/Mds/2007, forthe assessment year 2005-06. https://hcservices.ecourts.gov.in/hcservices/ 2. Heard Mr.T.R.Senthil Kumar, learned Senior StandingCounsel and Ms.K.G.Usha Rani, learned Junior Standing Counselfor the Revenue; and Mr.M.P.Senthil Kumar, learned counsel forthe assessee. 3. This Appeal has been admitted on 30.03.2009, on thefollowing substantial question of law:- “Whether on the facts and circumstances of the case, the Appellate Tribunal was right inupholding the findings of the Commissioner ofIncome Tax (Appeals) that the value of stocks asat the time of search at cost price should bearrived at by deducting the marked up sellingprice the gross profit of 16.66% as against 11.5%adopted by the Assessing Officer?” 4. The learned counsel for the respondent has produced amemo to demonstrate as to why the appeals are hit by theCircular No.3 of 2018 dated 11.07.2018. For betterappreciation, the memo is quoted hereinbelow:- “1. A sum of Rs.94,99,079/- was added asundisclosed income (Stock) by the Assessing Officer(Page 12 of Typed set). On appeal, the CIT (Appeals) reduced the addition to Rs.13,42,834/- (Page 17 of Typedset). The relief granted by theCIT (Appeals) is Rs.81,56,243/-. 2. The relief granted by the CIT (Appeals) wasrestricted to Rs.74,93,453/- by the Tribunal (Page 20 of Typed set); which is contested by thedepartment in this appeal. 3. The tax effect thereon Rs.74,93,453/- @ of 35% including surcharge and cess is only Rs.27,42,041/-. 4. In view of Circular No.3/2018 issued by theCBDT, the Appeal by the Department is liable to bedismissed in limine.” 5. The Revenue does not dispute the above factual position. 6. We have perused the order of assessment as well as theorder passed by the Commissioner of Income Tax and we find thatthe tax effect in this appeal is lesser than the threshold limitmentioned in Circular No.3 of 2018, dated 11.07.2018, issued bythe Central Board of Direct Taxes, which fixes the monetarylimit as Rs.50,00,000/- for the Department to pursue the matter.Furthermore, the Revenue has not been able to point out anydistinguishing features, by which the Circular No.3 of 2018,dated 11.07.2018, cannot be applied. 7. Thus, for the above reasons, the Revenue cannot pursuethis appeal in view of the low tax effect. Hence, this Tax CaseAppeal is dismissed and the substantial question of law, framedfor consideration, is left open. No costs. The Revenue is atliberty to seek for restoration of appeal if at a later point oftime, it is found that the tax effect is above the thresholdlimit or to fall under the exceptional clauses mentioned in theCircular. 7. Thus, for the above reasons, the Revenue cannot pursuethis appeal in view of the low tax effect. Hence, this Tax CaseAppeal is dismissed and the substantial question of law, framedfor consideration, is left open. No costs. The Revenue is atliberty to seek for restoration of appeal if at a later point oftime, it is found that the tax effect is above the thresholdlimit or to fall under the exceptional clauses mentioned in theCircular. Sd/- Assistant Registrar(CS VI) //True Copy// Sub Assistant Registrar abrTo 1.The Income Tax Appellate Tribunal Chennai “C” Bench. 2.The Commissioner of Income Tax (Appeals)II, Chennai, No.46, Mahatma Gandhi Salai, Nungambakkam, Chennai-34. 3.The Assistant Commissioner of Income Tax, Central Circle II 5(i/c), Chennai. +1cc to M/S.T.R.Senthilkumar, Advocate Sr.78121+1cc to M/S.G.Baskar, Advocate Sr.77801 T.C.(A) No.21 of 2009 kj[co]srg 28/12/2018