HC Dismisses Revenue Appeal; As no Question of Law Arising from Tribunal’s Order

PCIT Vs Zulu Merchandise Pvt Ltd (Calcutta High Court)

The Calcutta High Court dismissed the Income Tax Department’s appeal in the case of PCIT vs. Zulu Merchandise Pvt Ltd, addressing the challenge against an ITAT order. The appeal, which faced a 138-day delay, was allowed for consideration of the delay. The main issue was whether the ITAT correctly removed a Rs. 10,51,200 addition for bogus losses on share sales, arguing that the assessee had not proven shareholder identities, creditworthiness, or transaction genuineness. However, the Court found that the ITAT’s decision was based on the limitation issue alone, which was the sole focus of the Tribunal’s review. Consequently, the High Court concluded that the substantial legal questions raised by the revenue did not arise from the Tribunal’s order. As a result, the appeal was dismissed.

FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT

The Court:- We have heard learned Advocates on either side.

There is a delay of 138 days in filing the appeal. As we are satisfied with the reasons given, the delay in filing the appeal is condoned. GA/ 1/2024 is allowed.

This appeal by the Income Tax Department filed under Section 260A of the Income Tax Act, 1961 (the Act) is directed against the order dated July 11, 2023 passed by the Income Tax Appellate Tribunal, “C” Bench, Kolkata in ITA/380/KOL/2023 for the assessment year 2012-2013.

The revenue has raised the following substantial questions of law for consideration:

a. Whether on the facts and circumstances of the case, Hon’ble ITAT justified in law in deleting the addition of Rs. 10,51,200/- on the issue of bogus loss on sale of shares, without considering the fact that the assessee failed to prove the identity of the alleged shareholders, their creditworthiness and also the genuineness of the whole transactions ?

b. Whether on the facts and circumstances of the case, Hon’ble ITAT justified in law in coming to the conclusion that the assessee had discharged the initial onus which lay upon him in terms of the IT Act, 1961 ?

The learned advocate for the respondent has raised a preliminary objection to the maintainability of this appeal on the question of law suggested by the revenue. It is seen that the respondent/assessee succeeded before the Tribunal on the question of limitation and this was the sole issue which was considered by the learned Tribunal. In such circumstances, the question of law suggested by the revenue in this appeal do not arise out of the order passed by the learned Tribunal. Therefore, we hold that the appeal cannot be entertained on the question of law as suggested by the revenue.

Hence, the appeal stands dismissed.