ITO, Ward - 50(3), Kolkata, Kolkata V. Kaushik Dutta Roy, Kolkata

ITA 1439/KOL/2010

• Counselvise Citation: 143923514 RSA 2010
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 13-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K ROY
• Assessee Lawyers: G BANERJEE
• Keywords: Audit objection; Tax effect
• Section: 260A

Judgement Text

, , , , , , ,, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [ . . . . . . . . , ,, , , ,, , . . . . . .. . ! ! ! ! , ' ' ' ' ] [BEFORE HONBLE SHRI B. R. MITTAL, JM & HONBLE SHRI SHRI S.V. MEHROTRA, AM] #$ #$ #$ #$ / I.T.A. NO. 1439/KOL/2010 %& '() %& '() %& '() %& '()/ // / ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER/WARD-50(3) -VS.- KAUSHIK DUTTA ROY KOLKATA. KOLKATA. [PAN : ADPP D 6935 M] [ +, +, +, +, /APPELLANT] [ -.+, -.+, -.+, -.+,/ // / RESPONDENT] +, +, +, +, / FOR THE APPELLANT : / // / /SHRI S. K. ROY -.+, -.+, -.+, -.+, / FOR THE RESPONDENT : / // / / SHRI G. BANERJEE 0 /O R D E R [ . . . . . .. . ! ! ! ! , ] PER S.V. MEHROTRA, AM THE DEPARTMENT HAS FILED THIS APPEAL FOR ASSESSMENT YEAR 2006-07 AGAINST ORDER OF CIT(A)- XXXII, KOLKATA DATED 30.03.2010. 2. AT THE TIME OF HEARING, LD. COUNSEL APPEARING ON BE HALF OF THE ASSESSEE MENTIONED THAT IN VIEW OF INSTRUCTION NO.3/2011 (F. NO.279/MISC. 142/ 2007-ITJ], DATED 09.02.2011 READ WITH INSTRUCTION NO.5/2008 DATED 15.05.2008, ISSUED BY T HE C.B.D.T. ON MONETARY LIMITS OF FILING APPEAL BY THE DEPARTMENT, THE INSTANT APPEAL SHOULD NOT HA VE BEEN FILED BY THE DEPARTMENT ON 13.07.2010, AS THE TAX EFFECT ADMITTEDLY IS LESS THAN RS.2.00 L AKHS. 3. IT IS SETTLED LAW THAT IN VIEW OF THE DECISION O F HONBLE APEX COURT IN THE CASE OF COMMISSIONER OF CUSTOMS VS. INDIAN OIL CORPORATION LTD. 267 ITR 272 (SC), THE DEPARTMENT CAN NOT BE PERMITTED TO TAKE A STAND CONTRARY TO THE IN STRUCTIONS ISSUED BY THE BOARD. 4. WE FIND THAT THE TRIBUNAL VIDE ITS ORDER DATED 1 1.04.2011 IN THE CASE OF ITO VS. SMT. NILIMA SINGH IN ITA NO.1629/KOL/2010 HAS, INTER ALIA, OBSE RVED AS UNDER :- 2 IT IS OBSERVED THAT THE TAX EFFECT IN THIS APPEA L IS LESS THAN RS.2 LAKHS. HENCE, THE LD. D.R. WAS ASKED AS TO WHETHER ANY OF THE EXCEPTIONS LAID [ ITA NO. 1439/KOL/2010] 2 DOWN IN PARA 8 OF CBDT CIRCULAR NO. 279/MISC.-64/05 -ITJ DATED 24.10.05 READ WITH INSTRUCTION NO.5 OF 2008 DATED 15.05.2008 ARE APPLICABLE TO CONSIDER THIS APPEAL ON MERITS. THE DEPARTMENT IN A BOVE INSTRUCTION DATED 15.05.2008 HAS SPECIFIED 3 GROUNDS IN PARA 8 STATIN G THAT THE APPEAL COULD BE FILED BEFORE THE TRIBUNAL WHERE THE TAX EFFECT I S LESS THAN RS.2.00 LAKHS ONLY AND THE SAME ARE AS UNDER :- (A) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVIS IONS OF AN ACT OR RULE ARE UNDER CHALLENGE. (B) WHERE BOARDS ORDER, NOTIFICATION, INSTRUCTION OF CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES. (C) WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS B EEN ACCEPTED BY THE DEPARTMENT. 3. LD. D.R. FAIRLY CONCEDED THAT NONE OF THE ABOVE CONDITIONS ARE APPLICABLE IN RESPECT OF THIS APPEAL. 4. THERE IS NO DISPUTE ON THE FACT THAT THE CBDT VI DE INSTRUCTION NO. 2/2005 DATED 24.10.2005, ISSUED GUIDELINES TO THE R EVENUE AUTHORITIES WITH REGARD TO FILING OF APPEALS BEFORE THE TRIBUNAL, HI GH COURT AND THE SUPREME COURT. FROM THE SAID INSTRUCTIONS, IT IS EVIDENT TH AT SINCE 1987, THE CBDT HAS BEEN INSTRUCTING ITS OFFICERS NOT TO FILE THE A PPEAL WHERE THE TAX EFFECT IS BELOW CERTAIN MONETARY LIMITS. VIDE INSTRUCTION NO. 1903 DATED 28.10.1992 THE MONETARY LIMITS WAS REVISED UPWARD AND THE OFFI CERS WERE DIRECTED NOT TO FILE APPEAL BEFORE THE INCOME TAX APPELLATE TRIB UNAL WHERE THE TAX EFFECT WAS BELOW RS.25,000/-. THE ABOVE MONETARY LI MIT WAS FURTHER REVISED UPWARD BY INSTRUCTION NO.1979 DATED 27.3.20 00 AND THE OFFICERS WERE DIRECTED NOT TO FILE THE APPEAL TO ITAT WHERE THE TAX EFFECT IS BELOW RS. 1,00,000/-. THEREAFTER IN PARTIAL MODIFICATION OF THE ABOVE INSTRUCTION, THE BOARD VIDE INSTRUCTION NO.2/2005 DATED 24.10.20 05 HAS FURTHER RAISED THE ABOVE MONETARY LIMIT TO RS.2,00,000/- WITH THE SAME DIRECTIONS. THUS THE C.B.D.T SINCE 1987 HAS NOT ONLY TAKEN A CONSIST ENT APPROACH OF INSTRUCTING ITS OFFICERS FOR NOT FILING THE APPEAL WHERE THE TAX EFFECT IS BELOW THE MONETARY LIMIT, BUT SUCH MONETARY LIMIT I S ALSO REVISED UPWARD FROM TIME TO TIME. THE CIRCULAR UNDER INSTRUCTION N O.1979 DATED 27-3-2000 WAS CONSIDERED BY THE BOMBAY HIGH COURT IN THE CASE OF CAMCO COLOUR CO. 254 ITR 565 AND THEIR LORDSHIPS HELD AT PAGE 56 8 AS UNDER :- IT APPEARS THAT DESPITE THE ABOVE CIRCULAR, THE RE VENUE HAS CHOSEN TO FILE THE PRESENT APPEAL KNOWINGLY FULLY WELL THAT THE CO RRIDORS OF THE COURTS ARE FLOODED WITH PENDING LITIGATIONS. THE PRESENTATION OF THIS APPEAL IS QUITE CONTRARY TO THE INSTRUCTION ISSUED IN THE CIRCULAR, WHICH IS BINDING ON THE REVENUE. IN THE ABOVE VIEW OF THE MATTER, CONSIDERING THE IN STRUCTIONS ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES, WE ARE SATISFIED THA T THE BOARD HAS TAKEN A POLICY DECISION NOT TO FILE APPEAL IN A TYPE OF CAS E IN HAND AND THE SAME IS [ ITA NO. 1439/KOL/2010] 3 BINDING ON THE REVENUE (APPELLANT HEREIN). IN THE R ESULT, WE DISMISS THIS APPEAL ON THIS COUNT IN LIMINE WITH NO ORDER AS TO COSTS. 5. WE FIND THAT RECENTLY THE APEX COURT HAS CONSID ERED THE EFFECT OF CIRCULAR ISSUED BY THE CBDT IN THE CASE OF COMMISSI ONER OF CUSTOMS VS. INDIAN OIL CORPORATION LTD. 267 ITR 272. THEIR LORD SHIPS EXAMINED THE EARLIER DECISIONS OF THE APEX COURT WITH REGARD TO BINDING OF THE CIRCULAR AND LAID DOWN THE FOLLOWING PRINCIPLES AT PAGE 277 OF THE REPORTS- THE PRINCIPALS LAID DOWN BY ALL THESE DECISIONS AR E- 1) ALTHOUGH A CIRCULAR IS NOT BINDING ON A COURT ON AN ASSESSEE, IT IS NOT OPEN TO THE REVENUE TO RAISE A CONTENTION THAT IS C ONTRARY TO A BINDING CIRCULAR BY THE BOARD. WHEN A CIRCULAR REMAINS IN O PERATION, THE REVENUE IS BOUND BY IT AND CANNOT BE ALLOWED TO PLEAD THAT IT IS NOT VALID NOR THAT IT IS CONTRARY TO THE TERMS OF THE STATUTE. 2) DESPITE THE DECISION OF THIS COURT, THE DEPARTME NT CANNOT BE PERMITTED TO TAKE A STAND CONTRARY TO THE INSTRUCTIONS ISSUED BY THE BOARD. (3) A SHOW CAUSE NOTICE AND DEMAND CONTRARY TO EXI STING CIRCULARS OF THE BOARD ARE AB INITIO VOID. (4) IT IS NOT OPEN TO THE REVENUE TO ADVANCE AN ARG UMENT OR FILE AN APPEAL CONTRARY TO THE CIRCULARS. 6. IN VIEW OF THE ABOVE AND CONSIDERING THE CBDTS CIRCULAR F. NO. 279/MISC.-64/05-ITJ DATED 24 TH OCTOBER, 2005 READ WITH INSTRUCTION NO. 2/2005 DATED 24 TH OCTOBER, 2005 AND INSTRUCTION NO. 5/2008 DATED 15.05.2008, WE HOLD THAT THE APPEAL FILED BY THE DE PARTMENT IS CONTRARY TO THE SAID CIRCULARS/ INSTRUCTIONS OF THE CBDT. ACCOR DINGLY, THIS IS NOT ADMITTED AND IS BEING DISMISSED IN LIMINE. 5. WE NOW FIND VIDE INSTRUCTION NO.3/2011 [F. NO.27 9/MISC. 142/2007-ITJ] DATED 09.02.2011, THE LIMIT HAS FURTHER BEEN ENHANCED AS UNDER :- 3. HENCEFORTH APPEALS SHALL NOT BE FILED IN CASES WHER E THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER : S. NO. APPEALS IN INCOME-TAX MATTERS MONETARY LIMIT (IN RS.) 1. APPEAL BEFORE APPELLATE TRIBUNAL : 3,00, 000 2. APPEAL U/S. 260A BEFORE HIGH COURT 10,00,000 3. APPEAL BEFORE SUPREME COURT 25,00,0 00 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 DIFFERENCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HA VE BEEN CHARGEABLE HAD [ ITA NO. 1439/KOL/2010] 4 SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INC OME IN RESPECT OF THE ISSUES AGAINST WHICH APPEAL IS INTENDED TO BE FILED (HEREINAFTER REFERRED TO AS 'DISPUTED ISSUES'). HOWEVER THE TAX WILL NOT INCLUD E ANY INTEREST THEREON, EXCEPT WHERE CHARGEABILITY OF INTEREST ITSELF IS IN DISPUTE. IN CASE THE CHARGEABILITY OF INTEREST IS THE ISSUE UNDER DISPUT E, 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 O N DISPUTED ADDITIONS. IN CASE OF PENALTY ORDERS, THE TAX EFFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE ORDER TO BE APPEALED AGAINST. HOWEVER, IT HAS BEEN CLARIFIED IN PARA 11 OF INSTRU CTION NO. 3/2011 [F. NO.279/MISC.142/2007-ITJ] DATED 09.02.2011, THAT APPEALS FILED PRIOR TO THIS INSTRUCTION WOULD BE GOVERNED BY INSTRUCTION APPLICABLE AT THE TIME OF FILING APPEAL. 6. ON QUERY FROM THE BENCH, THE LD. DR COULD NOT PO INT OUT ANY OF THE EXCEPTIONS AS PROVIDED IN THE CIRCULAR AS UNDER: (A) THAT THIS IS A LOSS CASE HAVING TAX EFFECT MOR E THAN THE PRESCRIBED LIMIT, WHICH SHOULD BE TAKEN INTO ACCOUNT, (B) THAT THIS IS A COMPOSITE ORDER FOR MANY ASSESS MENT YEARS WHERE TAX EFFECT WILL BE MORE THAN THE PRESCRIBED LIMIT AS PER PARA 5 OF A BOVE INSTRUCTIONS, (C) THAT THERE IS OTHER YEAR PENDING AS DISPUTED O N THE SINGULAR ISSUE, (D) THAT IN THE CASE OF REVENUE, WHERE CONSTITUTIO NAL VALIDITY OF THE PROVISIONS OF THE ACT OR I.T. RULES 1962 ARE UNDER CHALLENGE , (E) THAT BOARDS ORDER, NOTIFICATION, INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES, (F) THAT REVENUE AUDIT OBJECTION IN THE CASE HAS BEEN ACCEPTED BY TH E DEPARTMENT AND THE SAME IS UNDER CHALLENGE. WE FIND THAT IN THE PRESENT APPEAL IT IS NOT DISPUT ED THAT THE TAX EFFECT IS LESS THAN RS.2.00 LAKHS, THEREFORE, IN VIEW OF INSTRUCTION DATED 15.05.2008, THE REVENUE SHOULD NOT HAVE PREFERRED THIS APPEAL. ACCORDINGLY, THIS BEING A TAX EFFECT CASE, IN VIEW OF THE REASONING GIVEN IN THE CASE OF SMT. NILIMA SINGH (SUPRA), WE DISMISS THE APPEAL OF THE REVENUE IN LIMINE AS UNADMITTED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. 0 0 0 0 '1 '1 '1 '1 2 22 2 1% 1% 1% 1% 3 3 3 3 4 4 4 4 5' 5' 5' 5' ORDER PRONOUNCED IN THE OPEN COURT ON 11. 07. 2011. SD/- SD/- [ . . , ] [ . . ! , ' ] [ B. R. MITTAL ] [ S.V. MEHROTRA ] JUDICIAL MEMBER ACCOUNTAN T MEMBER 5' / DATED : 11 TH JULY, 2011. [ ITA NO. 1439/KOL/2010] 5 0 6 -7 87(9 - COPY OF THE ORDER FORWARDED TO: 1. ' /APPELLANT- INCOME TAX OFFICER/WARD-50(3), 9 TH FLOOR, BAMBOO VILLA, 169, AJC BOSE ROAD , KOLKATA-700 014. 2 -.+, / RESPONDENT : KAUSHIK ROY, AE-549, SALT LAKE, KOLK ATA-700 064. 3. 0% / CIT 4. 0% ( )/ CIT(A) 5. '3 -% / DR, KOLKATA BENCHES, KOLKATA [ .7 - / TRUE COPY] 0%1 / BY ORDER : / #; /DEPUTY/ASSTT. REGISTRAR . [KKC '<= %>; ?' /SR.PS]