IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER I.T.A. NO. 1089/PN/09 (ASSTT. YEARS: 2006-07) ASSTT. COMMISSIONER OF INCOME-TAX, .. APPELLANT CIR.2, NASHIK VS. MRS INDERJEETKAUR HARPALSINGH SAHANI, .. RESPONDENT PROP. PRECISION FORGING & STAMPING, MAHATMA NAGAR, NASHIK PAN AGEPB8073A APPELLANT BY: SHRI T CHACKO MANI RESPONDENT BY: SHRI NIKHIL PATHAK ORDER PER G.S. PANNU, AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, NASHIK DATED 17.6.2009 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 28.12.2008 PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3 ) OF THE INCOME- TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO T HE ASSESSMENT YEAR 2006-07. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE IN T HIS APPEAL READ AS FOLLOWS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, CIT (A) ERRED IN DELETING ADDITION MADE OF RS 4,15,890/- U/S 40(2)(B), WITH R EMARK THAT THE AO HAS MADE ADDITION WITHOUT ANY BASIS OR POINTING OUT OR BRING ON RECORDS ANY EVIDENCE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN ALLOWING SALES COMMISSION AND SALARY PAID TO SHRI INDERPALSI NG SAHANI FOR RS 5,86,233/- WHICH WAS DISALLOWED BY THE AO U/S 40(2)(B). 2. AT THE TIME OF HEARING, THE LEARNED REPRESENTATI VE FOR THE RESPONDENT- ASSESSEE RAISED A PRELIMINARY OBJECTION BY POINTING OUT INSTRUCTION NO. 3/2011 DATED 09.02.2011 ISSUED BY THE CENTRAL BOARD OF DIR ECT TAXES (CBDT) FIXING THE MONETARY LIMITS FOR FILING OF DEPARTMENTAL APPEALS BEFORE THE TRIBUNAL. IN TERMS OF 2 THE SAID INSTRUCTION, MONETARY LIMIT FOR FILING DEP ARTMENTAL APPEAL TO THE TRIBUNAL HAS BEEN FIXED AT RS 3 LAKHS. IN OTHER WORDS, IN CA SES WHERE THE TAX EFFECT OF THE ADDITIONS DELETED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) IS LESS THAN RS 3 LAKHS, NO APPEAL SHALL BE FILED BY THE DEPARTMENT I N SUCH CASES. ACCORDING TO THE LEARNED REPRESENTATIVE, THE TAX EFFECT WITH RESPECT TO THE RELIEF ALLOWED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) IN THE CAPTION ED APPEAL FOR THE YEAR UNDER CONSIDERATION IS BELOW RS 3 LAKHS. SUCH FACTU AL MATRIX HAS NOT BEEN CONTESTED BY THE LEARNED DEPARTMENTAL REPRESENTATIV E FOR THE REVENUE. 3. THE LEARNED REPRESENTATIVE FOR THE RESPONDENT-AS SESSEE FURTHER RELIED UPON A RECENT DECISION OF THE MUMBAI BENCH OF THE T RIBUNAL IN THE CASE OF ITO V SHRI ASHOK G. DHANDHARIAI, MUMBAI IN ITA NO2460/MUM /2010 DATED 28.2.2011 TO CANVASS THAT THE REVISED INSTRUCTIONS DATED 9.2. 2011 (SUPRA) ARE APPLICABLE TO THE PRESENT CASE ALSO, ALTHOUGH SUCH APPEAL HAS BEE N FILED ON A PRIOR DATE. 4. IN VIEW OF THE PRECEDENT BROUGHT OUT BY THE LEAR NED REPRESENTATIVE FOR THE RESPONDENT, FACTUALLY THE CAPTIONED DEPARTMENTAL AP PEAL IS LIABLE TO BE CONSIDERED TO HAVE BEEN FILED CONTRARY TO THE CBDT INSTRUCTIONS DATED 9.2.2011 (SUPRA). THE TRIBUNAL FOLLOWING THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V MADHUKAR K. INAMDAR (HUF) 318 ITR 149 AND CIT V PITHWA ENGINEERING WORKS 276 ITR 519 (BOM) FOUND IT APPROP RIATE TO DISMISS THE DEPARTMENTAL APPEAL ON THE GROUND THAT TAX EFFECT I S LESS THAN RS 3 LAKHS, EVEN IN A CASE WHERE THE DEPARTMENTAL APPEAL WAS FILED PRIO R TO THE DATE OF THE CBDT INSTRUCTION DATED 9.2.2011 (SUPRA). THE FOLLOWING D ISCUSSION IN THE ORDER IS WORTHY OF NOTICE: 5. WE HEARD BOTH THE PARTIES. THE CASE OF CIT VS. CHHAJER PACKAGING & PLASTICS PVT. LTD. 300 ITR RELIED ON BY THE DR IS DISTINGUIS HABLE FROM THE FACTS OF THE PRESENT CASE. AT PARA 12 PAGE 184 OF THE DECISION IN THE CA SE OF CHHAJER PACKAGING & PLASTICS PVT. LTD. IT HAS BEEN HELD AS FOLLOWS: OTHERWISE ALSO, PARAGRAPH OF THIS CIRCULAR ITSELF SAVES CERTAIN APPEALS FROM BEING OBSTRUCTED DUE TO FINANCIAL LIMITS. PARAGRAPH 3 REA DS: THE BOARD HAS ALSO DECIDED THAT IN CASES INVOLVING SUBSTANTIAL QUESTION OF LAW OF IMPORTANCE AS WELL AS IN CASES WHERE THE SAME QUESTION OF LAW WILL REPEATEDLY ARISE, EITHER IN THE CASE CONCERNED OR IN SIMILAR CASES, SHOULD BE SEPARATELY CONSIDERED ON THE MERITS WITHO UT BEING HINDERED BY THE MONETARY LIMITS. IT IS EVIDENT THAT, WHENEVER THERE IS A SUBSTANTIAL QUESTION OF LAW, OR QUESTION OF LAW WHICH IS LIKELY TO RECUR IN FUTURE, THE DEPARTM ENT IS NOT PROHIBITED FROM FILING AND PURSUING APPEALS. WE BELIEVE THAT THE SAVING CL AUSE SAVES THE PRESENT 3 APPEAL SINCE IT INVOLVES A QUESTION OF LAW REGARDIN G INTERPRETATION OF SECTION 275(1)(C) OF THE ACT, AND MORE PARTICULARLY THE ASP ECT OF MANNER IN WHICH THE LIMITATION SHOULD BE COMPUTED IN THE LIGHT OF THE S AID PROVISIONS. WE HAVE, THEREFORE, PROCEEDED TO HEAR THE ADVOCATES ON THE M ERITS. IN OUR OPINION, THE CASE OF CIT V CHHAJER WAS WITH RESPECT OF INTERPRETATION OF 275(1)(C) OF THE ACT AND HENCE CAME UNDER THE EXCEP TION CLAUSE UNDER THE CBDT CIRCULAR AND WAS NOT OBSTRUCTED BY THE MONETARY LIM IT OF RS 3 LAKHS PRESCRIBED BY THE CIRCULAR. THEREFORE THE CASE OF 300 ITR 180 IS INAPPLICABLE TO THE FACTS OF OUR CASE. FURTHER INSTRUCTION NO. 5 DT. 15.5.2008 FIXIN G THE MONETARY LIMIT AT RS 2 LAKHS IS SIMILAR TO THAT OF INSTRUCTION NO. 3 DATED 9.2.2011 WHICH THE ASSESSEE HAS BROUGHT TO OUR NOTICE IN SUPPORT OF HIS CONTENT ION. SINCE BOTH THE INSTRUCTION NOS. 5 & 3 ARE IDENTICAL, THE RATIO OF THE DECISION IN THE CASE OF CIT V PITHWA ENGG. WORK WHICH DEALS WITH INSTRUCTION NO. 5 DT. 1 5.5.2008 SHALL EQUALLY APPLY TO THE PRESENT CASE WHICH FALLS UNDER LNSTRUCTION N O. 3 DATED 9.2.2011. FOLLOWING THE RATIO OF THE DECISION IN THE CASE OF CIT V PITH WA ENGG. WORK WHEREIN IT HAS BEEN HELD THAT IN OUR VIEW, THE BOARDS CIRCULAR D T. 27 TH MARCH, 2000 IS VERY MUCH APPLICABLE EVEN TO THE OLD REFERENCES WHICH ARE STI LL UNDECIDED, WE DISMISS THE DEPARTMENTAL APPEAL ON THE GROUND THAT THE TAX EFFE CT IS LESS THAN 3 LAKHS. 5. FOLLOWING THE AFORESAID PRECEDENT, THE CAPTIONED APPEAL FILED BY THE REVENUE IS LIABLE TO BE DISMISSED IN VIEW OF CBDT I NSTRUCTION NO. 3 DATED 9.2.2011 (SUPRA) AS THE TAX EFFECT WITH RESPECT TO THE QUANTUM OF RELIEF ALLOWED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) IN THE YEA R UNDER APPEAL IS BELOW RS 3 LAKHS AND IT HAS NOT BEEN SHOWN THAT THE APPEAL F ALLS UNDER ANY OF THE EXCEPTIONS PROVIDED IN PARA 8 OF THE CBDT INSTRUCTI ON (SUPRA). WE ORDER ACCORDINGLY. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON THIS 11 TH DAY OF MAY, 2011. SD/- SD/- (SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER PUNE: DATED: 11 TH MAY, 2011 B COPY OF THE ORDER IS FORWARDED TO : 1. MRS INDERJEETKAUR H SAHANI, NASHIK 2. THE ACIT CIR.2, NASHIK 3. THE CIT(A)-II, NASHIK 4. THE CIT-I, NASHIK 5. THE D.R, A BENCH, PUNE 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE 4