Assistant Commissioner of Income-tax, V. Shri Sunil Pannalal Banthia, Raigad

ITA 151/PUN/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1051 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 13-04-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 23-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Assessee Lawyers: SUBODH RATNAPARAKHI
• Keywords: Question of law; Tax effect
• Section: 143(3); 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NOS.150 TO 153/PN/2014 (ASSESSMENT YEARS : 2001-02, 2002-03, 2004-05 & 200 7-08) ACIT, PANVEL CIRCLE, PANVEL .. APPELLANT VS. SHRI SUNIL PANNALAL BANTHIA, 776, KESHAR ANAND NIWAS, M.G. ROAD, PANVEL, DIST : RAIGAD 410 206 .. RESPONDENT PAN NO.ABJPB0819L APPLICANT BY : SHRI SUBODH RATNAPARAKHI DEPARTMENT BY : SHRI B.C. MALAKAR DATE OF HEARING : 13-04-2015 DATE OF PRONOUNCEMENT : 13-04-2015 ORDER PER BENCH : THE ABOVE 4 APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE SEPARATE ORDERS DATED 1-11-2013 OF THE CI T(A)-II, THANE RELATING TO ASSESSMENT YEARS 2001-02, 2002-03, 2004-05 & 2007- 08 RESPESTIVELY. 2. THE REVENUE IN THE GROUND OF APPEAL HAS CHALLENGED TH E ORDER OF THE CIT(A) IN CANCELLING THE PENALTY LEVIED U/S.271(1)(C ) OF THE I.T. ACT AMOUNTING TO RS.1,32,906/- FOR A.Y. 2001-02, RS.2,22,704/- FOR A.Y. 2002-03, RS.1,03,867/- (WRONGLY TYPED AS RS.1,03,86,704 IN THE GROUNDS OF APPEAL) FOR A.Y. 2004-05 AND RS.2,14,200/- FOR A.Y. 2007-08 RESPECTIVELY. 3. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBM ITTED THAT THE TAX EFFECT IN ALL THE ABOVE 4 APPEALS FILED BY THE REVENUE ARE BELOW THE PRESCRIBED LIMIT OF RS.4 LAKHS. THEREFORE, IN VIE W OF 2 THE VARIOUS DECISIONS OF THE PUNE BENCHES OF THE TRIBUNAL THE APPEALS FILED BY THE REVENUE FOR THE ABOVE YEARS ARE NOT MAINTAINABLE AND ACCORDINGLY SHOULD BE DISMISSED. 4. THE LD. DEPARTMENTAL REPRESENTATIVE ALSO FAIRLY CONCED ED THAT THE TAX EFFECT IN THE ABOVE 4 APPEALS FILED BY THE R EVENUE ARE ADMITTEDLY BELOW RS.4 LAKHS. 5. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES. WE FIND AN IDENTICAL ISSUE HAD COME UP BEFORE THE TR IBUNAL IN THE CASE OF DCIT VS. KAMAL JESTARAM KAPADIA VIDE ITA NO.1257/PN/2013 FOR A.Y. 2008-09 ORDER DATED 12-12-2014 AND THE TRIBUNAL WHILE DISMISSING THE APPEAL FILED BY THE REVENUE HAS OBSERVED AS UNDER : 4. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES. WE FIND AN IDENTICAL ISSUE HAD COME UP BEFORE T HE TRIBUNAL IN THE CASE OF ACIT VS. NYATI INFRASTRUCTURE PVT. LTD. VI DE ITA NO.585/2011 ORDER DATED 27-11-2014 WHERE IT HAS BEEN HELD AS UNDER : 5. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. THERE IS NO DISPUTE TO THE FACT THAT THE TAX EFFECT IN THE INSTANT CASE IS L ESS THAN RS. 4 LAKHS AND TO BE PRECISE IT IS RS.3,01,003/-. THE APPEAL HAS BEEN FILED BY THE REVENUE ON 06-05-2011. WE FIND AN IDENTICAL ISSUE HA D COME UP BEFORE THE TRIBUNAL IN THE CASE OF SHRI SANJAY PRABH AKAR JUNNARKAR VIDE ITA NO.791/PN/2013 ORDER DATED 26-11-2014 WHER E ONE OF US (AM) IS A PARTY. THE RELEVANT OBSERVATIONS OF THE TRI BUNAL WHILE DISMISSING THE APPEAL FILED BY THE REVENUE ON THE ISSUE OF MONETARY LIMIT ARE AS UNDER: 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE RECORD. THE REVENUE IS IN APPEAL AGAINST THE RELIEF GRANTED T O THE ASSESSEE BY THE CIT(A) IN RESPECT OF ADDITION MADE BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HAD MADE THE ADDITION WHILE COMPLETIN G ASSESSING PROCEEDINGS UNDER SECTION 143(3) OF THE ACT, WHICH IN TURN, DELETED BY THE CIT(A) AS UNDER:- PARTICULARS AMOUNT DEPOSIT EXPENSES FOR BUSINESS ASSOCIATES 5,58,948 3 PROVISION FOR VAT AND OTHER TAXES 2,00,000 EXPENSES FOR FRANCHISEE DEVELOPMENT 2,67,640 EXPENSES FOR MLM DEVELOPMENT 2,67,640 LAPTOP/IT SOLUTION EXPENSES 90,000 TOTAL 11,48,931 5. THE REVENUE HAD FILED APPEAL AGAINST SUCH DELETION OF ABOVE ADDITION BY THE CIT(A). WHEN THE MATTER WAS TAKEN U P FOR HEARING, IT WAS POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTAT IVE FOR THE ASSESSEE THAT AS PER CBDT INSTRUCTION NO.5 OF 2014, DATED 10.07.2014, THE APPEAL FOR THE YEAR IS NOT MAINTAINABLE. 6. UNDER THE PROVISIONS OF SECTION 268(1) OF THE ACT, THE CBDT IS EMPOWERED TO ISSUE INSTRUCTIONS FIXING THE MONETARY LIM ITS FOR THE REVENUE TO FILE APPEALS BEFORE THE TRIBUNAL, ALL THE HIGH COURTS AND THE SUPREME COURT. THE CBDT FROM TIME TO TIME, ISSUE S INSTRUCTIONS FIXING THE MONETARY LIMITS WITH THE OBJECT OF NOT BU RDENING THE COURTS AND THE TRIBUNAL WITH MATTERS WHERE THE TAX EFFECT W AS ON A LOWER SIDE. THE CBDT VIDE INSTRUCTION NO.5 OF 2014 ISSUED ON 10.07.2014 HAD REVISED THE EARLIER INSTRUCTION NO.3 OF 2011, DAT ED 09.02.2011 WHEREIN, THE MONETARY LIMITS AND OTHER CONDITIONS FOR FILING THE DEPARTMENTAL APPEALS IN INCOME TAX MATTERS BEFORE TH E APPELLATE TRIBUNALS, HIGH COURTS AND SUPREME COURT WERE SPECIFIE D. THE INSTRUCTIONS ISSUED ON 10.07.2014 WERE IN SUPERSESSION OF T HE EARLIER INSTRUCTIONS AND THE MONETARY LIMITS HAVE BEEN ENHANCE D BY THE PRESENT INSTRUCTION AND IT HAS BEEN PROVIDED THAT THE APPEALS SHALL NOT BE FILED IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER: S NO APPEALS IN INCOME-TAX MATTERS MONETARY LIMIT (I N RS) 1. BEFORE APPELLATE TRIBUNAL 4,00,000/- 2. U/S 260A BEFORE HIGH COURT 10,00,000/- 3. BEFORE SUPREME COURT 25,00,000/- 7. THE REVISED MONETARY LIMIT FOR FILING THE APPEALS BEFORE THE APPELLATE TRIBUNAL WAS FIXED AT IN EXCESS OF RS.4 LACS. FURTHER, UNDER THE SAID INSTRUCTION, IT WAS ALSO DIRECTED THAT THE ASSESSI NG OFFICER SHALL CALCULATE THE TAX EFFECT SEPARATELY FOR EVERY A SSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUES. IN CASE OF EVERY ASSESSEE WH ERE, THE DISPUTED ISSUE ARISES IN MORE THAN ONE ASSESSMENT YEAR, IT WAS DIRECTED THAT APPEAL COULD BE FILED IN RESPECT OF SUC H ASSESSMENT YEAR OR YEARS IN WHICH, THE TAX EFFECT IN RESPECT OF THE D ISPUTED ISSUE EXCEEDED THE MONETARY LIMIT FIXED. IN OTHER WORDS A ND HENCEFORTH, THE APPEALS CAN BE FILED ONLY WITH REFERENCE TO THE TAX EFFECT IN THE RELEVANT ASSESSMENT YEAR. IN CASE OF COMPOSITE ORDER OF ANY HIGH COURT OR APPELLATE AUTHORITY, IT WAS FURTHER CLARIFI ED THAT IF THE APPEAL IS TO BE FILED IN RESPECT OF THE YEAR/S IN WHICH, TAX EFFECT EXCEEDS THE MONETARY LIMIT PRESCRIBED THEN, SUCH APPEALS COULD AL SO BE FILED IN 4 RESPECT OF ALL SUCH ASSESSMENT YEARS EVEN IF THE TAX EFFEC T IS LESS THAN PRESCRIBED MONETARY LIMITS. 8. IN THE FACTS OF THE PRESENT CASE, THE REVENUE HAD FILED THE APPEALS ON 04.04.2013. ADMITTEDLY, IN ALL THE YEARS UNDER APPEAL, THE TAX EFFECT IS LESS THAN RS.4 LACS AS PRESCRIBED IN INSTRUCT ION NO.5 OF 2014 ISSUED BY THE CBDT. AT THE TIME OF HEARING OF T HE APPEALS, THE MONETARY LIMITS PRESCRIBED BY THE CBDT STAND REVISED BY THE SAID INSTRUCTION NO.5 OF 2014, DATED 10.07.2014 UNDER WHI CH, IT HAS BEEN PROVIDED THAT WHERE THE TAX EFFECT DOES NOT EXCEED R S.4 LACS IN ANY OF THE ASSESSMENT YEARS THEN, NO APPEALS CAN BE FILED BEFORE THE APPELLATE TRIBUNAL. THE ISSUE ARISING BEFORE US IS WHETHER THE SAI D REVISED INSTRUCTIONS WHICH WERE ISSUED SUBSEQUENT TO THE FILING O F THE APPEALS BY THE REVENUE COULD BE APPLIED TO THE PENDING APPE ALS OR APPLICABLE ONLY TO THE NEW CASES TO BE FILED BY THE REVENUE AFTE R THE DATE OF ISSUE OF THE INSTRUCTIONS. 9. WE FIND THAT THE SAID ISSUE HAS BEEN CONSIDERED BY T HE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SMT. VIJAYA V. KAVEKAR (SUPRA). THE HONBLE HIGH COURT IN THE CASE OF CIT V S. SMT. VIJAYA V. KAVEKAR (SUPRA), HAD IN TURN FOLLOWED THE RATIO LAID DOWN BY ANOTHER DIVISION OF BOMBAY HIGH COURT IN THE CASE OF CIT VS. P OLYCOTT CORPORATION REPORTED IN (2009) 318 ITR 144 (BOM) WH EREIN, IT WAS HELD AS UNDER:- 8. IN CASE OF 'COMMISSIONER OF INCOME TAX V/S POLYC OTT CORPORATION' REPORTED AT '(2009) 318 ITR 144 (BOM), A ANOTHER DIVISION BENCH OF THIS COURT CONSTRUED THE SAME INS TRUCTION NO. 2 OF 2005, DATED 24TH OCTOBER, 2005. THE DIVISION BENCH OBSERVED WHILE CONSTRUING THE PARAGRAPH NO. 5 OF THE CIRCULAR, AS THUS : '9. HAVING CONSIDERED THE CONTENTIONS, IN OUR OPINI ON, THE INSTRUCTIONS CANNOT BE INTERPRETED AS A STATUTE THOUGH IT IS PUR SUANT TO THE POWER CONFERRED UNDER SECTION 268A OF THE IT ACT. WHAT TH E COURT HAS TO CONSIDER IS THE PLAIN LANGUAGE OF THE PARA AND THE OBJECT BEHIND THE SAID PROVISIONS. THE OBJECT APPEARS TO BE NOT TO BURDEN COURTS AND TRIBUNALS IN RESPECT OF MATTERS WHERE THE TAX EFFECT IS LESS T HAN THE LIMIT PRESCRIBED. EVEN BEFORE THIS INSTRUCTION, CBDT HAS BEEN ISSUING INSTRUCTIONS, THE LAST ONE BEING ON 24TH OCT., 2005 WHERE THE MONETARY LIMIT HAS BEEN FIXED. IN THOSE INSTRUCTIONS THE ONLY EXCEPTION HAD BEEN THAT IN CASES INVOLVING, SUBSTANTIAL QUESTION OF LA W OF IMPORTANCE AS WELL AS IN CASES WHERE THE SAME QUESTION OF LAW WILL REP EATEDLY ARISE, EITHER IN THE CASE CONCERNED OR IN SIMILAR CASE, APPEAL SH OULD BE FILED WITHOUT BEING HINDERED BY THE MONETARY LIMITS. THE PRESENT INSTRUCTIONS SEEM EVEN TO LIMIT THE ISSUES INSOFAR AS THE SAME QUESTI ON OF LAW OR RECURRING ISSUE EXCEPT TO THE EXTENT PROVIDED IN PARA 5. ON A PROPER READING OF PARA 5 OF THE INSTRUCTIONS I T WOULD BE CLEAR THAT A DUTY IS CAST ON THE AO THAT EVEN IF THE DISPUTED QU ESTIONS ARISE FOR MORE THAN ONE ASSESSMENT YEAR THEN AN APPEAL SHOULD BE F ILED ONLY IN RESPECT OF THOSE YEARS WHERE THE MONETARY LIMIT AS SPECIFIE D IN PARA 3 OF THE INSTRUCTION. THE EXCEPTION, HOWEVER, IS CARVED OUT I N RESPECT OF A COMPOSITE ORDER OF THE HIGH COURT OR APPELLATE AUTH ORITY. IN OTHER WORDS WHERE THE HIGH COURT OR TRIBUNAL HAS PASSED A COMPO SITE ORDER IN RESPECT OF THE SAME ASSESSEE ON THE SAME QUESTION A ND/OR ON DIFFERENT QUESTION AND FOR ONE OF THE ASSESSMENT YEARS, THE T AX EFFECT IS MORE THAN THE MONETARY LIMIT THEN THE APPEAL SHALL ALSO BE FI LED IN RESPECT OF ALL THE ASSESSMENT YEARS. THE SUBMISSION ON BEHALF OF THE A SSESSEE IS THAT THE COMPOSITE ORDER MUST RELATE TO A COMMON ISSUE. WE B EG TO DISAGREE ON A PLAIN AND LITERAL CONSTRUCTION OF THE INSTRUCTION. THE EXPRESSION 'WHICH 5 INVOLVES MORE THAN ONE YEAR' WOULD HAVE NO MEANING IF IT WAS RESTRICTED ONLY TO THE EXPRESSION 'COMMON ISSUES'. THE EXPRESS ION, THEREFORE, OF A COMPOSITE ORDER WILL HAVE TO BE READ TO MEAN AN ORD ER IN RESPECT OF THE SAME ASSESSEE FOR MORE THAN ONE YEAR. AN (ORDER) DI SPOSING OF SEVERAL APPEALS ON A COMMON QUESTION OF LAW BY APPELLATE AU THORITY, CANNOT BE SAID TO BE A COMPOSITE ORDER AS THE ORDER INVOLVES APPEALS BY DIFFERENT PERSONS, WHICH APPEALS FOR THE SAKE OF CONVENIENCE HAVE BEEN ONLY CLUBBED TOGETHER FOR THE PURPOSE OF DISPOSAL ON THA T ISSUE. IN OUR OPINION, THIS WOULD BE THE CORRECT READING OF PARA 5 OF THE INSTRUCTION.' 10. THE HONBLE BOMBAY HIGH COURT FURTHER HELD AS U NDER:- 15. THE POSITION OF LAW, THEREFORE, EMERGING FROM THE AFORESAID JUDGEMENTS, IS THAT THE CIRCULARS OR INSTRUCTIONS I SSUED UNDER SECTION 268A OF THE INCOME TAX ACT BY THE CENTRAL BOARD OF D IRECT TAXES, ARE APPLICABLE NOT ONLY TO NEW CASES BUT TO PENDING CAS ES AS WELL. SUCH CIRCULARS HAVE BEEN ISSUED UNDER SECTION 268A OF TH E INCOME TAX ACT, WHICH IS AN EXCEPTION TO THE PROVISIONS OF SECTION 2 60 OF THE ACT. THE CBDT BEING MINDFUL OF THIS POSITION HAS ISSUED THE AFORESAID INSTRUCTIONS. IN OUR OPINION, THEREFORE, THE INSTRU CTIONS WOULD BE APPLICABLE TO PENDING CASES AS WELL. WE HAVE ALREAD Y FOUND THAT THE INSTRUCTION NO. 5 OF 2008 AND INSTRUCTION NO. 3 OF 2011 ARE PARA-MATERIA. THE INSTRUCTION NO. 5 OF 2008 HAS ALREADY BEEN INTE RPRETED BY THIS COURT IN CIT V/S MADHUKAR INAMDAR (SUPRA). IT IS NOT DISP UTED THAT THIS JUDGEMENT HAS NOT BEEN CHALLENGED BY THE REVENUE AN D THEREFORE STILL HOLDS THE FIELD. 11. FOLLOWING THE ABOVE SAID PROPOSITION LAID DOWN BY THE HONBLE HIGH COURT IN THE CASE OF CIT VS. SMT. VIJAYA V. KAVE KAR (SUPRA), WE HOLD THAT IN VIEW OF THE REVISED INSTRUCTION ISSUED BY THE CBDT UNDER WHICH, THE MONETARY LIMIT FOR FILING THE APPEALS BEF ORE THE APPELLATE AUTHORITIES, TRIBUNALS HAS BEEN REVISED AND FIXED AT RS. 4 LACS I.E. ONLY APPEALS WITH TAX EFFECT EXCEEDING RS.4 LACS WERE MAINT AINABLE. IN THE PRESENT APPEAL FILED BY THE REVENUE, THE MONETARY LI MIT ADMITTEDLY, IS LESS THAN RS.4 LACS. IN VIEW OF INSTRUCTION NO.5 OF 201 4 WHICH ARE APPLICABLE NOT ONLY TO THE NEW APPEALS TO BE FILED B Y THE REVENUE, BUT ALSO TO THE APPEALS PENDING BEFORE THE TRIBUNAL, WE D ISMISS THE APPEAL FILED BY THE REVENUE BECAUSE OF SMALL TAX EFFECT. 5.1 SINCE THE TAX EFFECT IN THE IMPUGNED APPEAL FIL ED BY THE REVENUE IS ADMITTEDLY BELOW RS.4 LAKHS, THEREFORE, IN VIEW OF THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL CIT ED (SUPRA), WE HOLD THAT THE CBDT INSTRUCTION NO.05/2014 RAISING THE MONETARY LIMIT FOR FILING OF APPEAL BY THE REVENUE TO RS. 4 LAKHS I S APPLICABLE TO THIS CASE ALSO EVEN THOUGH THE APPEAL HAS BEEN FILED BY THE REVENUE PRIOR TO THE DATE OF ISSUE OF SUCH INSTRUCTION REVISING THE M ONETARY LIMIT. THEREFORE, THE APPEAL FILED BY THE REVENUE IS NOT MA INTAINABLE. ACCORDINGLY, THE SAME IS DISMISSED. 4.1 SINCE THE TAX EFFECT IN THE IMPUGNED APPEAL IS ADMITTEDLY LESS THAN RS.4 LAKHS, THEREFORE, FOLLOWING THE RATIO LAID DOWN IN THE ABOVE CITED CASE, THE APPEAL FILED BY THE REVENUE IS DISMISSED . 5.1 SINCE THE TAX EFFECT IN THE ABOVE APPEALS ARE ADMITTED LY BELOW RS. 4 LAKHS IN EACH CASE, THEREFORE, RESPECTFULLY FOLLOWIN G THE 6 DECISION CITED (SUPRA) THE APPEALS FILED BY THE REVENUE A RE DISMISSED. 6. IN THE RESULT, ALL THE APPEALS FILED BY THE REVENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING IT SELF, I.E. ON 13-04-2015. SD/- SD/- (VIKAS AWASTHY) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH PUNE DATED: 13 TH APRIL, 2015 COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-II, THANE 4. CIT-II, THANE 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE