DCIT, Circle-1, Nashik V. Dr. Shri Ranjit N Mehta, Nashik

ITA 1656/PUN/2013

• Counselvise Citation: 165624514 RSA 2013
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 30-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAZHAR AKRAM
• Assessee Lawyers: AKASH V RATHOD
• Keywords: Question of law; Tax effect
• Section: 260A

Judgement Text

INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 1656/PN/2013 (ASSESSMENT YEAR 2008-09) ACIT, CIRCLE-1, NASHIK .. APPELLANT VS. DR. SHRI RANJIT N. MEHTA, MEHTA HOSPITAL, KULKARNI COLONY, SHARANPUR ROAD, NASHIK 422101 .. RESPONDENT PAN NO.ABFPM2447M ASSESSEE BY : SHRI AKASH V. RATHOD DEPARTMENT BY : SHRI MAZHAR AKRAM DATE OF HEARING : 27-11-2014 DATE OF PRONOUNCEMENT : 27-11-2014 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 06-06-2013 OF THE CIT(A)-I, NASHIK RELATING TO ASSESSMENT YEAR 2008-09. 2. THE REVENUE IN THE GROUNDS OF APPEAL HAS CHALLEN GED THE ORDER OF THE CIT(A) IN DELETING THE PENALTY OF RS.3,96,480/- U/S.271(1)(C) OF THE I.T. ACT. 3. AN ADJOURNMENT PETITION WAS FILED BY THE ASSESSE E SEEKING ADJOURNMENT OF THE CASE. HOWEVER, SINCE TH E TAX EFFECT IN THE INSTANT CASE WAS FOUND TO BE LESS THA N RS.4 LAKHS, THEREFORE, THE ADJOURNMENT PETITION FILED BY THE 2 ASSESSEE WAS REJECTED AND THE APPEAL WAS TAKEN UP F OR HEARING. 4. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED TH AT THE CBDT INSTRUCTION NO.05/2014 DATED 10-07-2014 IS APPLICABLE ONLY TO THE APPEALS FILED ON OR AFTER TH E DATE OF SUCH INSTRUCTION. 5. WE HAVE CONSIDERED THE ARGUMENTS OF THE LD. DEPARTMENTAL REPRESENTATIVE. WE FIND THE APPEAL IN THE INSTANT CASE HAS BEEN FILED BY THE REVENUE ON 30-08 -2013 AND THE TAX EFFECT IS ADMITTEDLY LESS THAN RS.4 LAK HS. WE FIND AN IDENTICAL ISSUE HAD COME UP BEFORE THE TRIB UNAL IN THE CASE OF SHRI SANJAY PRABHAKAR JUNNARKAR VIDE IT A NO.791/PN/2013 ORDER DATED 26-11-2014 WHERE ONE OF US (AM) IS A PARTY. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL 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 TO THE ASSESSEE BY THE CIT(A) IN RESPECT OF ADDITION MADE BY TH E ASSESSING OFFICER. THE ASSESSING OFFICER HAD MADE THE ADDI TION WHILE COMPLETING ASSESSING PROCEEDINGS UNDER SECTION 143 (3) OF THE ACT, WHICH IN TURN, DELETED BY THE CIT(A) AS UND ER:- PARTICULARS AMOUNT DEPOSIT EXPENSES FOR BUSINESS ASSOCIATES 5,58,948 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 T AKEN UP FOR HEARING, IT WAS POINTED OUT BY THE LEARNED AUTHORIZE D REPRESENTATIVE FOR THE ASSESSEE THAT AS PER CBDT INSTRUCT ION 3 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 MONET ARY LIMITS FOR THE REVENUE TO FILE APPEALS BEFORE THE TRI BUNAL, ALL THE HIGH COURTS AND THE SUPREME COURT. THE CBDT FROM TI ME TO TIME, ISSUES INSTRUCTIONS FIXING THE MONETARY LIMITS WIT H THE OBJECT OF NOT BURDENING THE COURTS AND THE TRIBUNAL WITH MATTERS WHERE THE TAX EFFECT WAS ON A LOWER SIDE. THE CBDT V IDE INSTRUCTION NO.5 OF 2014 ISSUED ON 10.07.2014 HAD REVI SED THE EARLIER INSTRUCTION NO.3 OF 2011, DATED 09.02.2011 W HEREIN, THE MONETARY LIMITS AND OTHER CONDITIONS FOR FILING THE D EPARTMENTAL APPEALS IN INCOME TAX MATTERS BEFORE THE APPELLATE T RIBUNALS, HIGH COURTS AND SUPREME COURT WERE SPECIFIED. THE IN STRUCTIONS ISSUED ON 10.07.2014 WERE IN SUPERSESSION OF THE 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 N OT 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 L ACS. FURTHER, UNDER THE SAID INSTRUCTION, IT WAS ALSO DIRECT ED THAT THE ASSESSING OFFICER SHALL CALCULATE THE TAX EFFECT SEPARATE LY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUES. IN CASE OF EVERY ASSESSEE WHERE, THE DISPUTED ISSUE ARISES IN MORE T HAN ONE ASSESSMENT YEAR, IT WAS DIRECTED THAT APPEAL COULD B E FILED IN RESPECT OF SUCH ASSESSMENT YEAR OR YEARS IN WHICH, THE TA X EFFECT IN RESPECT OF THE DISPUTED ISSUE EXCEEDED THE MONETARY LIMIT FIXED. IN OTHER WORDS AND HENCEFORTH, THE APPEALS CA N BE FILED ONLY WITH REFERENCE TO THE TAX EFFECT IN THE RELEVA NT ASSESSMENT YEAR. IN CASE OF COMPOSITE ORDER OF ANY HIGH COURT OR APPELLATE AUTHORITY, IT WAS FURTHER CLARIFIED THAT IF THE APPE AL IS TO BE FILED IN RESPECT OF THE YEAR/S IN WHICH, TAX EFFECT EXCEEDS THE MONETARY LIMIT PRESCRIBED THEN, SUCH APPEALS COULD ALSO BE FILED IN RESPECT OF ALL SUCH ASSESSMENT YEARS EVEN IF THE TAX EFFECT IS LESS THAN PRESCRIBED MONETARY LIMITS. 8. IN THE FACTS OF THE PRESENT CASE, THE REVENUE HAD F ILED THE APPEALS ON 04.04.2013. ADMITTEDLY, IN ALL THE YEAR S UNDER APPEAL, THE TAX EFFECT IS LESS THAN RS.4 LACS AS PRESCRIBE D IN INSTRUCTION NO.5 OF 2014 ISSUED BY THE CBDT. AT THE T IME OF HEARING OF THE APPEALS, THE MONETARY LIMITS PRESCRIBED BY THE CBDT STAND REVISED BY THE SAID INSTRUCTION NO.5 OF 2014 , DATED 10.07.2014 UNDER WHICH, IT HAS BEEN PROVIDED THAT WH ERE THE TAX EFFECT DOES NOT EXCEED RS.4 LACS IN ANY OF THE ASSESSMENT YEARS THEN, NO APPEALS CAN BE FILED BEFORE THE APPELLATE T RIBUNAL. THE ISSUE ARISING BEFORE US IS WHETHER THE SAID REVISED INSTRUC TIONS 4 WHICH WERE ISSUED SUBSEQUENT TO THE FILING OF THE APPEA LS BY THE REVENUE COULD BE APPLIED TO THE PENDING APPEALS OR A PPLICABLE 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 VS. 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. POLYCOTT 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 ANOTHER DIVISION BENCH OF THIS COURT CONSTRUED THE SAME INS TRUCTION NO. 2 OF 2005, DATED 24TH OCTOBER, 2005. THE DIVISION BEN CH OBSERVED WHILE CONSTRUING THE PARAGRAPH NO. 5 OF THE CIRCULA R, AS THUS : '9. HAVING CONSIDERED THE CONTENTIONS, IN OUR OPINI ON, 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 LANGUAG E OF THE PARA AND THE OBJECT BEHIND THE SAID PROVISIONS. THE OBJE CT APPEARS TO BE NOT TO BURDEN COURTS AND TRIBUNALS IN RESPECT OF MA TTERS WHERE THE TAX EFFECT IS LESS THAN THE LIMIT PRESCRIBED. EV EN BEFORE THIS INSTRUCTION, CBDT HAS BEEN ISSUING INSTRUCTIONS, TH E LAST ONE BEING ON 24TH OCT., 2005 WHERE THE MONETARY LIMIT HAS BEE N FIXED. IN THOSE INSTRUCTIONS THE ONLY EXCEPTION HAD BEEN THAT IN CASES INVOLVING, SUBSTANTIAL QUESTION OF LAW OF IMPORTANC E AS WELL AS IN CASES WHERE THE SAME QUESTION OF LAW WILL REPEATEDL Y 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 QUESTION OF LAW OR RECURRING ISSUE EXCEPT TO THE EXTE NT 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 DISP UTED QUESTIONS ARISE FOR MORE THAN ONE ASSESSMENT YEAR THEN AN APP EAL SHOULD BE FILED ONLY IN RESPECT OF THOSE YEARS WHERE THE MONE TARY LIMIT AS SPECIFIED IN PARA 3 OF THE INSTRUCTION. THE EXCEPTI ON, HOWEVER, IS CARVED OUT IN RESPECT OF A COMPOSITE ORDER OF THE H IGH COURT OR APPELLATE AUTHORITY. IN OTHER WORDS WHERE THE HIGH COURT OR TRIBUNAL HAS PASSED A COMPOSITE ORDER IN RESPECT OF THE SAME ASSESSEE ON THE SAME QUESTION AND/OR ON DIFFERENT Q UESTION AND FOR ONE OF THE ASSESSMENT YEARS, THE TAX EFFECT IS MORE THAN THE MONETARY LIMIT THEN THE APPEAL SHALL ALSO BE FILED IN RESPECT OF ALL THE ASSESSMENT YEARS. THE SUBMISSION ON BEHALF OF T HE ASSESSEE IS THAT THE COMPOSITE ORDER MUST RELATE TO A COMMON IS SUE. WE BEG TO DISAGREE ON A PLAIN AND LITERAL CONSTRUCTION OF THE INSTRUCTION. THE EXPRESSION 'WHICH INVOLVES MORE THAN ONE YEAR' WOUL D HAVE NO MEANING IF IT WAS RESTRICTED ONLY TO THE EXPRESSION 'COMMON ISSUES'. THE EXPRESSION, THEREFORE, OF A COMPOSITE ORDER WILL HAVE TO BE READ TO MEAN AN ORDER IN RESPECT OF THE SAME ASS ESSEE FOR MORE 5 THAN ONE YEAR. AN (ORDER) DISPOSING OF SEVERAL APPE ALS ON A COMMON QUESTION OF LAW BY APPELLATE AUTHORITY, CANN OT 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 BO ARD OF DIRECT TAXES, ARE APPLICABLE NOT ONLY TO NEW CASES BUT TO P ENDING CASES AS WELL. SUCH CIRCULARS HAVE BEEN ISSUED UNDER SECTION 268A OF THE INCOME TAX ACT, WHICH IS AN EXCEPTION TO THE PROVISIO NS OF SECTION 260 OF THE ACT. THE CBDT BEING MINDFUL OF THIS POSI TION HAS ISSUED THE AFORESAID INSTRUCTIONS. IN OUR OPINION, THEREFO RE, THE INSTRUCTIONS WOULD BE APPLICABLE TO PENDING CASES A S WELL. WE HAVE ALREADY FOUND THAT THE INSTRUCTION NO. 5 OF 2008 AN D INSTRUCTION NO. 3 OF 2011 ARE PARA-MATERIA. THE INSTRUCTION NO. 5 OF 2008 HAS ALREADY BEEN INTERPRETED BY THIS COURT IN CIT V/S M ADHUKAR INAMDAR (SUPRA). IT IS NOT DISPUTED THAT THIS JUDGE MENT HAS NOT BEEN CHALLENGED BY THE REVENUE AND THEREFORE STILL HOLDS THE FIELD. 11. FOLLOWING THE ABOVE SAID PROPOSITION LAID DOWN B Y THE HONBLE HIGH COURT IN THE CASE OF CIT VS. SMT. VIJAYA V. KAVEKAR (SUPRA), WE HOLD THAT IN VIEW OF THE REVISED INSTRUCT ION ISSUED BY THE CBDT UNDER WHICH, THE MONETARY LIMIT FOR FILING THE APPEALS BEFORE THE APPELLATE AUTHORITIES, TRIBUNALS HAS BEEN REVISED AND FIXED AT RS.4 LACS I.E. ONLY APPEALS WITH TAX EFFECT E XCEEDING RS.4 LACS WERE MAINTAINABLE. IN THE PRESENT APPEAL FILED BY THE REVENUE, THE MONETARY LIMIT ADMITTEDLY, IS LESS THAN R S.4 LACS. IN VIEW OF INSTRUCTION NO.5 OF 2014 WHICH ARE APPLICABL E NOT ONLY TO THE NEW APPEALS TO BE FILED BY THE REVENUE, BUT ALSO TO THE APPEALS PENDING BEFORE THE TRIBUNAL, WE DISMISS THE APP EAL 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, THEREFO RE, IN VIEW OF THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL CITED (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 IS APPLICABLE TO THIS C ASE ALSO EVEN THOUGH THE APPEAL HAS BEEN FILED PRIOR TO THE DATE OF ISSUE OF SUCH INSTRUCTION REVISING THE MONETARY LIM IT. 6 THEREFORE, THE APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE. ACCORDINGLY, THE SAME IS DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF, I.E. ON 27 TH DAY OF NOVEMBER 2014. SD/- SD/- (R.S. PADVEKAR) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: 27 TH NOVEMBER, 2014 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-I, NASHIK 4. CIT-I, NASHIK 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR, ITAT, PUNE BENCHES, PUNE