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Notice u/s 153C is unsustainable if no incriminating material is found during Search proceedings: HC

2019-TIOL-1620-HC-MAD-IT

IN THE HIGH COURT OF MADRAS

Tax Case Appeal Nos.710 and 711 of 2018
CMP No.14859 of 2018

COMMISSIONER OF INCOME TAX
NON CORPORATE CIRCLE 10, CHENNAI

Vs

RAJU GANESAN
PLAT NO 4A, PETTUCOLA TOWERS
P H ROAD, KILPAUK, CHENNAI-600010
PAN NO: AACPG8349N

T S Sivagnanam & V Bhavani Subbaroyan, JJ

Dated: July 03, 2019

Income tax – Section 54F – CBDT Circular No.3/2018

Keywords – purchase of residential house – tax effect – monetary limit

THE Revenue Department preferred the present appeal challenging the action of ITAT in allowing deduction u/s 54F though the assessee has purchased a residential flat within a period of one year from the date of transfer of original asset apart from new residential house at Padur and hence the assessee had not complied with the proviso (a)(ii) of Sec.54F(1).

On appeal, the HC held that,

Whether appeals having tax effect less than the monetary limit specified by the CBDT Circular, merits dismissal per se, without deciding case on merits – YES: HC

++ the Revenue’s counsel submits that the appeals are hit by low tax effect on account of the recent circular issued by the Board in Circular No.3/2018, dated July 11, 2018. Recording the said submission, the appeals are dismissed on the ground of low tax effect. Needless to state that if for any reason, it is found that the case is not covered by the circular, liberty is granted to the Revenue to seek for restoration of the appeals to be heard on merits and in such case, any application is filed before the Registry, the same should be listed before this Court along with the appeals without insisting for any petition for condonation of delay or for any other matters. Consequently, the substantial questions of law are left open.

Revenue’s appeal dismissed

JUDGEMENT

Per: T S Sivagnanam:

These appeals filed by the Revenue, under Section 260A of the Income-tax Act, 1961, are directed against the common order dated 22.02.2018 passed by the Income-tax Appellate Tribunal ‘B’ Bench, Chennai, in I.T.A.Nos.2258/Chny/2017 and 2313/Chny/2017 for the assessment year 2009-10.

2. The Revenue has raised the following substantial questions of law for our consideration:-

“i. Whether the Tribunal was right and justified in holding that the assessment reopened is bad in law though the assessee has failed to disclose the material facts truly and correctly during the course of scrutiny assessment proceedings?

ii. Whether the Tribunal was right and justified in allowing the deduction u/s 54F though the assessee has purchased a residential flat within a period of one year from the date of transfer of original asset apart from new residential house at Padur and hence the assessee has not complied with the proviso (a)(ii) of Sec.54F(1)?”

3. Heard Ms.S.Premalatha, learned Standing Counsel for the appellant/Revenue; and Ms.E.Malini, learned counsel for the respondent/Revenue, for M/s.Pass Associates.

4. The learned counsel appearing for the appellant/Revenue submits that the appeals are hit by low tax effect on account of the recent circular issued by the Board in Circular No.3/2018, dated 11.07.2018.

5. Recording the said submission, the appeals are dismissed on the ground of low tax effect.

6. Needless to state that if for any reason, it is found that the case is not covered by the circular, liberty is granted to the Revenue to seek for restoration of the appeals to be heard on merits and in such case, any application is filed before the Registry, the same should be listed before this Court along with the appeals without insisting for any petition for condonation of delay or for any other matters. Consequently, the substantial questions of law are left open. No costs. Consequently, the connected miscellaneous petition is closed.

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