DCIT CIRCLE -2(1)(1) , AGRA V. M/S CHITAVALASHA JUTE MILLS LTD, AGRA

MA 25/AGR/2020

AI Insights

The case involves the Deputy Commissioner of Income Tax, Circle-2(1)(1), Agra, as the appellant, and M/s Chitavalash Jute Mills Ltd. as the respondent. The core issue arose from the dismissal of the Department's appeal by the Tribunal due to a perceived low tax effect, which was later contested by the Department through a Miscellaneous Application. The Department argued that the notional tax effect was significantly higher than initially considered, amounting to Rs.3,77,72,793/-, which warranted a recall of the Tribunal's earlier order. The Tribunal, upon reviewing the submissions and the relevant CBDT Circular, agreed with the Department's assessment and recalled the earlier order, allowing the appeal to proceed.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 779452 (ITAT-AGRA)
• Duration Of Justice: 5 year(s) 7 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 15-10-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 26-02-2020
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR
• Keywords: Depreciation; Tax effect
• Section: 144; 143(3)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, DB: AGRA (Through Physical / Virtual Hearing) BEFORE SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER AND SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER M.A. No.25/Agr/2020 Arising Out of ITA No.409/Agr/2018 [Assessment Year: 2012-13] Dy. Commissioner of Income Tax, Circle-2(1)(1), Agra, U.P. VS M/s Chitavalash Jute Mills Ltd. B-623, Kamla Nagar, Agra PAN-AACCC6834D Revenue Assessee Revenue by Shri Anil Kumar, Sr. DR Assessee by None Date of Hearing 18.07.2025 Date of Pronouncement 15.10.2025 ORDER PER BRAJESH KUMAR SINGH, AM: This Miscellaneous Application (hereinafter referred to as the ‘MA’) has been filed by the Revenue against the order dated 18.08.2018 in ITA No.409/Agr/2018. Printed from counselvise.com MA No.- 25/Agr/2020 M/s Chitavalasha Jute Mills Ltd. 2 2. None appeared on behalf of the assessee. However, this Miscellaneous Application is being decided after hearing the ld. Sr. DR and on the basis of material available on record. 3. The appeal of the Department was dismissed by the Tribunal on account of low tax effect. In the Miscellaneous Application filed by the Department, it is stated that the notional tax effect in this case was Rs.3,77,72,793/- and therefore the dismissal of the Departmental appeal on account of low tax effect was mistake apparent from record and requested to recall the order by restoring the appeal of the Department. 4. The assessment order in this case was passed u/s 144 r.w.s. 143(3) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) on 25.02.2015. The assessee had filed its return of income declaring Nil and the net loss as shown in the return was Rs. 14,21,27,985/-. The Department made various disallowance of Rs. 13,70,58,441/- and the total taxable income was determined at a loss of Rs.50,69,554/-. The computation of income as made in the assessment order is reproduced as under: - 2.4. Accordingly, income of the assessee is computed as under:- Printed from counselvise.com MA No.- 25/Agr/2020 M/s Chitavalasha Jute Mills Ltd. 3 Net profit shown in return (-)14,21,27,985 Addition: Disallowance of Sundry Creditors @40% due to non verification of same 11,90,27,242 Disallowance of interest due to non verification 99,69,661 Disallowance of depreciation on account of non verification 67,84,622 Disallowance of other expenses for want of verification 12,76,916 5. Aggrieved with the said order, the assessee filed an appeal before the ld. CIT(A), wherein, the ld. CIT(A) sustained the addition to the extent of Rs.49,72,098/- out of the total disallowance of sundry creditors of Rs.11,90,27,242/-. The ld. CIT(A) further deleted the disallowance of depreciation amounting to Rs.67,84,862/- and sustained the disallowance of interest expenses of Rs. 99,69,661/- along with disallowance of other expenses amounting to Rs.12,76,916/-. 6. Aggrieved with the said order, the Department filed appeal before the Tribunal, wherein challenged the deletion to the extent of Rs. 11,40,55,144/- (Rs. 11,90,27,242/- Rs. 49,72,098/-), out of the sundry creditors disallowance of Rs.11,90,27,242/-. The Printed from counselvise.com MA No.- 25/Agr/2020 M/s Chitavalasha Jute Mills Ltd. 4 Departmental grounds of appeal before the Tribunal is reproduced as under: - 1. That the Learned. CIT(A), has erred in law and on facts in restricting the addition to the extent of Rs. 49,72,098/- as against Rs. 11,90,27,242/- made by the AO on account of sundry creditors without appreciating the fact that the assessee has failed to furnish any evidences regarding genuineness of creditors (both fresh and carried over) during the assessment proceedings as well as appellate proceedings. 2. That the order of Ld. Commissioner of Income Tax (Appeals) being erroneous in law and on facts deserves to be quashed and that of the Assessing Officer deserves to be restored. 7. The Ld. DR supported the Miscellaneous Application of the Department and referred to para-5.1 of the CBDT Circular No.5/2024, dated 15th March, 2024. The relevant paragraph is reproduced hereunder: - “For this purpose, 'tax effect' means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issues against which appeal is intended to be filed (hereinafter referred to as 'disputed issues'). Further, 'tax effect' shall be tax including applicable surcharge and cess. However, the tax will not include any interest thereon, except where chargeability of interest itself is in dispute. In case the chargeability of interest is the issue under dispute, the amount of interest shall be the tax effect. In cases where returned loss is reduced or assessed as income, the tax effect would include notional tax on disputed additions. In case of penalty orders, the tax effect Printed from counselvise.com MA No.- 25/Agr/2020 M/s Chitavalasha Jute Mills Ltd. 5 will mean quantum of penalty deleted or reduced in the order to be appealed against.” 8. Based on the above para, the ld. DR submitted that in case, where the returned loss is reduced, the tax effect would be notional tax on disputed additions. The Ld. DR further submitted that in this case, the deleted / disputed disallowance was Rs. 11,40,55,144/- on account of sundry creditors subject matter of the appeal filed by Revenue before the Tribunal, on which the tax effect stated by the Department in its MA is Rs.3,77,72,793/- (notional), which is more than Rs.60 lakhs above the mandatory limit fixed for maintainability of appeal filed by the Department before the Tribunal as per the CBDT Circular No. 5/2024 dated 15.03.2024. It was therefore submitted that the appeal filed by the Department before the Tribunal vide ITA No.409/Agr/2018 for AY 2012-13 was maintainable, and was wrongly dismissed by the Tribunal on low tax effect of or less than Rs. 50 lakhs. 9. We have considered the facts stated in the M.A. and heard the Ld. Sr. DR and perused the materials available on record. It is an undisputed fact that in this case, the AO made a disallowance of Rs.11,90,27,242/- on account of sundry creditors. Further, in view Printed from counselvise.com MA No.- 25/Agr/2020 M/s Chitavalasha Jute Mills Ltd. 6 of this disallowance loss of Rs.14,21,27,985/- would have been reduced by an amount of Rs.11,40,55,144/- [after factoring in the confirmation of Rs. 49,72,098/- and deletion of Rs. 11,40,45,144/- by the Ld. CIT(A)] on which the tax effect would be potential tax effect on the disputed disallowance of Rs.11,40,55,144/- which will be more than Rs.60 lakhs. Therefore, we are of the considered view that there was a mistake apparent from record in the order dated 19.08.2019 of the Tribunal in ITA No.409/Agr/2018 for AY 2012-13 by considering the tax effect to be less than Rs.50 lakhs in the said appeal, whereas the tax effect in present appeal is more than Rs.60 lakhs. We, therefore, recall the order dated 19.08.2019 of the Tribunal in ITA No.409/Agr/2018 and direct the Registry to fix this appeal in the regular course of hearing. 10. In the result, the Miscellaneous Application of the Department is allowed. Order pronounced in the open court on 15th October, 2025. Sd/- Sd/- [SUNIL KUMAR SINGH] [BRAJESH KUMAR SINGH] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 15 .10.2025. Shekhar Printed from counselvise.com MA No.- 25/Agr/2020 M/s Chitavalasha Jute Mills Ltd. 7 Copy forwarded to: 1. Assessee 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, Agra, Printed from counselvise.com "