Punjab & Haryana HC Dismisses 23 Years Old Income Tax Appeals Due to Inactive Prosecution & Low Tax Effect [Read Order]
Punjab & Haryana High Court dismisses decades-old income tax appeals, observing tax effect was below Rs. 2 crore and the prosecution was inactive.
Punjab & Haryana HC - Income Tax Appeals- Inactive Prosecution-Low Tax Effect - taxscan
Punjab & Haryana HC - Income Tax Appeals- Inactive Prosecution-Low Tax Effect - taxscan
In a recent judgment, the Punjab and Haryana High Court dismissed a 23 years old income tax appeals, observing that the tax effect in the case was below Rs. 2 crore and the prosecution initiated against the company was inactive.
The appeals, pending since 2002, arose from the assessment years 1983-84, 1984-85, and 1985-86. The Revenue challenged the Income Tax Appellate Tribunal’s order which had allowed investment allowance under Section 32A of the Income Tax Act, 1961, in favour of the assessee company.
The revenue submitted that the assessee had wrongly claimed investment allowance on dumpers and other machinery which were not used by it for its own business but hired out to its sister concern, G.S. Attwal & Co., which in turn did not utilize them for mining operations.
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During the hearing, the Division Bench of Justice Jagmohan Bansal and Justice Harpreet Kaur Jeewan referred to CBDT Circular No. 5/2024 dated 15 March 2024, which fixes a monetary limit of Rs. 2 crore for filing appeals before High Courts.
The court observed that the total tax effect in all four appeals was much below this threshold. The department’s counsel argued that since prosecution had been launched against the assessee, the case fell under an exception to the circular.
The court explained that the prosecution before the Chief Judicial Magistrate, Jagadhri, was not proceeding and appeared to have been adjourned indefinitely. It also pointed out that despite multiple opportunities, the department failed to serve notice to the respondents.
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The court observed that as the tax effect was low, the prosecution inactive, and the appeals pending for over two decades without progress, continuing the litigation would serve no practical purpose.
The court dismissed all four appeals but granted liberty to the Department to file an appropriate application within six months if a valid cause survives.
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