ACIT, Nashik V. Shri Sanjay Prabhkar Ganorkar, Nashik

ITA 1597/PUN/2012

• Counselvise Citation: 159724514 RSA 2012
• Duration Of Justice: 2 year(s) 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-11-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 26-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law; Tax effect
• Section: 153A; 260A; 27; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NOS.1593 TO 1598/PN/2012 (ASSESSMENT YEARS: 2003-04 TO 2008-09) THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, NASHIK . APPELLANT VS. SHRI SANJAY PRABHAKAR GANORKAR GANORKAR HOSPITAL, BEHIND MAHAMARG BUS STAND, MUMBAI NAKA, NASHIK 422010 PAN: AESPG5451P . RESPONDENT APPELLANT BY : SHRI RAJESH DAMOR RESPONDENT BY : SHRI KISHORE PHADKE DATE OF HEARING : 05-11-2014 DATE OF PRONOUNCEMENT : 25-11-2014 ORDER PER SUSHMA CHOWLA, JM: THIS BUNCH OF SIX APPEALS FILED BY THE REVENUE ARE AGAINS T CONSOLIDATED ORDER OF CIT(A)-I, NASHIK, DATED 18.05.2012 RE LATING TO ASSESSMENT YEARS 2003-04 TO 2008-09 AGAINST PENALTY LE VIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. 2. SIMILAR GROUNDS OF APPEAL WERE RAISED IN ALL THE YEARS, WH ICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED CIT(A) ERRED IN DELETING PENALTY LEVIED UNDER SECTION 2 71(1)(C) OF THE ACT AMOUNTING TO RS.2,67,520/- WITHOUT APPRECIATING THE ITA NOS.1593 TO 1598/PN/2012 SHRI SANJAY P GANORKAR 2 SETTLED LEGAL POSITION THAT THE DIFFERENCE BETWEEN THE INCOME DISCLOSED U/S.139(1) AND 153C OF THE ACT ATTRACTS P ENALTY U/S. 271(1)(C) OF THE ACT PARTICULARLY WHEN SUCH A DIFFERE NCE IS BASED ON INCRIMINATING SEIZED MATERIAL. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT THE ADDITIONAL I NCOME OF RS. 8,24,265/- WAS OFFERED ONLY IN THE RETURN FILED U/S. 153A OF THE ACT ON SPECIFIC ISSUE OF SUPPRESSED PROFESSIONAL RE CEIPTS ON THE BASIS OF INCRIMINATING MATERIALS FOUND AND SEIZED DURIN G THE SEARCH. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED CIT(A) ERRED IN APPLYING EXPLANATION 1 TO SECTION 27 1(1)(C) OF THE ACT INSTEAD OF EXPLANATION 5A OF THAT SECTION THUS R ENDERING HIS DECISION PERVERSE AND BAD IN LAW. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT BUT FO R THE SEARCH OPERATIONS THE ASSESSEE WOULD NOT HAVE OFFERED ADDITI ONAL INCOME IN THE RETURN FILED U/S.153A OF THE ACT. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, MODIFY THE G ROUNDS OF APPEAL, IF CONSIDERED NECESSARY SUBSEQUENTLY. 6. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF H EARING. 3. ALL THE APPEALS RELATING TO SAME ASSESSEE ON SAME ISSU E WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. THE FACTS IN ALL THE YEARS UNDER APPEAL AR E IDENTICAL. HOWEVER, WE MAKE A REFERENCE TO THE FACTS IN ITA NO.159 3/PN/2012 ON THE ISSUE. 4. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE POINTED OUT THAT THE ISSUE RAISED IN THE PRESENT APPEALS WAS OF SMALL TAX EFFECT AND THE APPEALS OF REVENUE WERE NOT MAINTAINABLE. IT WAS FURT HER POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE AS SESSEE THAT IN ALL THE YEARS UNDER APPEAL, PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS LEVIED WHICH WAS LESS THAN RS.4 LACS. OUR ATTENTION WAS DR AWN TO THE REVISED INSTRUCTION NO.5 OF 2014, DATED 10.07.2014 UNDER W HICH, THE ITA NOS.1593 TO 1598/PN/2012 SHRI SANJAY P GANORKAR 3 LIMIT FOR FILING THE APPEAL BEFORE THE TRIBUNAL BY REVENUE HAS BEEN FIXED HAVING TAX EFFECT OF RS.4 LACS OR MORE. THE LEARNED AUTHOR IZED REPRESENTATIVE FOR THE ASSESSEE FURTHER PLACED RELIANCE O N THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. SMT. VI JAYA V. KAVEKAR REPORTED IN (2013) 350 ITR 237 (BOM) FOR THE PROP OSITION THAT THE CIRCULARS ISSUED BY THE CBDT WERE NOT ONLY APPLICABLE TO THE NEW CASES BUT WERE ALSO APPLICABLE TO THE PENDING APPEALS. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVE NUE HOWEVER, POINTED OUT THAT INSTRUCTIONS ARE TO BE APPLIED AS PREVALENT ON THE DATE OF FILING APPEALS AND NOT SUBSEQUENT INSTRUCTIONS ISSUED IN THE MATTE R. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE REVENUE IS IN APPEAL AGAINST THE DELETION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR THE CAPTIONED ASSESSMENT YEARS. T HE ASSESSING OFFICER HAD LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT, W HICH IN TURN, WAS DELETED BY THE CIT(A), AS UNDER:- ASSESSMENT YEAR PENALTY AMOUNT (RS.) 2003-04 2,67,520 2004-05 2,77,630 2005-06 1,83,950 2006-07 2,56,400 2007-08 3,84,040 2008-09 3,96,910 7. THE REVENUE HAD FILED APPEALS AGAINST SUCH DELETION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT BY THE CIT(A). WHEN THE MATTER WAS TAKEN UP FOR HEARING, IT WAS POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT AS PER CBDT INST RUCTION NO.5 OF ITA NOS.1593 TO 1598/PN/2012 SHRI SANJAY P GANORKAR 4 2014, DATED 10.07.2014, THE APPEALS FOR ALL THE YEARS WERE NOT MAINTAINABLE. 8. UNDER THE PROVISIONS OF SECTION 268(1) OF THE ACT, THE C BDT IS EMPOWERED TO ISSUE INSTRUCTIONS FIXING THE MONETARY LIMITS FOR THE REVENUE TO FILE APPEALS BEFORE THE TRIBUNAL, ALL THE HIGH COU RTS AND THE SUPREME COURT. THE CBDT FROM TIME TO TIME, ISSUES INSTRU CTIONS FIXING THE MONETARY LIMITS WITH THE OBJECT OF NOT BURDENING THE COURTS AND THE TRIBUNAL WITH MATTERS WHERE THE TAX EFFECT WAS ON A LOWE R SIDE. THE CBDT VIDE INSTRUCTION NO.5 OF 2014 ISSUED ON 10.07.2014 HA D REVISED THE EARLIER INSTRUCTION NO.3 OF 2011, DATED 09.02.2011 WH EREIN, THE MONETARY LIMITS AND OTHER CONDITIONS FOR FILING THE DEPARTMEN TAL APPEALS IN INCOME TAX MATTERS BEFORE THE APPELLATE TRIBUNALS, HIGH COURTS AND SUPREME COURT WERE SPECIFIED. THE INSTRUCTIONS ISSUED O N 10.07.2014 WERE IN SUPERSESSION OF THE EARLIER INSTRUCTIONS AND THE MONETARY LIMITS HAVE BEEN ENHANCED 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 (IN 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/- 9. THE REVISED MONETARY LIMIT FOR FILING THE APPEALS BEFORE TH E APPELLATE TRIBUNAL WAS FIXED AT IN EXCESS OF RS.4 LACS. FURTHE R, UNDER THE SAID INSTRUCTION, IT WAS ALSO DIRECTED THAT THE ASSESSING OFFICER SHALL CALCULATE THE TAX EFFECT SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUES. IN CASE OF EVERY ASSESSEE WHERE, T HE DISPUTED ISSUE ITA NOS.1593 TO 1598/PN/2012 SHRI SANJAY P GANORKAR 5 ARISES IN MORE THAN ONE ASSESSMENT YEAR, IT WAS DIRECTED THAT APPEAL COULD BE FILED IN RESPECT OF SUCH ASSESSMENT YEAR OR YEAR S IN WHICH, THE TAX EFFECT IN RESPECT OF THE DISPUTED ISSUE EXCEEDED THE MONETARY LIMIT FIXED. IN OTHER WORDS AND HENCEFORTH, THE APPEALS CAN B E FILED ONLY WITH REFERENCE TO THE TAX EFFECT IN THE RELEVANT ASSESSMENT Y EAR. IN CASE OF COMPOSITE ORDER OF ANY HIGH COURT OR APPELLATE AUTHORITY, IT WAS FURTHER CLARIFIED THAT IF THE APPEAL IS TO BE FILED IN RESPECT OF THE Y EAR/S IN WHICH, TAX EFFECT EXCEEDS THE MONETARY LIMIT PRESCRIBED THEN, SUC H APPEALS COULD ALSO BE FILED IN RESPECT OF ALL SUCH ASSESSMENT YEARS EVEN IF THE TAX EFFECT IS LESS THAN PRESCRIBED MONETARY LIMITS. 10. IN THE FACTS OF THE PRESENT CASE, THE REVENUE HAD FILED THE APPEALS ON 26.07.2012. ADMITTEDLY, IN ALL THE YEARS UNDER APPEAL, T HE TAX EFFECT IS LESS THAN RS.4 LACS AS PRESCRIBED IN INSTRUCTION NO.5 OF 2014 ISSUED BY THE CBDT. AT THE TIME OF HEARING OF THE APPEALS, THE MONE TARY LIMITS PRESCRIBED BY THE CBDT STAND REVISED BY THE SAID INSTR UCTION NO.5 OF 2014, DATED 10.07.2014 UNDER WHICH, IT HAS BEEN PROVIDED T HAT WHERE THE TAX EFFECT DOES NOT EXCEED RS.4 LACS IN ANY OF THE AS SESSMENT YEARS THEN, NO APPEALS CAN BE FILED BEFORE THE APPELLATE TRIBUNAL. THE ISSUE ARISING BEFORE US IS WHETHER THE SAID REVISED INSTRUCTIONS WHICH WERE ISSUED SUBSEQUENT TO THE FILING OF THE APPEALS BY THE REVE NUE COULD BE APPLIED TO THE PENDING APPEALS OR APPLICABLE ONLY TO THE N EW CASES TO BE FILED BY THE REVENUE AFTER THE DATE OF ISSUE OF THE INSTRUCTIONS. 11. 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 VS. S MT. VIJAYA V. KAVEKAR (SUPRA), HAD IN TURN FOLLOWED THE RATIO LAID DOWN BY ANOTHER ITA NOS.1593 TO 1598/PN/2012 SHRI SANJAY P GANORKAR 6 DIVISION OF BOMBAY HIGH COURT IN THE CASE OF CIT VS. POLYCO TT CORPORATION REPORTED IN (2009) 318 ITR 144 (BOM) WHEREIN, 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 A NOTHER DIVISION BENCH OF THIS COURT CONSTRUED THE SAME INST RUCTION NO. 2 OF 2005, DATED 24TH OCTOBER, 2005. THE DIVISION BENCH OBSE RVED WHILE CONSTRUING THE PARAGRAPH NO. 5 OF THE CIRCULAR, AS THUS : '9. HAVING CONSIDERED THE CONTENTIONS, IN OUR OPINIO N, THE INSTRUCTIONS CANNOT BE INTERPRETED AS A STATUTE THO UGH IT IS PURSUANT TO THE POWER CONFERRED UNDER SECTION 268A OF THE IT ACT. WHAT THE COURT HAS TO CONSIDER IS THE PLAIN LAN GUAGE 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 THAN THE LIMIT PR ESCRIBED. EVEN BEFORE THIS INSTRUCTION, CBDT HAS BEEN ISSUING INSTRUCTIONS, THE LAST ONE BEING ON 24TH OCT., 2005 WH ERE THE MONETARY LIMIT HAS BEEN FIXED. IN THOSE INSTRUCTIONS T HE ONLY EXCEPTION HAD BEEN THAT IN CASES INVOLVING, SUBSTANTIAL QUESTION OF LAW OF IMPORTANCE AS WELL AS IN CASES WHER E THE SAME QUESTION OF LAW WILL REPEATEDLY ARISE, EITHER IN T HE CASE CONCERNED OR IN SIMILAR CASE, APPEAL SHOULD BE FILED WITH OUT BEING HINDERED BY THE MONETARY LIMITS. THE PRESENT INSTRUCTIONS SEEM EVEN TO LIMIT THE ISSUES INSOFAR AS THE SAME QUESTION OF LAW OR RECURRING ISSUE EXCEPT TO THE EXTENT P ROVIDED IN PARA 5. ON A PROPER READING OF PARA 5 OF THE INSTRUCTIONS IT WOULD BE CLEAR THAT A DUTY IS CAST ON THE AO THAT EVEN IF THE DISPUTED QUESTIONS ARISE FOR MORE THAN ONE ASSESSMENT YEAR T HEN AN APPEAL SHOULD BE FILED ONLY IN RESPECT OF THOSE YEARS W HERE THE MONETARY LIMIT AS SPECIFIED IN PARA 3 OF THE INST RUCTION. THE EXCEPTION, HOWEVER, IS CARVED OUT IN RESPECT OF A COMPOSITE ORDER OF THE HIGH COURT OR APPELLATE AUTHOR ITY. IN OTHER WORDS WHERE THE HIGH COURT OR TRIBUNAL HAS PAS SED A COMPOSITE ORDER IN RESPECT OF THE SAME ASSESSEE ON T HE SAME QUESTION AND/OR ON DIFFERENT QUESTION AND FOR ONE O F THE ASSESSMENT YEARS, THE TAX EFFECT IS MORE THAN THE MO NETARY LIMIT THEN THE APPEAL SHALL ALSO BE FILED IN RESPECT OF A LL THE ASSESSMENT YEARS. THE SUBMISSION ON BEHALF OF THE AS SESSEE IS THAT THE COMPOSITE ORDER MUST RELATE TO A COMMON ISSUE. WE BEG TO DISAGREE ON A PLAIN AND LITERAL CONSTRUCTION OF THE INSTRUCTION. THE EXPRESSION 'WHICH INVOLVES MORE THA N ONE YEAR' WOULD HAVE NO MEANING IF IT WAS RESTRICTED ONL Y TO THE EXPRESSION 'COMMON ISSUES'. THE EXPRESSION, THEREFORE , OF A COMPOSITE ORDER WILL HAVE TO BE READ TO MEAN AN ORDE R IN RESPECT OF THE SAME ASSESSEE FOR MORE THAN ONE YEAR . AN (ORDER) DISPOSING OF SEVERAL APPEALS ON A COMMON QUEST ION OF LAW BY APPELLATE AUTHORITY, CANNOT BE SAID TO BE A COM POSITE ORDER AS THE ORDER INVOLVES APPEALS BY DIFFERENT PERS ONS, ITA NOS.1593 TO 1598/PN/2012 SHRI SANJAY P GANORKAR 7 WHICH APPEALS FOR THE SAKE OF CONVENIENCE HAVE BEEN ONLY CLUBBED TOGETHER FOR THE PURPOSE OF DISPOSAL ON THAT ISSUE. IN OUR OPINION, THIS WOULD BE THE CORRECT READING OF PAR A 5 OF THE INSTRUCTION.' 12. THE HONBLE BOMBAY HIGH COURT FURTHER HELD AS UNDER:- 15. THE POSITION OF LAW, THEREFORE, EMERGING FROM TH E AFORESAID JUDGEMENTS, IS THAT THE CIRCULARS OR INSTRUCTIONS IS SUED UNDER SECTION 268A OF THE INCOME TAX ACT BY THE CENTRAL BOARD OF DIRECT TAX ES, ARE APPLICABLE NOT ONLY TO NEW CASES BUT TO PENDING CASE S AS WELL. SUCH CIRCULARS HAVE BEEN ISSUED UNDER SECTION 268A OF TH E INCOME TAX ACT, WHICH IS AN EXCEPTION TO THE PROVISIONS OF SECT ION 260 OF THE ACT. THE CBDT BEING MINDFUL OF THIS POSITION HAS ISSUED THE AFORESAID INSTRUCTIONS. IN OUR OPINION, THEREFORE, THE INSTRUC TIONS WOULD BE APPLICABLE TO PENDING CASES AS WELL. WE HAVE ALREADY FOU ND THAT THE INSTRUCTION NO. 5 OF 2008 AND INSTRUCTION NO. 3 OF 2 011 ARE PARA- MATERIA. THE INSTRUCTION NO. 5 OF 2008 HAS ALREADY BEEN INTERPRETED BY THIS COURT IN CIT V/S MADHUKAR INAMDAR (SUPRA). IT IS NOT DISPUTED THAT THIS JUDGEMENT HAS NOT BEEN CHALLENGED BY THE REVENUE AND THEREFORE STILL HOLDS THE FIELD. 13. FOLLOWING THE ABOVE SAID PROPOSITION LAID DOWN BY THE H ONBLE HIGH COURT IN THE CASE OF CIT VS. SMT. VIJAYA V. KAVEKAR (SUPR A), WE HOLD THAT IN VIEW OF THE REVISED INSTRUCTION ISSUED BY THE CBDT UND ER WHICH, THE MONETARY LIMIT FOR FILING THE APPEALS BEFORE THE APPELLATE AUTH ORITIES, TRIBUNALS HAS BEEN REVISED AND FIXED AT RS.4 LACS I.E. ONLY APPEALS WITH TAX EFFECT EXCEEDING RS.4 LACS WERE MAINTAINABLE. IN THE P RESENT SET OF APPEALS FILED BY THE REVENUE, THE MONETARY LIMIT ADMITTEDLY, IS LESS THAN RS.4 LACS IN EACH OF THE YEARS. IN VIEW OF INSTRUCTION N O.5 OF 2014 WHICH ARE APPLICABLE NOT ONLY TO THE NEW APPEALS TO BE FILED BY THE REVENUE, BUT ALSO TO THE APPEALS PENDING BEFORE THE TRIBUNAL, WE DISMISS THE APPEALS FILED BY THE REVENUE BECAUSE OF SMALL TAX EFFECT. 14. THE ISSUE IN ITA NOS.1594 TO 1598/PN/2012 ARE IDEN TICAL TO THE ISSUE IN ITA NO.1593/PN/2012 AND OUR DECISION IN ITA ITA NOS.1593 TO 1598/PN/2012 SHRI SANJAY P GANORKAR 8 NO.1593/PN/2012 SHALL APPLY MUTATIS MUTANDIS TO ITA NOS.1594 TO 1598/PN/2012. 15. IN THE RESULT, ALL THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF NOVEMBER, 2014. SD/- SD/- (G.S. PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 25 TH NOVEMBER, 2014. GCVSR COPY OF THE ORDER IS FORWARDED TO : - 1) THE DEPARTMENT; 2) THE ASSESSEE; 3) THE CIT(A)-I, NASHIK; 4) THE CIT-I, NASHIK; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE