PCIT Vs Electrical And Electronic India Ltd. (Delhi High Court)
The Delhi High Court, in PCIT Vs Electrical And Electronic India Ltd., declined to interfere with the Income Tax Appellate Tribunal’s decision concerning a protective addition of Rs.4,05,00,000 made under Section 69 of the Income Tax Act, 1961. The Court held that no substantial question of law arose for consideration, particularly because the corresponding substantive additions made in the hands of the JP Minda Group of companies had already been deleted on merits by a coordinate Bench of the High Court.
The dispute arose for Assessment Year 2010-11. The Revenue challenged the Tribunal’s order dated 18 April 2023, which had examined the CIT(A)’s order dated 13 November 2017 concerning Assessment Years 2010-11 to 2012-13. The underlying controversy related to alleged unexplained investments aggregating Rs.4.05 crore in the JP Minda Group of companies. The Assessing Officer had made the addition in the assessee’s hands only on a protective basis, while the substantive addition was made in the hands of the JP Minda Group.
Considering that the substantive additions had already been deleted and that the addition in the respondent-assessee’s hands was only protective, the High Court found no substantial question of law warranting consideration. Accordingly, the Revenue’s appeal was closed. The decision highlights the significance of the fate of the substantive assessment when examining a related protective addition, in the particular circumstances recorded by the Court.
Cases Discussed
- Pr. Commissioner of Income Tax (Central)-2 Vs M/s JPM Tools Ltd., ITA 358/2022 (Delhi High Court), judgment dated 26.09.2023 — Coordinate Bench decision deleting the substantive additions made in the JP Minda Group on merits.
- Pr. Commissioner of Income Tax (Central)-2 Vs Jay FE Cylinder Ltd., ITA 360/2022 (Delhi High Court), covered by judgment dated 26.09.2023 — Connected appeal concerning the substantive additions.
- Commissioner of Income Tax Vs Kabul Chawla, (2016) 380 ITR 573 (Delhi High Court) — Legal authority forming the basis of the coordinate Bench’s decision concerning the substantive additions.
- Principal Commissioner of Income Tax Vs Abhisar Buildwell, 2023 SCC OnLine SC 481 (Supreme Court) — Cited as affirming the legal position laid down in Kabul Chawla.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. This appeal concerns Assessment Year (AY) 2010-11. Via the instant appeal, the appellant/revenue seeks to assail the order dated 18.04.2023 passed by the Income Tax Appellate Tribunal [in short, “Tribunal”].
2. The Tribunal was called upon to examine the sustainability of the order dated 13.11.2017 passed by the Commissioner of Income Tax (Appeals) [in short, “CIT(A)”] concerning AYs 2010-11 to 2012-13.
3. On merits, the issue that was raised before the Tribunal was whether the CIT(A) had erred on facts and in law in deleting the addition made under Section 69 of the Income Tax Act, 1961 [in short, “Act”], unexplained investments made by the appellant/respondent in the JP Minda Group of companies.
3.1 To be noted, the aggregate amount invested was Rs.4,05,00,000/ -. Significantly, the addition in the hands of respondent/assessee was made on a protective basis. The substantive addition had been made in the hands of the JP Minda Group.
4. It is not disputed that insofar as the JP Minda Group is concerned, a challenge was laid before a coordinate bench which was the subject matter of the judgment dated 26.09.2023, concerning a bunch of appeals; the lead appeal being IT A 358/2022, titled Pr. Commissioner of Income Tax (Central)– 2 vs. M/s JPM Tools Ltd.
4.1 In particular, this judgment also covered ITA 360/2022, titled Pr. Commissioner of Income Tax (Central)– 2 vs. Jay FE Cylinder Ltd.
5. The sum and substance of the judgment dated 26.09.2023 passed by a coordinate bench was that the substantive addition made in the hands of the JP Minda Group was dropped, albeit, on merits.
6. Mr Sanjay Kumar, learned senior standing counsel, who appears on behalf of the appellant/revenue, correctly points out that the addition was dropped on the basis of a judgment passed by a coordinate Bench of this court inCommissioner of Income Tax vs. Kabul Chawla, (2016) 380 ITR 573. 6.1 To be noted, the said judgment has been affirmed by the Supreme Court in Principal Commissioner of Income Tax vs. Abhisar BuildwellSCC OnLine SC 481.
7. The Tribunal dismissed the appeal preferred by the appellant/revenue, dropped. As indicated above, the addition in the hands of the respondent/assessee was only made on a protective basis.
8. In these circumstances, we are of the view that no substantial question of law arises for consideration by this court. The appeal is, accordingly, closed.
