The Commissioner Of Income Tax,Chennai v. Shri Hussain Mohideen Ibrahim Sha

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 24.06.2019 CORAM : THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMandTHE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN TCA.No.722 of 2018 The Commissioner of Income Tax,Chennai .. Appellant Vs. Shri Hussain Mohideen Ibrahim Sha,C/o Ramesh & Ramachandran, Charted Accountants, New No.39, Old No.29/3,Viswanathapuram Main Road,Kodambakkam, Chennai – 600 024. PAN: .. Respondent Prayer :Tax Case Appeal filed under Section 260A of theIncome Tax Act, 1961, against the order of the Income TaxAppellate Tribunal Madras 'A' Bench, Chennai, dated27.02.2018 in I.T.A.No.449/Mds/2017 for the assessment year2008-2009 the commissioner of Income Tax Appeals 2,121,MG.Road, Nungambakkam, chennai PAN: .dated08.12.2015 Assessment year 2008-2009 against the AssistantCommissioner of Income Tax,Business circle I,Chennai. Dated28.02.2014 PAN: Assessment Year 2008-2009. For Appellant: Ms. Hemalatha Senior Standing Counsel For Respondent : Mr.A.S.Sriraman * * * J U D G M E N T [Judgment of the Court was delivered by T.S.Sivagnanam, J.] This appeal filed by the Revenue under Section 260 A ofthe Income Tax Act, 1961 (hereinafter referred to as "theAct") is directed against the order dated 27.02.2018 inITA.No.449/Mds/2017 passed by the Income Tax AppellateTribunal Madras, 'A' Bench in the assessment year 2008-2009. https://hcservices.ecourts.gov.in/hcservices/ 2.The assessee has filed this appeal by raising thefollowing substantial questions of law: “1. Whether the Tribunal was right indeleting the addition of expenditure madeunder Section 69C based on a perversefinding of fact which is not supported bythe evidence on record that it is recordedin the regular books of account maintainedwhich is contrary to the declaration givenat the time of survey and the evidencecollected by the department? 2. Is not the finding of the Tribunalperverse by holding that the transactionsare recorded in the regular books ofaccounts especially when the declarationgiven by the Assessee during surveyoperations and the evidences collected bythe department will clearly prove thecontrary to the fact that the transactionsare not recorded in the books of accountmaintained? ” 3.We have heard Ms.Hemalatha, learned Senior Standingcounsel appearing for the appellant/revenue andMr.A.S.Sriraman, learned counsel appearing for therespondent/assessee. With the consent on either side, theappeal itself is taken up for final disposal. 4. The question which was required to be decided by theTribunal is with regard to applicability of Section 115BBEof the Act, which came into effect from 01.04.2017(typographical error in the order of the Tribunal shown as01.04.2013). From reading paragraph 6 of the order passedby the Tribunal, we find that the Tribunal proceeded toconsider the expenditure incurred by the assessee, whichthe assessee claimed that it was recorded in the books ofaccounts. Based on such submission, the Tribunal held thatwhen the expenditure was recorded in the books of account,which was maintained in the course of regular business, itcannot be said that the assessee could not explain thesource of income for meeting such expenditure.Unfortunately, what was the subject matter, which wasplaced before the Tribunal is with regard to effect of Section 115BBE of the Act. According to the assessee, thisprovision was introduced with effect from 01.04.2017 andtherefore, not applicable to the assessment year underconsideration namely 2008 -2009. Section 115BBE of the Act. According to the assessee, thisprovision was introduced with effect from 01.04.2017 andtherefore, not applicable to the assessment year underconsideration namely 2008 -2009. 5. The Revenue argued before the Tribunal stating thatSection 115BBE of the Act was brought into statute book toclarify the ambiguity prevailed in respect of unexplainedexpenditure. In other words, it was the contention ofRevenue that the said provision being clarificatory wouldbe retrospective. Therefore, the endeavour of the Tribunalshould have been to test the submission made by theassessee and the Revenue in this regard. 6. However, what weighed in the mind of the Tribunalwas with regard to the expenditure, which according to theassessee, was recorded in the books of accounts maintainedin the course of regular business. The assessment wasreopened solely on the ground that under Section 115BBE ofthe Act having been brought into the statute book, theexpenditure under Section 11BBE., etc. should be assessedseparately. 7. At this juncture, it will be beneficial to refer toa recent circular issued by the CBDT in Circular No.11 of2019 dated 19.06.2019, wherein the Board has clarified onthe following lines: “Thus keeping the legislative intentbehind amendment in Section 11BBE(2) videthe Finance Act, 2016 to remove anyambiguity of interpretation, the Board isof the view that since the term 'or set offof any loss' was specifically inserted onlyvide the Finance Act 2016, w.e.f.01.04.2017, an assessee is entitled toclaim set-off of loss against incomedetermined under Section 115BBE of the Acttill the assessment year 2016-17.” 8.Learnedcounselappearingfortherespondent/assessee referred to a decision rendered byDivision Bench of this Court in Commissioner of Income TaxVs. Chensing Ventures reported in [2007] 291 ITR 258(Madras), wherein, the loss sustained by the assessee, in https://hcservices.ecourts.gov.in/hcservices/ any year under, the heads of income was permitted as setoff against income under any other head. Learned counselfor assesssee also referred to a decision of Division Benchin High Court of Gujarat in Commissioner of Income Tax -IIVs. Shilpa Dyeing & Printing Mills (P) Limited reported in[2013] 39 taxmann.com 3 (Gujarat). 9. After elaborately hearing learned counsel for theparties, we are of the considered view that the matterrequires reconsideration by the Tribunal for the reasons,which we have indicated in this judgment. Furthermore, theCBDT has issued Circular No.11 of 2019 dated 19.06.2019also needs to be looked into as regards the effect of theintroduction of Section 115BBE of the Act. 10. In the light of the above, the appeal filed by theRevenue is allowed, the order of the Tribunal is set asideand the matter is remanded back to the Tribunal for freshconsideration for the issues we have pointed out in thisjudgment. Consequently, the substantial questions of laware left open. No costs. Assistant Registrar(CS) To, //True Copy// Sub Assistant Registrar 1.THE COMMISSIONER OF INCOME TAX, CHENNAI 2. THE INCOME TAX APPELLATE TRIBUNAL MADRAS A BENCH, CHENNAI3.THE COMMISSIONER OF INCOME TAX APPEALS 2, 121,MG.ROAD,NUNGAMBAKKAM, CHENNAI 4.THE ASSISTANT COMMISSIONER OF INCOME TAX BUSINESS CIRCLEI CHENNAI +1cc to Mr.T.Ravi kumar , Advocate SR.No. 51516+1cc to Mr.S.Sridhar , Advocate SR.No. 51544 TCA.No.722 of 2018