Income Tax Assessment Order Challenged Over Rs.136 Crore Expenses: Madras HC disposes Petition Leaving to Contest before Appellate Authority [Read Order]

The Madras High Court disposed of the writ petition filed against the Income Tax Assessment order over addition of Rs.136 crores rejecting the total expenses. The court disposed of by leaving it open to the petitioner to present a statutory appeal.

The bench of Justice Senthilkumar Ramamoorthy stated that “In effect, on examining the impugned assessment order, it appears that the documents submitted by the petitioner were examined in detail and findings were recorded in relation thereto. The validity of these findings cannot be tested without re-appraising the evidence, and the appropriate forum for reappraisal is the appellate authority.”

The Petitioner, Sri Jaya Sakthi Edible Oils Pvt Ltd  had filed a return of income for assessment year 2023-24 declaring the total income of Rs.10,47,145/- and income of Rs.22,78,709/- under Section 115JB of the Income Tax Act, 1961.

After issuing notices under Section 142(1), a show cause notice was issued on 03.03.2024 proposing additions to the extent of Rs.136,75,78,691/-. The petitioner replied to such show cause notice and submitted documents in support of its contentions. The order impugned herein was issued in the said facts and circumstances

During the proceedings, the counsel of the petitioner invited the attention of the court to the replies filed by the petitioner upon receipt of notices under Section 142(1) of the Income Tax Act. With reference thereto, he pointed out that the petitioner filed multiple documents, including audited financial statements, GST returns, bank statements and the like to establish that the expenses booked by the petitioner in its accounts are genuine.

In spite of providing these documents, the counsel contended that the assessing officer disregarded such documents and concluded that the petitioner had not actually incurred expenses of Rs.136,75,78,691/-.

On such a basis, he submitted that the entire expenditure shown by the petitioner in its books of account were disallowed and added to the total taxable income of the petitioner. For such a reason, the impugned order calls for interference, stated the counsel.

Conversely, the senior standing counsel representing the department acknowledged the submissions made by the petitioner but pointed out discrepancies in certain transactions and the absence of supporting documentation. He contended that there is no infirmity in the order warranting interference under Article 226.

The High court noted that the petitioner's documents were meticulously reviewed, and findings were recorded accordingly. However, it concluded that the validity of these findings could only be evaluated through reappraisal, which falls under the jurisdiction of the appellate authority.

Thus, the court disposed of the writ petition, granting the petitioner the liberty to file a statutory appeal. Additionally, it directed the appellate authority to receive and adjudicate the appeal within fifteen days from the date of receiving a copy of the court's order.

Mr.G.Ashokapathy and Dr.B.Ramaswamy, Sr. SC appeared for the petitioner and respondents respectively.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates