The ITO, Ward-6(2), Ahmedabad V. Shri Devjibhai V.Patel, Ahmedabad

ITA 1548/AHD/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50774 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 1999-2000
• Appeal Filed On: 02-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: G S PATEL
• Keywords: Question of law; Difference of opinion; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE SHRI BHAVNESH SAINI, JM AND SHRI A. L. GEHL OT, AM) ITA NO.1548/AHD/2011 A.Y.: 1999-2000 THE INCOME TAX OFFICER, WARD-6 (2), 1 ST FLOOR, C. U. SHAH CHAMBERS, ASHRAM ROAD, AHMEDABAD VS SHRI DEVJIBHAI V. PATEL, PROP. DHARTHI ENTERPRISE, OPP. T. V. TOWER, DRIVE IN ROAD, AHMEDABAD PA NO. ACPPP 9440 E (APPELLANT) (RESPONDENT) C. O. NO.165/AHD/2011 (IN ITA NO.1548/AHD/2011: A.Y.: 1999-2000) SHRI DEVJIBHAI V. PATEL, PROP. DHARTHI ENTERPRISE, OPP. T. V. TOWER, DRIVE IN ROAD, AHMEDABAD VS THE INCOME TAX OFFICER, WARD-6 (2), 1 ST FLOOR, C. U. SHAH CHAMBERS, ASHRAM ROAD, AHMEDABAD PA NO. ACPPP 9440 E (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY SHRI B.L. YADAV, DR ASSESSEE BY SHRI G. S. PATEL, AR DATE OF HEARING: 21-10-2011 DATE OF PRONOUNCEMENT: 21-10-2011 O R D E R PER BHAVNESH SAINI: THE DEPARTMENTAL APPEAL AS WELL AS THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AG AINST THE ORDER OF ITA NO. 1548/AHD/2011 AND C. O. NO.165/AHD/2011 SHRI DEVJIBHAI V. PATEL 2 THE LEARNED CIT(A)-XI, AHMEDABAD DATED 23-03-2011 F OR ASSESSMENT YEAR 1999-2000, CHALLENGING THE DELETION OF ADDITIO N OF RS.9,90,880/-. 2. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE OUTS ET, SUBMITTED THAT SINCE THE DEPARTMENTAL APPEAL IS FILED ON 02-0 6-2011, THEREFORE, THE PRESENT BOARD CIRCULAR NO.3/2011 DATED 09-02-20 11 WOULD BE APPLICABLE THROUGH WHICH IT IS DIRECTED THAT DEPART MENTAL APPEALS SHOULD NOT BE FILED BEFORE THE TRIBUNAL IN THE CASE S WHERE THE TAX EFFECT IN THE DEPARTMENT APPEAL IS BELOW RS.3 LACS. HE HAS SUBMITTED THAT IN THE GROUNDS OF APPEAL RAISED BY THE REVENUE THE TAX EFFECT WILL BE RS.2,94,451/-. THEREFORE, THE APPEAL IS FILED IN CONTRAVENTION OF BOARD CIRCULAR. HE HAS SUBMITTED THAT THE CROSS OBJ ECTION IS FILED MERELY IN SUPPORT OF THE ORDER OF THE LEARNED CIT(A ). THEREFORE, HE WOULD NOT BE PRESSING THE SAME. THE LEARNED DR DID NOT DISPUTE THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT TAX EFFECT IS BELOW RS.3 LACS AS PER THE CALCULATION FILED BY THE LEARNED COUNSEL FOR THE ASSESSEE. THE LEARNED DR HOWEVER, SUBMITTED THA T SINCE IT IS SECOND ROUND PROCEEDINGS IN WHICH THE TRIBUNAL EARL IER ISSUED DIRECTIONS TO THE AO WHICH HAVE NOT BEEN COMPLIED W ITH, THEREFORE, THE APPEAL OF THE REVENUE MAY NOT BE DISMISSED. 3. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE D O NOT FIND ANY JUSTIFICATION FOR FILING OF THE DEPARTMENTAL APPEAL IN CONTRAVENTION OF THE BOARD CIRCULAR. THE DEPARTMENTAL APPEAL IS FILE D ON 02-06-2011 AND AS SUCH THE RECENT BOARD CIRCULAR WILL APPLY TH ROUGH WHICH IT IS DIRECTED THAT THE DEPARTMENTAL APPEALS HAVING TAX E FFECT OF LESS THAN RS.3 LACS SHOULD NOT BE FILED. THE CALCULATION OF T HE LEARNED COUNSEL ITA NO. 1548/AHD/2011 AND C. O. NO.165/AHD/2011 SHRI DEVJIBHAI V. PATEL 3 FOR THE ASSESSEE SHOWS THAT TAX EFFECT IS BELOW RS. 3 LACS WHICH IS ALSO NOT DISPUTED BY THE LEARNED DR. NO SUBSTANTIAL QUESTION OF LAW ARISES OUT OF THE IMPUGNED ORDER. MERELY IT IS SECO ND ROUND PROCEEDINGS BEFORE THE TRIBUNAL IS NOT GROUND TO KE EP THE DEPARTMENTAL APPEAL ALIVE WHICH IS FILED IN CONTRAV ENTION OF THE BOARD CIRCULAR. IN THIS VIEW OF THE MATTER THE DEPARTMENT AL APPEAL IS NOT MAINTAINABLE AND IS LIABLE TO BE DISMISSED. THE HO NBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS CONCORD PHARMACEUTICALS IN TAX APPEAL NO.402/2001 VIDE ORDER DATED 05-08-2008 HAS FINALLY SETTLED THE ISSUE REGARDING TAX EFFECT CASES. THE HONBLE HIGH COURT IN THIS CASE HAS HELD AS UNDER:- 25. THERE IS ALSO DIFFERENCE OF OPINION AMONGST TH E COURTS WITH REGARD TO THE APPLICABILITY OF THE CIRCULAR. IF ON THE DATE OF FILING OF AN APPEAL, A CIRCULAR IS NOT IN F ORCE OR CERTAIN EXCEPTIONS ARE NOT THERE OR MONETARY LIMIT IS LESS THAN WHAT WAS THERE AT THE TIME OF DECIDING THIS AP PEAL, IN SUCH CASES, THE TRIBUNAL WILL HAVE TO GIVE DUE WEIG HTAGE TO THE PROVISIONS CONTAINED IN THE CIRCULAR PREVALE NT ON THE DATE OF FILING OF APPEAL AND NOT ON THE DATE OF THE DECISION OF THE APPEAL. IN CIT V. CHHAGER PACKAGI NG & PLASTICS (P) LTD.,(2008) 214 CTR 389 (BOM), THE BOM BAY HIGH COURT TOOK THE VIEW THAT CIRCULARS / INSTRUCTI ONS ISSUED BY THE BOARD ARE APPLICABLE ONLY PROSPECTIVE LY AND IF THERE IS NO REFERENCE TO THEIR APPLICABILITY TO THE PENDING MATTERS, SUCH PENDING MATERS CANNOT BE DECIDED ON T HE BASIS OF CIRCULARS / INSTRUCTIONS. 26. IN PITHWA ENGINEERING WORKS CASE [2005] 276 I TR 519 THE BOMBAY HIGH COURT TOOK THE VIEW THAT TAKING JUD ICIAL NOTICE OF THE MONEY VALUE HAVING GONE DOWN AND COST OF LITIGATION EXPENSES HAVING GONE UP AS WELL AS HUGE PENDENCY OF CASES, THE BOARD SHOULD EVOLVE A POLICY OF APPLYING THE CIRCULAR EVEN TO THE OLD REFERENCES WH ICH ARE ITA NO. 1548/AHD/2011 AND C. O. NO.165/AHD/2011 SHRI DEVJIBHAI V. PATEL 4 STILL UNDIVIDED. THE DEPARTMENT SHOULD NOT HAVE PROCEEDED WITH THE APPEALS / REFERENCES WHEREIN THE TAX IMPACT IS MINIMAL, IRRESPECTIVE OF THEIR DATE OF FI LING. 27. THERE IS NO DISPUTE ABOUT THE FACT THAT WHERE S UBSTANTIAL QUESTION OF LAW OF IMPORTANCE IS INVOLVED OR WHERE QUESTION OF LAW IS IMPORTANCE IS INVOLVED OR WHERE QUESTION OF LAW IS REPEATEDLY ARISING OR WHERE THE ISSUE IS COVERED BY THE JUDGMENT OF TERRITORIAL HIGH COURT O R SUPREME COURT, THE TRIBUNAL WILL HAVE TO DECIDE THE APPEAL ON MERITS AND IN TERMS OF THE LAW DECLARED B Y THE SUPREME COURT OR BY THE TERRITORIAL HIGH COURT. HO WEVER, ON THIS GROUND THE MATTERS CANNOT BE REMANDED TO TH E TRIBUNAL DIRECTING THE TRIBUNAL TO DECIDE THE SAME AFRESH. IF NO OBJECTIONS ARE RAISED BY THE DEPARTMENTAL REPRESENTATIVE AT THE TIME OF HEARING OF THE APPEAL AGAINST THE APPLICABILITY OF THE CIRCULAR DESPITE T HERE BEING AN EXCEPTION, THE DEPARTMENT HAS MISSED THE BUS AND SECOND INNING CANNOT BE GRANTED FOR THAT PURPOSE. HOWEVER, IN MATTERS WHERE SUCH OBJECTIONS ARE RAISE D AND DESPITE THOSE OBJECTIONS OR WITHOUT DEALING WIT H THOSE OBJECTIONS IF THE TRIBUNAL HAS DISMISSED THE APPEAL ONLY ON THE GROUND OF LOW TAX EFFECT IN SUCH MATTER, AN INDULGENCE IS REQUIRED TO BE SHOWN BY THIS COURT AN D FOR THIS LIMITED PURPOSES, THE DEPARTMENT IS PERMITTED TO MOVE AN APPROPRIATE APPLICATION BEFORE THE TRIBUNAL FOR DECIDING THE APPEAL ON MERITS. 28. WE ARE OF THE VIEW THAT SIMPLY BECAUSE THE APPE AL IS FILED BY THE DEPARTMENT IN CONTRAVENTION OF THE CIRCULAR THE TRIBUNAL IS NOT BOUND TO DECIDE THE APPEAL ON MERIT S. DUE WEIGHTAGE SHOULD INVARIABLY BE GIVEN BY THE TRIBUNA L TO THE CIRCULAR ISSUED BY THE BOARD. EVEN OTHERWISE, THE NEWLY INSERTED PROVISIONS CONTAINED IN SECTION 268A (4) MAKE IT OBLIGATORY FOR THE TRIBUNAL TO CONSIDER SUC H CIRCULAR. IT IS NOT OPEN FOR THE DEPARTMENT TO CON TEND THAT CIRCULARS ARE INTERNAL MATTERS OF THE DEPARTMENT AN D ASSESSEE CANNOT OBJECT TO FILING OF AN APPEAL ON TH E BASIS OF SUCH CIRCULAR. IT IS TRUE THAT FILING OF AN APP EAL IS A STATUTORY RIGHT BUT IT CAN CERTAINLY BE REGULATED B Y THE ITA NO. 1548/AHD/2011 AND C. O. NO.165/AHD/2011 SHRI DEVJIBHAI V. PATEL 5 BOARD BY ISSUANCE OF ORDERS, INSTRUCTIONS OR CIRCUL ARS. THIS WOULD NOT AMOUNT TO TAKING AWAY THE RIGHT OF F ILING OF APPEAL OR THAT SUCH RIGHT IS PROHIBITED BY EXECUTIV E INSTRUCTIONS. SECTION 268A(1) OF THE ACT NOW RECOG NIZES SUCH RIGHT OF THE BOARD TO REGULATE THE FILING OF A PPEAL OR APPLICATION BEFORE THE TRIBUNAL OR THE COURT. IT I S ALSO TRUE THAT WHEN THE HONBLE SUPREME COURT OR THE TERRITOR IAL HIGH COURT HAVE DECLARED THE LAW ON A QUESTION, IT IS NOT OPEN TO THE TRIBUNAL TO DIRECT THAT THE CIRCULAR IS SUED BY THE BOARD PRESCRIBING THE MONETARY LIMIT SHOULD BE GIVEN EFFECT TO AND NOT THE DECISION OF HONBLE SUPREME C OURT OR THE TERRITORIAL HIGH COURT. IT IS, HOWEVER, EQUA LLY TRUE THAT THE TRIBUNALS ATTENTION MUST BE DRAWN BY THE DEPARTMENTAL REPRESENTATIVE TO SUCH DECISION OF THE HONBLE SUPREME COURT OR THE HIGH COURT. AN OBJECT ION MUST BE RAISED BY THE DEPARTMENTAL REPRESENTATIVE. CONSIDERING ALL THE AFORESAID ISSUES, WE DISMISS A LL THESE TAX APPEALS RESERVING LIBERTY TO THE DEPARTME NT ONLY ON THOSE CASES TO APPLY TO THE TRIBUNAL TO DEC IDE THE APPEAL ON MERITS WHERE THE OBJECTIONS WERE RAISED B EFORE THE TRIBUNAL EITHER IN THE APPEAL MEMO OR AT THE TI ME OF HEARING OF APPEAL RAISING A SPECIFIC CONTENTION THA T A PARTICULAR APPEAL IS COVERED BY AN EXCEPTION AND DE SPITE THIS OBJECTION THE TRIBUNAL HAS NOT DEALT WITH THE SAID CONTENTION AND DISMISSED THE APPEAL ON THE GROUND O F LOW TAX EFFECT. IT IS EXPECTED FROM THE TRIBUNAL TO CON SIDER THIS BROAD PARAMETERS WHILE APPLYING THE RELEVANT CIRCUL AR TO THE FACTS OF THE CASE AT THE TIME OF DECIDING APPEA LS. 4. IN VIEW OF THE ABOVE, WE DISMISS THE DEPARTMENTA L APPEAL AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED AS WITHDRAWN. ITA NO. 1548/AHD/2011 AND C. O. NO.165/AHD/2011 SHRI DEVJIBHAI V. PATEL 6 5. IN THE RESULT, THE DEPARTMENTAL APPEAL AS WELL A S THE CROSS OBJECTION OF THE ASSESSEE, BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 21/10/2011. SD/- SD/- (A. L. GEHLOT) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD