ACIT, Circle - 34, Kolkata, Kolkata V. M/s. Esbee Road Products, Kolkata

ITA 1488/KOL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100282 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 03-11-2011
• Court: TRIBUNAL
• Department Lawyers: UDAY KR SARDAR
• Keywords: Audit objection; Tax effect
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI M. BALAGANES H, AM] I.T.A NO.1488/KOL/2011 ASSESSMENT YEAR: 2008-09 ASSISTANT COMMISSIONER OF INCOME-TAX, VS. M/S. ES BEE ROAD PRODUCTS CIRCLE-34, KOLKATA. (PAN: AABFE0095J) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 31.12.2015 DATE OF PRONOUNCEMENT: 31.12.2015 FOR THE APPELLANT: SHRI UDAY KR. SARDAR, ADDL. CIT , SR. DR FOR THE RESPONDENT: SHRI SOMNATH GHOSH, ADVOCATE ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL OF THE REVENUE ARISES OUT OF THE ORDER OF THE CIT(A) IN APPEAL NO. 297/CIT(A)-XX/WD-34/10-11/KOL DATED 12.08.2011. ORD ER OF ASSESSMENT FRAMED U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT) BY ITO, WD- 34(4), KOLKATA FOR AY 2008-09 VIDE HIS ORDER DATED 31.12.2010. 2. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE STA TED THAT TAX EFFECT IN THIS APPEAL OF REVENUE IS BELOW THE PRESCRIBED MONETARY LIMITS FOR FILING OF APPEALS BEFORE ITAT. IN THIS APPEAL OF REVENUE, THE QUANTUM INVOLVED IS RS. 22,88,628/- ON WHICH TOTAL TAX EFFECT IS RS. 7,78,133/-, WHICH IS BELOW RS.10 LACS . 3. AFTER PERUSING THE MATERIALS AVAILABLE ON RECOR D, WE FIND THAT THE TOTAL TAX EFFECT, ON THE ADDITIONS DISPUTED BEFORE US IS BELOW THE TA X EFFECT LIMIT PRESCRIBED BY CBDT VIDE CIRCULAR NO. 21 / 2015 DATED 10.12.2015 FOR PR EFERRING APPEALS BEFORE TRIBUNAL BY THE REVENUE. IT WILL BE PERTINENT TO REPRODUCE THE RELEVANT PORTION OF THE SAID CIRCULAR NO. 21 / 2015 DATED 10.12.2015:- 3. HENCEFORTH, APPEALS / SLPS SHALL NOT BE FILED I N CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER:- 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. FILI NG OF APPEAL IN SUCH CASES IS TO BE DECIDED ON MERITS OF THE CASE. 2 ITA NO.1488/K/2011 ESBEE ROAD PRODUCTS AY 2008-09 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 CHARGEABL E HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF THE I SSUES AGAINST WHICH APPEAL IS INTENDED TO BE FILED (HEREINAFTER REFERRED TO AS DISPUTED I SSUES). HOWEVER, THE TAX WILL NOT INCLUDE ANY INTEREST THEREON, EXCEPT WHERE CHARGEAB ILITY OF INTEREST ITSELF IS IN DISPUTE. IN CASE THE CHARGEABILITY OF INTEREST IS THE ISSUE UND ER 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 ADDIT IONS. IN CASE OF PENALTY ORDERS, THE TAX EFFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE ORDER 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 IN THE CASE OF EVERY ASSESSEE. IF, IN THE CASE OF AN ASSESSEE, THE DISPUTED ISSUES ARISE IN MORE THAN ON E ASSESSMENT YEAR , APPEAL, CAN BE FILED IN RESPECT OF SUCH ASSESSMENT YEAR OR YEARS I N WHICH THE TAX EFFECT IN RESPECT OF THE DISPUTED ISSUES EXCEEDS THE MONETARY LIMIT SPECIFIE D 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 SPECIFIED IN PARA 3. IN OTHER WORDS, HENCEFO RTH, APPEALS CAN BE FILED ONLY WITH REFERENCE TO THE TAX EFFECT IN THE RELEVANT ASSESSM ENT YEAR. HOWEVER, IN CASE OF A COMPOSITE ORDER OF ANY HIGH COURT OR APPELLATE AUTH ORITY, 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 ASSESSMENT YEARS EVEN IF THE TAX EFFECT IS LESS THAN THE PRESCRIBED MONETARY LIMITS IN ANY OF THE YEAR(S), I F IT IS DECIDED TO FILE APPEAL IN RESPECT OF THE YEAR(S) IN WHICH TAX EFFECT EXCEEDS THE MONET ARY LIMIT PRESCRIBED. IN CASE WHERE A COMPOSITE ORDER / JUDGEMENT INVOLVES MORE THAN ONE ASSESSEE, EACH ASSESSEE SHALL BE DEALT WITH SEPARATELY. 8. ADVERSE JUDGEMENTS RELATING TO THE FOLLOWING ISS UES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EFFECT ENTAILED IS LES S 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 OBJECTION IN THE CASE HAS BEEN ACCEPTED BY THE DEPARTMENT, OR (D) WHERE THE ADDITION RELATES TO UNDISCLOSED FOREIGN A SSETS / BANK ACCOUNTS. 10. THIS INSTRUCTION WILL APPLY RETROSPECTIVELY TO PENDING APPEALS AND APPEALS TO BE FILED HENCEFORTH IN HIGH COURTS/ TRIBUNALS. PENDING APPE ALS BELOW THE SPECIFIED TAX LIMITS IN PARA 3 ABOVE MAY BE WITHDRAWN / NOT PRESSED. APPEA LS BEFORE THE SUPREME COURT WILL BE GOVERNED BY THE INSTRUCTIONS ON THIS SUBJECT, OPERA TIVE AT THE TIME WHEN SUCH APPEAL WAS FILED. 4. WE FIND THAT INTENTION BEHIND THE CIRCULAR NO.21 /2015 DATED 10-12-2015 NEEDS TO BE UNDERSTOOD IN THE FOLLOWING PERSPECTIVE:- BY PASSAGE OF TIME, THE MONEY VALUE HAS GONE DOWN, THE COST OF LITIGATION EXPENSES HAS GONE UP, NUMBER OF ASSESSES ON THE FI LES OF THE DEPARTMENT HAVE BEEN INCREASED AND CONSEQUENTLY, THE BURDEN ON THE DEPARTMENT IS ALSO INCREASED TO A TREMENDOUS EXTENT. THE CORRIDORS OF THE SUPERI OR COURTS ARE CHOKED WITH HUGE PENDENCY OF CASES. IN THIS VIEW OF THE MATTE R, THE CBDT HAS RIGHTLY TAKEN 3 ITA NO.1488/K/2011 ESBEE ROAD PRODUCTS AY 2008-09 A DECISION TO REVISE THE MONETARY LIMITS IN TUNE WI TH THE PRESENT VALUE OF MONEY AND WITH A VIEW TO REDUCE THE LITIGATION AND OFFERI NG RELIEF TO SMALL TAX PAYERS. THIS IS ALSO IN VIEW OF THE FACT THAT TIME AND ENER GY OF THE DEPARTMENT COULD BE USED MORE PRODUCTIVELY AND EFFICIENTLY TO CATCH HOL D OF BIG FISHES, WHO IN TURN WOULD CONTRIBUTE MORE TO THE DEVELOPMENT OF THE COU NTRY. 5. ON PERUSAL OF THE CIRCULAR NO. 21 / 2015 DATED 1 0.12.2015 AND THE MATERIALS AVAILABLE ON RECORD, LD. DR COULD NOT POINT OUT WHE THER THIS CASE FALLS UNDER ANY OF THE EXCEPTION AS PROVIDED IN THE CIRCULAR DESPITE SPECI FIC OPPORTUNITY WAS GIVEN, DOES NOT FALL UNDER ANY OF THE EXCEPTIONS CONTEMPLATED IN TH E SAID CIRCULAR, AS THIS IS COVERED. WE ALSO FIND THAT THE CIRCULAR MAKES IT VERY CLEAR THAT THE REVISED MONETARY LIMITS SHALL APPLY RETROSPECTIVELY TO PENDING APPEALS ALSO. WE F IND THAT THE CIRCULAR IS BINDING ON THE TAX AUTHORITIES. THIS POSITION HAS BEEN CONFIRMED B Y THE HONBLE APEX COURT IN THE CASE OF COMMISSIONER OF CUSTOMS VS INDIAN OIL CORPORATIO N LTD REPORTED IN 267 ITR 272 (SC) WHEREIN THEIR LORDSHIPS EXAMINED THE EARLIER DECIS IONS OF THE APEX COURT WITH REGARD TO BINDING NATURE OF THE CIRCULARS AND LAID DOWN THAT WHEN A CIRCULAR ISSUED BY THE BOARD REMAINS IN OPERATION THEN THE REVENUE 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. HENCE, WE HOLD THAT THE APPEAL OF THE REVENUE DESERVES TO BE DISMI SSED IN TERMS OF LOW TAX EFFECT VIDE CIRCULAR NO.21 / 2015 DATED 10.12.2015. ACCORDINGL Y, THIS BEING A LOW TAX EFFECT CASE, WE DISMISS THIS APPEAL OF REVENUE IN LIMINE, AS UNA DMITTED, WITHOUT GOING INTO THE MERITS OF THE CASE. 6. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D INLIMINE. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (M. BALAGANESH) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 31ST DECEMBER, 2015 JD. SR. P.S 4 ITA NO.1488/K/2011 ESBEE ROAD PRODUCTS AY 2008-09 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT ACIT, CIRCLE-34, KOLKATA 2 RESPONDENT - M/S. ESBEE ROAD PRODUCTS, 9, EZRA S TREET, KOLKATA-700 001. 3. THE CIT(A), KOLKATA 4. 5. CIT KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .