Deputy commissioner of Income Tax, Circle-7(1)(1), Bangalore V. M/s. The Hutti Gold Mines Company Ltd, Bangalore

ITA 1340/BANG/2017

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 4081 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 12-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS NEERA MALHOTRA
• Keywords: Tax effect; Benefit of exemption

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI A.K. GARODIA , ACCOUNTANT MEMBER I TA NO S . 1338 & 1340/BANG/2017 ASSESSMENT YEAR : 2009 - 10 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 7(1)(1), BANGALORE. VS. M/S. THE HUTTI GOLD MINES COMPANY LTD., 3 RD FLOOR, KHB SHOPPING COMPLEX NATIONAL GAMES VILLAGE, KORAMANGALA, BANGALORE 560 047. PAN: AABCT 4338C APPELLANT RESPONDENT APPELLANT BY : MS. NEERA MALHOTRA, CIT(DR)(ITAT) , BENGALURU. RE SPONDENT BY : SHRI RAVISHANKAR, ADVOCATE DATE OF HEARING : 09 . 1 0 .201 8 DATE OF PRONOUNCEMENT : 12 .10.2018 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER WHEN THESE TWO APPEALS WAS TAKEN UP FOR HEARING, IT WAS NOTICED THAT THE TAX EFFECT IN THE APPEALS FOR AY 2009-10 & 2011-12 WERE LESS THAN RS.20 LACS AND IN VIEW OF CBDT CIRCULAR NO. 3/2018 DATED 11TH JULY, 2018, THE APPEAL BY THE REVENUE IS LIABLE TO BE DISMISSED AS ACCORDING TO THE AFORESAID CIRCULARS APPEALS TO THE TRIBUNAL SHOULD NOT BE FILED WHERE THE TAX EFFECT IN LESS THAN RS.20 LACS IN ONE ASSESSMEN T YEAR. ITA NOS.1338 & 1340/BANG/2017 PAGE 2 OF 6 2. THE LEARNED DR HOWEVER MADE A REFERENCE TO PARA- 5 OF THE AFORESAID CIRCULAR, WHICH READS AS FOLLOWS: 5. THE ASSESSING OFFICER SHALL CALCULATE THE TAX E FFECT SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTE D ISSUES IN THE CASE OF EVERY ASSESSEE. IF, IN THE CASE OF AN ASSES SEE, THE DISPUTED ISSUES ARISE IN MORE THAN ONE ASSESSMENT YEAR, APPE AL CAN BE FILED IN RESPECT OF SUCH ASSESSMENT YEAR OR YEARS IN WHIC H THE TAX EFFECT IN RESPECT OF THE DISPUTED ISSUES EXCEEDS THE MONET ARY LIMIT SPECIFIED IN PARA 3. NO APPEAL SHALL BE FILED IN RE SPECT OF AN ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIED IN PARA 3. IN OTHER WORDS, HENCEFORTH, APPEALS CAN BE FILED ONLY WITH REFERENCE TO THE TAX EFFECT IN THE RELEVANT ASSESSMENT YEAR. HOWEVER, IN CASE OF A COMPOSITE ORDER OF ANY HIGH COURT OR APPELLATE AUTHORITY, WHI CH INVOLVES MORE THAN ONE ASSESSMENT YEAR AND COMMON I SSUES IN MORE THAN ONE ASSESSMENT YEAR, APPEALS SHALL BE FILED IN RESPECT OF ALL SUCH ASSESSMENT YEARS EVEN IF THE TA X EFFECT IS LESS THAN THE PRESCRIBED MONETARY LIMITS IN ANY OF THE YEAR(S), IF IT IS DECIDED TO FILE APPEAL IN RESPECT OF THE Y EAR(S) IN WHICH TAX EFFECT EXCEEDS THE MONETARY LIMIT PRESCRIBED. IN CASE WHERE A COMPOSITE ORDER/JUDGEMENT INVOLVES MORE THAN ONE ASSESSEE, EACH ASSESSEE SHALL BE DEALT WITH SEPARATELY. 3. SHE POINTED OUT THAT THE ORDER OF THE CIT(A) WAS A COMMON ORDER FOR AY 2009-10, 2010-11 & 2011 AND THE ISSUES WERE COMM ON IN ALL THE THREE AYS AND THE TAX EFFECT IN APPEAL FOR AY 2010-11 IS MORE THAN THE MONETARY LIMIT OF RS.20 LACS AND THEREFORE IN VIEW OF THE LA TER PORTION OF PARA-5 OF THE CIRCULAR SHOWN IN BOLD IN THE EXTRACTED PORTION OF PARA-5, THE APPEAL SHOULD BE HELD TO BE MAINTAINABLE FOR AY 2009-10 & 2011-12 ALSO. 4. THE LEARNED COUNSEL FOR THE ASSESSEE HOWEVER BRO UGHT TO OUR NOTICE THAT PARA-5 OF THE CBDT CIRCULAR 3/2018 IS IDENTICA L TO PARAGRAPH-5 OF CIRCULAR NO.3/2012 PRESCRIBING MONETARY LIMITS FOR FILING APPEAL BEFORE APPELLATE FORUMS AND HAD A SIMILAR CLAUSE-5 WHICH PROVIDED THAT IN CASE OF A COMPOSITE ORDER OF ANY HIGH COURT OR APPELLATE AUTHORITY, WHICH ITA NOS.1338 & 1340/BANG/2017 PAGE 3 OF 6 INVOLVES MORE THAN ONE ASSESSMENT YEAR AND COMMON I SSUES IN MORE THAN ONE ASSESSMENT YEAR, APPEAL SHALL BE FILED IN RESPECT OF ALL SUCH ASSESSMENT YEARS EVEN IF THE 'TAX EFFECT' IS LESS T HAN THE PRESCRIBED OF THE YEAR(S) IN WHICH THE 'TAX EFFECT' EXCEEDS TH E MONETARY LIMIT PRESCRIBED. 5. PARAGRAPH 5 OF CBDT CIRCULAR NO.3/2012 HAD COME UP FOR CONSIDERATION BEFORE THE HONBLE KARNATAKA HIGH COU RT IN THE CASE OF CIT, CENTRAL CIRCULAR VS. PSI HYDRAULICS (2014) 226 TAXM AN 34 (KAR) . IN THE AFORESAID DECISION, THE HONBLE KARNATAKA HIGH COUR T HELD MERELY BECAUSE THE ORDER OF THE CIT(A) IS CONSOLIDATED ORDER PASSE D FOR SEVERAL YEARS TAX EFFECT SHOULD NOT BE SEEN FOR EACH AY SEPARATELY. THE HONBLE KARNATAKA HIGH COURT HELD THAT PARAGRAPH 5 OF CIRCULAR NO.3/2 013 WAS DISCRIMINATORY AND OFFENDED ARTICLE 14 OF THE CONSTITUTION OF INDI A. THE HONBLE HIGH COURT FINALLY HELD THAT EVEN THOUGH THE CUMULATIVE TAX EFFECT IN A COMMON ORDER PASSED BY CIT(A) FOR SEVERAL YEARS IS MORE TH AN 10 LAKHS BUT IF THE INDIVIDUAL TAX EFFECT IN EACH ASSESSMENT YEAR IS LE SS THAN THE MONETARY LIMIT PRESCRIBED IN CIRCULAR NO.3/2011, THE SAME SHOULD BE HELD TO BE NOT MAINTAINABLE. 6. FOR THE SAKE OF READY REFERENCE, WE GIVE BELOW T HE RELEVANT PARAGRAPHS OF HONBLE KARNATAKA HIGH COURT ON THIS ISSUE:- .PER CONTRA, SRI K.V. ARAVIND, LEARNED COUNSEL FO R THE APPELLANTS REFERS TO PARA 5 OF CIRCULAR NO. 3/2011, WHICH READS THUS:- 5. THE ASSESSING OFFICER SHALL CALCULATE THE TAX EFFECT SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESP ECT OF THE DISPUTED ISSUES IN THE CASE OF EVERY ASSESSEE. IF, IN THE CASE OF AN ASSESSEE, THE DISPUTED ISSUES ARISE IN MORE THAN ONE ASSESSMENT YEAR, APPEAL, CAN BE FILED IN R ESPECT OF SUCH ASSESSMENT YEAR OR YEARS IN WHICH THE TAX E FFECT IN RESPECT OF THE DISPUTED ISSUES EXCEEDS THE MONETARY LIMIT ITA NOS.1338 & 1340/BANG/2017 PAGE 4 OF 6 SPECIFIED IN PARA 3. NO APPEAL SHALL BE FILED IN RE SPECT OF ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIED IN PARA 3. IN OTH ER WORDS, HENCEFORTH, APPEALS CAN BE FILED ONLY WITH REFERENC E TO THE TAX EFFECT IN THE RELEVANT ASSESSMENT YEAR. HOWEVER , IN CASE OF A COMPOSITE ORDER OF ANY HIGH COURT OR APPE LLATE AUTHORITY, WHICH INVOLVES MORE THAN ONE ASSESSMENT YEAR AND COMMON ISSUES IN MORE THAN ONE ASSESSMENT YEAR, APPEAL SHALL BE FILED IN RESPECT OF ALL SUCH ASSESS MENT YEARS EVEN IF THE 'TAX EFFECT' IS LESS THAN THE PRE SCRIBED OF THE YEAR(S) IN WHICH THE 'TAX EFFECT' EXCEEDS THE M ONETARY LIMIT PRESCRIBED. IN CASE WHERE A COMPOSITE ORDER/JUDGMENT INVOLVES MORE THAN ONE ASSESSEE, EAC H ASSESSEE SHALL BE DEALT WITH SEPARATELY.' 17. IN CASE OF AN ASSESSEE, WHERE COMMON ORDER IS P ASSED IN RESPECT OF MORE THAN ONE ASSESSMENT YEAR, WHICH INV OLVES COMMON ISSUES EVEN IF IN ONE OF THE ASSESSMENT YEAR S THE TAX EFFECT IS MORE THAN RS. 10 LAKHS, IRRESPECTIVE OF T HE FACT THAT IN RESPECT OF OTHER ASSESSMENT YEARS WHICH IS PART OF THE COMMON ORDER, THE TAX EFFECT IS LESS THAN RS. 10 LAKHS, TH E REVENUE IS ENTITLED TO FILE APPEAL EVEN IN RESPECT SUCH ASSESS MENT YEARS WHERE THE TAX EFFECT IS LESS THAN RS. 10 LAKHS. HOW EVER, IN CASE WHERE THERE IS NO COMMON ORDER AND AN ORDER IS PASS ED ONLY IN RESPECT OF AN ASSESSMENT, YEAR AND THE TAX EFFECT T HEREIN IS LESS THAN RS. 10 LAKHS, THE REVENUE CANNOT FILE THE APPE AL. 18. ON THOROUGH SCRUTINY OF PARA 5 OF THE CIRCULAR NO. 3/2011, WE FIND THAT THERE APPEARS TO BE A GLARING DISCRIMI NATION OFFENDING THE SPIRIT OF ARTICLE 14 OF THE CONSTITUT ION. IN THE CASE OF A COMMON ORDER PASSED IN RESPECT OF ONE OR MORE ASSESSMENT YEAR/YEARS, IF THE TAX EFFECT IS LESS TH AN RS. 10 LAKHS, THE ASSESSEE IS NOT ENTITLED TO BENEFIT OF EXEMPTIO N AND THE REVENUE IS NOT DEBARRED FROM FILING AN APPEAL, EVEN THOUGH THE TAX EFFECT IN RESPECT OF ONE OR MORE ASSESSMENT YEA RS IS LESS THAN RS. 10 LAKHS. IN OTHER WORDS, THE REVENUE CAN FILE AN APPEAL AGAINST ALL THE ASSESSMENT ORDERS WHICH IS A PART O F THE COMMON ORDER, IRRESPECTIVE OF THE FACT, WHETHER FOR ONE OF THE ASSESSMENT YEAR/YEARS, THE TAX EFFECT IS LESS THAN RS. 10 LAKH S. HOWEVER, IF IT IS A SOLITARY ORDER AND TAX EFFECT IS LESS THAN RS. 10 LAKHS, THE ASSESSEE IS ENTITLED TO THE BENEFIT OF EXEMPTION AN D THE REVENUE CANNOT FILE THE APPEAL. ITA NOS.1338 & 1340/BANG/2017 PAGE 5 OF 6 19. THE PARA-5 OF THE CIRCULAR IS HIGHLY DISCRIMINA TORY. AFTER ALL THE BUNCHING AND CLUBBING OF CASES AND PASSING COMMON O RDERS IS A PROCEDURE ADOPTED FOR CONVENIENT DISPOSAL OF THE CA SES BY THE COURT OR QUASI JUDICIAL AUTHORITY. THE ASSESSEE HAS NO SAY IN THE MATTER OF CLUBBING OF CASES AND PASSING OF COMMON O RDERS. MERELY BECAUSE THE AUTHORITY CONCERNED FOR JUDICIAL CONVENIENCE, CLUBS THE CASES AND PASS COMMON ORDER, THE ASSESSEE SHOULD NOT BE DENIED OF THE BENEFIT OF CIRCULAR-3/2011 WHE N THE TAX EFFECT FOR THE ASSESSMENT YEAR/YEARS THE TAX EFFECT IS LES S THAN RS. 10 LAKHS. THEREFORE, IT IS TO BE HELD THAT WHETHER IT IS A SOLITARY ORDER OR COMMON ORDER, THE ASSESSEE SHOULD HAVE THE BENEF IT OF THE TAX EFFECT LESS THAN RS. 10 LAKHS AND IN ALL SUCH C ASES WHETHER IT IS A PART OF THE COMMON ORDER OR A SOLITARY ORDER, THE REVENUE WILL NOT BE ENTITLED TO FILE AN APPEAL. (EMPHASIS SUPPLIED) 7. IN VIEW OF THE AFORESAID DECISION OF HONBLE KAR NATAKA HIGH COURT, THE REVENUE CANNOT TAKE THE PLEA OF CONSIDERING CUM ULATIVE TAX EFFECT ALSO. IN THE LIGHT OF THE ABOVE DISCUSSION, WE CONCLUDE T HAT THE AFORESAID TWO APPEALS OF THE REVENUE ARE NOT MAINTAINABLE AND ARE LIABLE TO BE DISMISSED AS SUCH. 8. IN THE RESULT, THE APPEALS ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF OCTOBER, 2018. SD/- SD/- ( A.K. GARODIA ) ( N.V. VASUDEVAN ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 12 TH OCTOBER, 2018. / D ESAI S MURTHY / ITA NOS.1338 & 1340/BANG/2017 PAGE 6 OF 6 COPY TO: 1. THE APP ELL ANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.