The Commissioner Of Income Tax,Chennai v. M/S.acurus Solutions Pvt Ltd

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMandTHE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBARAYON T.C.A.No.418 of 2019 The Commissioner of Income Tax,Chennai. .. Appellant Versus M/s.Acurus Solutions Pvt Ltd.,No.4/363, ''C'' Block, Rajaji Street,CMIR, Kandanchavadi, Chennai 600 096PAN : AADCA4486E.. Respondent Prayer:- Tax Case Appeal filed under Section 260-A of the IncomeTax Act, 1961, against the order of the Income Tax AppellateTribunal, ''B'' Bench, Chennai dated 04.09.2018 inI.T.A.No.1003/Chny/2018, arising against the order passed by theCommissioner of Income Tax (Appeals)-4, Chennai, dated13.12.2017 in ITA No.321/2016-17/A.Y.2009-10/CIT(A)-4, arisingagainst Assessment Order Passed by the Income Tax officer,Corporate ward-I(1), dated 30.03.2016 PAN . For Appellant: Ms.R.Hemalatha Senior Standing CounselFor Respondent : Mr.V.S.Jayakumar JUDGMENT [Order of the Court was made by T.S.SIVAGNANAM, J.]This appeal, filed by the assessee, under Section 260A ofthe Income Tax Act, 1961 ('the Act' for brevity) is directedagainst the order dated 04.09.2018 passed by the Income TaxAppellate Tribunal Bench 'B' Chennai ('the Tribunal' forbrevity) in I.T.A.No.1003/Chny/2018 for the Assessment Yearunder consideration (AY 2009-10). The appeal is entertained onthe following Substantial Questions of Law: 1. Whether on the facts and circumstances ofthe case the Tribunal was right in dismissing thedepartmental appeal on the ground of low tax effectwithout taking note of the fact that the case is https://hcservices.ecourts.gov.in/hcservices/ covered by exceptions provided under clause (10)(c)of Circular No.3 of 2018 wherein it has beenclearly stated that the cases involving revenueaudit objection which had been accepted by thedepartment are to be disposed off on merits? 2. Is not the finding of the Tribunal bad,especially the last fact finding authority shouldhave disposed off the matter on merits especiallyin cases where the Revenue audit objections hadbeen accepted by the department? 2. The first Substantial Question of Law raised by theRevenue is whether the Tribunal was right in dismissing theappeal filed by the Revenue on the ground that the appeal is hitby the Circular No.3 of 2018 dated 11.07.2018 issued by theCentral Board of Direct Tax ('CBDT') fixing the monetary limitwith regard to the appeals filed by the Revenue. It is theargument of Ms.R.Hemalatha, learned Senior Standing Counsel thatthe Tribunal erred in applying the Circular, since theassessee's case falls within Clause 10(c) of the Circular whichdeals with exceptional circumstances in which though the taxeffect is low, within the threshold limit, the Revenue would beable to pursue the appeal before the Tribunal or before thisCourt. 3. Upon perusal of the relevant papers, we find that thereis an audit objection which has been raised and if this is so,the case would fall within the exception pointed out underSection 10(c) of the Circular No.3 of 2018 dated 11.07.2018.Subsequent circular issued in the year 2019 also contains thevery same exceptional clauses and even in the new Circular, theRevenue would be entitled to pursue the remedy. 4. In the light of the above, we have no hesitation tohold that the Tribunal erred in dismissing the Revenue's appealon the ground of low tax effect. For the above reason, theSubstantial Question of Law No.1 is answered in favour of theRevenue and consequently the order passed by the Tribunal is setaside. The natural consequence that will follow, when suchorders are passed by the Courts, is to remit the matter to theTribunal for fresh consideration. 4. In the light of the above, we have no hesitation tohold that the Tribunal erred in dismissing the Revenue's appealon the ground of low tax effect. For the above reason, theSubstantial Question of Law No.1 is answered in favour of theRevenue and consequently the order passed by the Tribunal is setaside. The natural consequence that will follow, when suchorders are passed by the Courts, is to remit the matter to theTribunal for fresh consideration. 5. We have heard Ms.R.Hemalatha, learned Senior StandingCounsel for the Revenue and Mr.V.S.Jayakumar, learned counselfor respondent/assessee on this aspect. We note that the taxdemanded from the respondent assessee is Rs.2,78,840/-.Considering the low demand, we thought fit to hear the matter onmerits. 6. We have elaborately heard the learned counsels for theparties. 7. The assessee is a Private Limited Company filed itsreturn of income for the assessment year under consideration (AY2009-10) on 14.09.2009 admitting 'Nil' income under the normalprovision and a sum of Rs.28,34,017/- under the MAT provisions.The assessee claimed deduction under Section 10A of the Act tothe tune of Rs.44,98,815/- and the claim made was for the firstyear. The case of the assessee was selected for scrutiny and itwas completed under Section 143(3) of the Act, accepting thereturn of income filed by the assessee. Subsequently theassessment was reopened by issuance of notice under Section 148of the Act dated 28.09.2015. The reason being that the assesseehad omitted to adjust the business loss and unobserveddepreciation of the assessment years 2007-08 & 2008-09 and hehad failed to comply with the provisions of Section 10A(2)(ii)and (iii) of the Act. The assessee vide letter dated 04.11.2015stated that the return originally filed under Section 139 of theAct may be treated as a return filed pursuant to the noticeissued under Section 148 of the Act. The assessee afterobtaining reasons for reopening had objected to the same, whichwas rejected by the Assessing Officer by an order dated07.03.2016. Consequently the reassessment was completed videorder dated 30.03.2016. Challenging the said order, the assesseefiled an appeal before the Commissioner of Income Tax (Appeals)-4, Chennai, [CIT(A)]. By order dated 30.03.2016, the CIT(A)allowed the assessee's appeal on the ground that reopening wasnot justified as well as on merits. Questioning such an order,the Revenue preferred an appeal before the Tribunal and the samewas dismissed by the impugned order, on the ground of Low TaxEffect, which we have held to be not sustainable. 8. Second Substantial Question of Law raised by the Revenuein this appeal has been decided earlier by the Division Bench ofthis Court and the legal issue is no longer res integra. At thisstage, it would be beneficial to refer to the decision of theHon'ble Division Bench of this Court in the case of Commissionerof Income Tax Vs. Comstar Automative Technologies Pvt Ltd., (TCANo.301/2019 dated 06.07.2020). The Substantial Question of Lawframed for consideration in that appeal was identical to that ofthe case on hand except for the fact in the said case, theprovision which was pressed into the service is Section 10B ofthe Act. The appeal filed by the Revenue was dismissed byjudgment dated 06.07.2020 following the decision in the saidassessee's case in M/s.Comstar Automative Vs. The DeputyCommissioner of Income Tax (T.C.A.No.228/2011 dated 18.03.2020). 9. In the light of the above decision, the SubstantialQuestion of Law no.1 is answered in favour of theappellant/Revenue and the Substantial Question of Law no.2 isanswered in favour of the respondent/assessee. Sd/- Assistant Registrar //True Copy// Sub Assistant Registrar 9. In the light of the above decision, the SubstantialQuestion of Law no.1 is answered in favour of theappellant/Revenue and the Substantial Question of Law no.2 isanswered in favour of the respondent/assessee. Sd/- Assistant Registrar //True Copy// Sub Assistant Registrar skTo1.Commissioner of Income TaxCorporate Ward 3(4)Chennai.2.The Income Tax Appellate Tribunal, B Bench,Chennai.+1 cc to M/s.V.S.Jayakumar, Advocate Sr.No. 30559+1 cc to M/s.T.Ravikumar , Advocate Sr.No. 30686T.C.A.No.418 of 2019RSK(CO)RMP(21/10/2020)