Income Tax Officer, Ward-1, Shillong V. Golden Arrow Tours & Travels, Shillong

ITA 108/GTY/2012

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0498 (ITAT-GUWAHATI)
• Duration Of Justice: 6 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 31-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL GUWAHATI BENCH : GUWAHATI [BEFORE SHRI P.M.JAGTAP, AM & SHRI A. T. VARKEY, J M] SL. NO. ITA NO. & A.Y. (1) REVENUE/REP. BY (2) VS (3) ASSESSEE/PAN/REP. BY (AS PER POWER FILED) (4) 1. 108/GAU/2012 AY 2007-08 ITO-WARD-1, SHILLONG, AAYAKAR BHAWAN, M.G.ROAD, SHILLONG- 7903001, REP.BY SHRI SANDEEP SENGUPTA, JCIT GOLDEN ARROW TOURS & TRAVELS, POLICE BAZAR POINT, G.S.ROAD, SHILLONG-793001 PAN:AAEFG5096L REP.BY SHRI SANJAY MODY, FCA 2. C.O.05/GAU/2012 IN ITA 108/GAU/2012 AY 2007-08 GOLDEN ARROW TOURS & TRAVELS, POLICE BAZAR POINT, G.S.ROAD, SHILLONG-793001 PAN:AAEFG5096L REP.BY SHRI SANJAY MODY, FCA ITO-WARD-1, SHILLONG, AAYAKAR BHAWAN, M.G.ROAD, SHILLONG-7903001, REP.BY SHRI SANDEEP SENGUPTA, JCIT DATE OF HEARING: 16.08.2018 DATE OF PRONOUNCEMENT: 16.08.2018 ORDER PER BENCH: THIS APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARISE OUT OF THE ORDER OF THE LEARNED CIT(A), SHILLONG DATED 27.08.2012. 2. AT THE OUTSET ITSELF, THE LD. DR HAS BROUGHT TO OUR ATTENTION THE FACT THAT THE REVENUE HAS PREFERRED THIS APPEAL WHICH HAS TAX EFFECT OF LESS THAN RS. 20 LACS, THEREFORE, THE REVENUE DOES NOT INTEND TO PRESS THE APPEAL IN THE LIGHT OF THE CBDT CIRCULAR NO.3/2018 DATED 11.07.2018 WHEREIN CBDT HAS DIRECTED AS UNDER: 3 . HENCEFORTH, APPEALS/ SLPS SHALL NOT BE FILED I N CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER: SL. NO. APPEALS/SLPS IN INCOME-TAX MATTERS MONETARY LIMIT (IN RS) 1. BEFORE APPELLATE TRIBUNAL 20,00,000/- 2. BEFORE HIGH COURT 50,00,000/- 3. BEFORE SUPREME COURT 1,00,00,000/- IT IS CLARIFIED THAT AN APPEAL SHOULD NOT BE FILED MERELY BECAUSE THE TAX EFFECT IN A CASE EXCEEDS THE MONETARY LIMITS PRESCRIBED ABOVE. FILING OF APPEAL IN SUCH CASES IS TO BE DECIDED ON MERITS OF THE CASE. 4. FOR THIS PURPOSE, 'TAX EFFECT' MEANS THE DIFFERE NCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HAVE BEEN CHARGEABLE HAD SUC H TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF THE ISSUES AGAINST WHICH APPEA L 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 THER EON, EXCEPT WHERE CHARGEABILITY OF INTEREST ITSELF IS IN DISPUTE. IN CASE THE CHARGEABILITY OF INTERES T IS THE ISSUE UNDER DISPUTE, THE AMOUNT OF INTERES T SHALL BE THE TAX EFFECT. IN CASES WHERE RETURNED LO SS IS REDUCED OR ASSESSED AS INCOME, THE TAX EFFECT 2 2 WOULD INCLUDE NOTIONAL TAX ON DISPUTED ADDITIONS. I N CASE OF PENALTY ORDERS, THE TAX EFFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE O RDER TO BE APPEALED AGAINST. 3. IN PARA-13 OF THE SAID CIRCULAR IT HAS FURTHER BEEN CLARIFIED THAT THE REVISED MONETARY LIMITS WILL APPLY RETROSPECTIVELY. THE RELEVANT PARA-13 O F THE CIRCULAR READS THUS: 13. THIS CIRCULAR WILL APPLY TO SLPS/APPEALS/CROSS OBJECTIONS/REFERENCES TO BE FILED HENCEFORTH IN SC/HCS/TRIBUNAL AND IT SHALL ALSO APPLY RETROSPECTI VELY TO PENDING SLPS/APPEALS/CROSS OBJECTIONS/REFERENCES. PENDING APPEALS BELOW THE SP ECIFIED TAX LIMITS IN PARA 3 ABOVE MAY BE WITHDRAWN/NOT PRESSED. 4. IN THE PRESENT CASE, THE TAX EFFECT INVOLVED I N THE APPEAL OF THE REVENUE IS LESS THAN RS.20,00,000/-. THOUGH THIS APPEAL HAD BEEN FILED BY THE REVENUE ON 30.10.2012 AND WAS WITHIN THE MONETARY LIMIT IN THE FORM OF TAX EFFECT FOR FI LING APPEALS BEFORE TRIBUNAL, IN VIEW OF PARA-13 OF THE CIRCULAR OF CBDT, EVEN SUCH APPEAL WILL BE GOVE RNED BY THE NEW MONETARY LIMIT LAID DOWN IN THE CBDT CIRCULAR NO.3/2018 REFERRED TO ABOVE. 5. IT IS A SETTLED LAW THAT THE CIRCULARS ISSUED BY CBDT ARE BINDING ON THE REVENUE. THIS POSITION WAS CONFIRMED BY THE APEX COURT IN THE CA SE OF COMMISSIONER OF CUSTOMS VS INDIAN OIL CORPORATION LTD. REPORTED IN 267 ITR 272 WHEREIN TH EIR LORDSHIPS EXAMINED THE EARLIER DECISIONS OF THE APEX COURT WITH REGARD TO BINDING NATURE OF THE CIRCULAR AND LAID DOWN THAT WHEN A CIRCULAR ISSUED BY THE BOARD REMAINS IN OPERATION THEN THE R EVENUE IS BOUND BY IT AND CANNOT BE ALLOWED TO PLEAD THAT IT IS NOT VALID OR THAT IT IS CONTRARY T O THE TERMS OF THE STATUTE. 5.1. IN THE EVENT, THE REVENUE FINDS AT A LATER POI NT OF TIME THAT THE TAX EFFECT IN THE APPEAL IS MOR E THAN RS.20 LAKHS OR DESPITE LOW TAX EFFECT, THE APP EAL OF THE REVENUE IS MAINTAINABLE, THE REVENUE IS AT LIBERTY TO MOVE THIS TRIBUNAL FOR RECALLING OF THIS ORDER. 6. IN VIEW OF THE ABOVE, WE HOLD THAT THIS APPEAL F ILED BY THE DEPARTMENT AGAINST THE IMPUGNED ORDER OF THE LD. CIT(A), IS CONTRARY TO THE POLICY DECISION OF THE DEPARTMENT AND AS SUCH THE SAME IS LIABLE TO BE DISMISSED AS NOT MAINTAINABLE. 7. AS REGARDS THE CROSS OBJECTION FILED BY THE ASS ESSEE, IT IS OBSERVED THAT THE SOLITARY ISSUE INVOLVED THEREIN RELATES TO THE ADDITION OF RS.20,5 85/- MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) BY TREATING THE DEBIT BALANCE OF SUSPENSE AC COUNT AS UNEXPLAINED EXPENDITURE. IN THIS REGARD, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE AMOUNT IN QUESTION APPEARING AS SUSPENSE 3 3 ACCOUNT BALANCE DID NOT REPRESENT ANY EXPENDITURE C LAIMED BY THE ASSESSEE BUT REPRESENTED DEBIT BALANCE APPEARING UNDER THE HEAD DEPOSIT AND ADVA NCES IN THE BALANCE SHEET. HE HAS CONTENDED THAT THE SAME THEREFORE CANNOT BE ADDED AS UNEXPLAI NED EXPENDITURE. WE FIND MERIT IN THIS CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. THE AO IS ACCORDINGLY DIRECTED TO DELETE THIS ADDITION AFTER VERIFYING THE CLAIM OF THE ASSESSEE THAT THE AMOUNT IN QUESTION DID NOT REPRESENT ANY EXPENDITURE INCURRED BY THE ASSESSEE. CROSS OBJECT ION FILED BY THE ASSESSEE IS ACCORDINGLY TREATED AS ALLOWED. 8. IN THE RESULT, THE APPEAL BY THE REVENUE IS DI SMISSED WHILE THE CROSS OBJECTION FILED BY THE ASSESSEE IS TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH AUGUST, 2018. SD/- SD/- (A.T.VARKEY) (P.M.JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 16 TH AUGUST, 2018 RG. SR. P.S COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2 RESPONDENT 3. THE CIT(A), GUWAHATI 4. 5. CIT GUWAHATI DR, GUWAHATI BENCH, GUWAHATI /TRUE COPY, BY ORDER, SR.PRIVATE SECRETARY(ON TOUR) ITAT,GUWAHATI