Assistant Commissioner of Income-tax, V. Western India Forgings P. Ltd., Pune

ITA 1117/PUN/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2296 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 23-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHEERAJ KUMAR JAIN
• Keywords: Tax effect
• Section: 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1117/PN/2014 / ASSESSMENT YEAR : 2008-09 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 10, PUNE ....... / APPELLANT / V/S. WESTERN INDIA FORGINGS P. LTD. J-2, S BLOCK MIDC, TELCO RD. BHOSARI, PUNE - 411026 PAN NO.AAACW2628M / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI DHEERAJ KUMAR JAIN / DATE OF HEARING : 23-12-2015 / DATE OF PRONOUNCEMENT : 23-12-2015 / ORDER PER VIKAS AWASTHY, JM : THE APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORD ER OF COMMISSIONER OF INCOME TAX (APPEALS)-V, PUNE DATED 31-12- 2013 PASSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREIN AFT ER REFERRED TO AS THE ACT) FOR THE ASSESSMENT YEAR 2008-09. 2. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE S UBMITTED AT THE OUTSET THAT THE TAX EFFECT ON THE GROUNDS RAISED B Y THE REVENUE IN APPEAL IS LESS THAN RS.10 LAKHS. IN VIEW OF THE LATEST CBDT CIRCULAR 2 ITA NO. 1117/PN/2014, A.Y. 2008-09 NO.21/2015 DATED 10-12-2015 THE APPEAL OF THE REVENUE IS NOT MAINTAINABLE AND IS LIABLE TO BE DISMISSED. AS PER THE CIRCULAR , THE SAID LIMIT WOULD BE APPLICABLE NOT ONLY TO FUTURE TAX LITIGATION S BUT TO THE PENDING APPEALS ALSO WHERE THE TAX INVOLVED IN THE AP PEALS DOES NOT EXCEED RS.10 LAKHS. 3. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE FAIR LY ADMITTED TO THE SUBMISSIONS MADE BY THE LEARNED AUTHORIZ ED REPRESENTATIVE FOR THE ASSESSEE. 4. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF THE RIVAL SIDES AND PERUSED THE RECORDS. THE ISSUE ARISIN G IN THE PRESENT APPEAL IS IN RELATION TO THE PENALTY, WHEREIN THE TAX EFFECT IS LESS THAN RS.10 LAKHS. IN THIS BACKGROUND, WE HAVE TO CO NSIDER THE CIRCULAR NO.21/2015 DATED 10.12.2015 OF CBDT. THE CBDT VID E THE SAID CIRCULAR HAS ANNOUNCED THAT SUBJECT TO CERTAIN EXC EPTIONS, NO DEPARTMENTAL APPEAL WOULD BE FILED AGAINST THE RELIEF GIVEN BY THE CIT(A) BEFORE THE TRIBUNAL, WHERE THE TAX EFFECT EXCLUDING INT EREST DOES NOT EXCEED RS.10 LAKHS. THE SAID INSTRUCTIONS ARE A PPLICABLE NOT ONLY TO THE FUTURE APPEALS TO BE FILED BY THE REVENU E BUT EVEN TO THE PENDING APPEALS WHERE THE TAX EFFECT IN EACH OF THE APPEAL DOES NOT EXCEED RS.10 LAKHS. IN VIEW THEREOF, WHERE AN APPEAL IS PENDING BEFORE THE TRIBUNAL, IRRESPECTIVE OF THE YEAR TO WHICH IT R ELATES, THE SAID INSTRUCTIONS OF THE CBDT WOULD BE APPLICABLE AND THE A PPEALS OF THE REVENUE PENDING BEFORE THE TRIBUNAL WHERE THE TAX E FFECT IS LESS THAN RS.10 LAKHS WOULD NOT BE MAINTAINABLE. THE RELEVANT E XTRACT OF THE CBDT CIRCULAR READS AS UNDER:- 3. HENCEFORTH, APPEALS/SLPS SHALL NOT BE FILED IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN UNDER:- 3 ITA NO. 1117/PN/2014, A.Y. 2008-09 S NO APPEALS IN INCOME - TAX MATTERS MONETARY LIMIT (IN RS.) 1 BEFORE APPELLATE TRIBUNAL 10,00,000/ - 2 BEFORE HIGH COURT 20,00,000/ - 3 BEFORE SUPREME COURT 25,00,000/ - 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 B EEN CHARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESP ECT OF THE ISSUES AGAINST WHICH APPEAL IS INTENDED TO BE FILED (HEREINAFTER R EFERRED TO AS DISPUTED ISSUES). HOWEVER, THE TAX WILL NOT INCLUDE ANY INTEREST THER EON, EXCEPT WHERE CHARGEABILITY OF INTEREST ITSELF IS IN DISPUTE. IN CASE THE CHAR GEABILITY 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 PEN ALTY ORDERS, THE TAX EFFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE O RDER TO BE APPEALED AGAINST. 5. THE ASSESSING OFFICER SHALL CALCULATE THE TAX EF FECT SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUES I N THE CASE OF EVERY ASSESSMENT. IF, IN THE CASE OF AN ASSESSEE, THE DISPUTED ISSUES ARISE IN MORE THAN ONE ASSESSMENT YEAR, APPEAL, CAN BE FILED IN RESPECT OF SUCH ASSES SMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IN RESPECT OF THE DISPUTED ISSUES EXCEED S THE MONETARY LIMIT SPECIFIED IN PARA 3. NO APPEAL SHALL BE FILED IN RESPECT OF AN ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPEC IFIED IN PARA 3. IN OTHER WORDS, HENCEFORTH, APPEALS CAN BE FILED ONLY WITH REFERENC E TO THE TAX EFFECT IN THE RELEVANT ASSESSMENT YEAR. HOWEVER, IN CASE OF A CO MPOSITE ORDER OF ANY HIGH COURT OF APPELLATE AUTHORITY, WHICH INVOLVES MORE T HAN ONE ASSESSMENT YEAR AND COMMON ISSUES IN MORE THAN ONE ASSESSMENT YEAR, APP EAL SHALL BE FILED IN RESPECT OF ALL SUCH ASSESSMENT YEARS EVEN IF THE TAX EFFEC T IS LESS THAN THE PRESCRIBED MONETARY LIMITS IN ANY OF THE YEAR(S), IF IT IS DEC IDED TO FILE APPEAL IN RESPECT OF THE YEAR(S) IN WHICH TAX EFFECT EXCEEDS THE MONETARY LIMIT PRESCRIBED. IN CASE WHERE A COMPOSITE ORDER / JUDGMENT INVOLVES MORE THAN ONE ASSESSEE, EACH ASSESSEE SHALL BE DEALT WITH SEPARATELY. 5. THE CBDT HAS FURTHER CLARIFIED THAT IN CASE THE DISPUTE D ISSUE ARISES IN MORE THAN ONE ASSESSMENT YEAR, THEN THE APPE AL CAN BE FILED IN RESPECT OF SUCH ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IN RESPECT OF THE DISPUTED ISSUE EXCEEDS THE MONE TARY LIMIT SPECIFIED IN PARA 3 I.E. RS.10 LAKHS BEFORE THE TRIBUNAL. IT IS FURTHER DIRECTED THAT HENCEFORTH, THE APPEALS CAN BE FILED BY THE REVENUE ONLY WITH REFERENCE TO THE TAX EFFECT IN THE RELEVANT ASS ESSMENT YEAR. HOWEVER, IN CASE OF A COMPOSITE ORDER OF ANY HIGH COURT O R APPELLATE AUTHORITY, WHICH INVOLVES MORE THAN ONE ASSESSMENT YEAR AND COMMON ISSUES IN MORE THAN ONE ASSESSMENT YEAR, THEN A PPEAL SHALL 4 ITA NO. 1117/PN/2014, A.Y. 2008-09 BE FILED IN RESPECT OF SUCH ASSESSMENT YEAR, EVEN IF THE TA X EFFECT IS LESS THAN THE PRESCRIBED MONETARY LIMITS IN ANY OF THE YE AR(S), IF IT IS DECIDED TO FILE APPEAL IN RESPECT OF THE YEAR(S) IN WHICH TAX EFFECT EXCEEDS THE MONETARY LIMIT PRESCRIBED. WHERE A COMPOSITE ORDER / JUDGMENT INVOLVES MORE THAN ONE ASSESSEE, THEN EACH AS SESSEE SHALL BE DEALT WITH SEPARATELY. IT IS ALSO PROVIDED FURTHER VIDE PARAS 6 AND 7 THAT WHERE THE APPEAL BEFORE THE TRIBUNAL WAS NOT FILED ONLY ON ACCOUNT OF TAX EFFECT BEING LESS THAN SPECIFIED MONETARY LIM IT, THEN THE INCOME-TAX DEPARTMENT SHALL NOT BE PRECLUDED FROM FILIN G AN APPEAL AGAINST THE DISPUTED ISSUES IN THE CASE OF THE SAM E ASSESSEE FOR ANY OTHER ASSESSMENT YEAR, OR IN CASE OF ANY OTHER ASSESSEE FOR THE SAME OR ANY OTHER ASSESSMENT YEAR, IF THE TAX EFFEC T EXCEEDS THE SPECIFIED MONETARY LIMITS. THE CBDT HAS FURTHER VIDE PARA 8 HAS SPECIFIED THE ISSUE WHICH SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EFFECT ENTAILED IS LESS THAN THE MONETARY LIMITS SPECIFIED. FURTHER, THE SPECIFIED MONETARY LIMITS AS PER PARA 9 WOULD NOT APPLY TO WRIT MATTERS AND DIRECT TAX MATTER S OTHER THAN INCOME TAX AND ALSO IS NOT APPLICABLE TO THE APPEALS WERE TAX EFFECT IS NOT QUANTIFIABLE OR NOT INVOLVED, SUCH AS THE CASE OF REGIS TRATION OF TRUSTS OR INSTITUTIONS UNDER SECTION 12A OF THE ACT. IN SUCH CASES, THE DECISION TO FILE AN APPEAL IS TO BE TAKEN ON THE MERITS OF A PARTICULARS CASE. THE PARAS 6 TO 9 OF THE CIRCULAR READ AS UNDER:- 6. IN A CASE WHERE APPEAL BEFORE A TRIBUNAL OR A C OURT IS NOT FILED ONLY ON ACCOUNT OF THE TAX EFFECT BEING LESS THAN THE MONET ARY LIMIT SPECIFIED ABOVE, THE COMMISSIONER OF INCOME-TAX SHALL SPECIFICALLY RECOR D THAT EVEN THOUGH THE DECISION IS NOT ACCEPTABLE, APPEAL IS NOT BEING FIL ED ONLY ON THE CONSIDERATION THAT THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPEC IFIED IN THIS INSTRUCTION. IN SUCH CASES, THERE WILL BE NO PRESUMPTION THAT THE INCOME -TAX DEPARTMENT HAS ACQUIESCED IN THE DECISION ON THE DISPUTED ISSUES. THE INCOME-TAX DEPARTMENT SHALL NOT BE PRECLUDED FROM FILING AN APPEAL AGAINS T THE DISPUTED ISSUES IN THE CASE OF THE SAME ASSESSEE FOR ANY OTHER ASSESSMENT YEAR, OR IN THE CASE OF ANY OTHER ASSESSEE FOR THE SAME OR ANY OTHER ASSESSMENT YEAR, IF THE TAX EFFECT EXCEEDS THE SPECIFIED MONETARY LIMITS. 7. IN THE PAST, A NUMBER OF INSTANCES HAVE COME TO THE NOTICE OF THE BOARD, WHEREBY AN ASSESSEE HAS CLAIMED RELIEF FROM THE TRI BUNAL OR THE COURT ONLY ON THE GROUND THAT THE DEPARTMENT HAS IMPLICITLY ACCEPTED THE DECISION OF THE TRIBUNAL 5 ITA NO. 1117/PN/2014, A.Y. 2008-09 OR COURT IN THE CASE OF THE ASSESSEE FOR ANY OTHER ASSESSMENT YEAR OR IN THE CASE OF ANY OTHER ASSESSEE FOR THE SAME OR ANY OTHER ASSESS MENT YEAR, BY NOT FILING AN APPEAL ON THE SAME DISPUTED ISSUES. THE DEPARTMENT AL REPRESENTATIVES/COUNSELS MUST MAKE EVERY EFFORT TO BRING TO THE NOTICE OF TH E TRIBUNAL OR THE COURT THAT THE APPEAL IN SUCH CASES WAS NOT FILED OR NOT ADMITTED ONLY FOR THE REASON OF THE TAX EFFECT BEING LESS THAN THE SPECIFIED MONETARY LIMIT AND, THEREFORE, NO INFERENCE SHOULD BE DRAWN THAT THE DECISIONS RENDERED THEREIN WERE ACCEPTABLE TO THE DEPARTMENT. ACCORDINGLY, THEY SHOULD IMPRESS UPON THE TRIBUNAL OR THE COURT THAT SUCH CASES DO NOT HAVE ANY PRECEDENT VALUE. A S THE EVIDENCE OF NOT FILING APPEAL DUE TO THIS INSTRUCTION MAY HAVE TO BE PRODU CED IN COURTS, THE JUDICIAL FOLDERS IN THE OFFICE OF CIT MUST BE MAINTAINED IN A SYSTEMIC MANNER FOR EASY RETRIEVAL. 8. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING ISSU ES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EFFECT ENTAILED IS LESS THAN THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE OR THERE IS NO TAX EFFECT: (A) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVISIONS OF AN ACT OR RULE ARE UNDER CHALLENGE, OR (B) WHERE BOARDS ORDER, NOTIFICATION, INSTRUCTION OR C IRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES, OR (C) WHERE REVENUE AUDIT OBJECT IN THE CASE HAS BEEN ACC EPTED BY THE DEPARTMENT, OR (D) WHERE THE ADDITION RELATES TO UNDISCLOSED FOREIGN A SSETS / BANK ACCOUNTS. 9. THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE SH ALL NOT APPLY TO WRIT MATTERS AND DIRECT TAX MATTERS OTHER THAN INCOME TA X. FILING OF APPEALS IN OTHER DIRECT TAX MATTERS SHALL CONTINUE TO BE GOVERNED BY RELEVANT PROVISIONS OF STATUTE & RULES. FURTHER, FILING OF APPEAL IN CASES OF INC OME TAX, WHERE THE TAX EFFECT IS NOT QUANTIFIABLE OR NOT INVOLVED, SUCH AS THE CASE OF REGISTRATION OF TRUSTS OR INSTITUTIONS UNDER SECTION 12A OF THE IT ACT, 1961, SHALL NOT BE GOVERNED BY THE LIMITS SPECIFIED IN PARA 3 ABOVE AND DECISION TO FI LE APPEAL IN SUCH CASES MAY BE TAKEN ON MERITS OF A PARTICULAR CASE. 6. THE RETROSPECTIVE OPERATION OF THE INSTRUCTIONS TO PE NDING APPEALS IS PROVIDED IN PARA 10 OF THE CIRCULAR, WHICH READS AS UNDER:- 10. THIS INSTRUCTION WILL APPLY RETROSPECTIVELY TO PENDING APPEALS AND APPEALS TO BE FILED HENCEFORTH IN HIGH COURTS / TRIBUNALS. PENDING APPEALS BELOW THE SPECIFIED TAX LIMITS IN PARA 3 ABOVE MAY BE WITHDRA WN / NOT PRESSED. APPEALS BEFORE THE SUPREME COURT WILL BE GOVERNED BY THE IN STRUCTIONS ON THIS SUBJECT, OPERATIVE AT THE TIME WHEN SUCH APPEAL WAS FILED. IN VIEW OF THE ABOVE SAID INSTRUCTIONS, WHERE THE TAX EFFEC T IS LESS THAN RS.10 LAKHS, THE APPEALS OF THE REVENUE PENDIN G BEFORE THE TRIBUNAL ARE EITHER NOT TO BE PRESSED OR TO BE WITHDRAW N BY THE REVENUE AUTHORITIES. 7. IN THE INSTANT APPEAL FILED BY THE REVENUE UNDISPUTEDL Y THE TAX EFFECT IS LESS THAN RS.10 LAKHS. THEREFORE, IN VIEW OF THE INST RUCTIONS OF CBDT AND THE ENTIRETY OF FACTS, WE DISMISS THE APPEAL OF REVENUE AS NOT MAINTAINABLE. 6 ITA NO. 1117/PN/2014, A.Y. 2008-09 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AFTER THE HEARING OF APPEAL. SD/- SD/- (R.K. PANDA) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; / DATED : DECEMBER 23, 2015 SATISH # $&' (' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. # () / THE CIT(A), AURANGABAD 4. # / THE CIT, AURANGABAD 5. & ))* , * , - , / DR, ITAT, A BENCH, PUNE. 6. 0 / GUARD FILE. / BY ORDER , // TRUE COPY // & ) //TRUE COPY// 34 ) * / SR. PRIVATE SECRETARY * , / ITAT, PUNE