ITO, Ward - 48(2), Kolkata, Kolkata V. Samir Engg. Works, Howrah

ITA 1695/KOL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48172 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 27-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MALAKAR
• Assessee Lawyers: M D DHAR
• Keywords: Audit objection; Additional evidence; Tax effect
• Section: 260A; 12A; 201; 2

Judgement Text

, , , , , , ,, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [ . . . . . .. . , , ! ! ! ! , , ,, , ] [BEFORE HONBLE SHRI S.V. MEHROTRA, AM & HONBLE SHRI MAHAVIR SINGH, JM] !' !' !' !' / I.T.A NO. 1695/KOL/2010 #$ %& #$ %& #$ %& #$ %&/ // / ASSESSMENT YEARS : 2007-08 INCOME TAX OFFICER/WARD-48(2) -VS.- SAMIR ENGINEERING WORKS KOLKATA HOWRAH. [ PAN : AAMFS2649 K] [ () /APPELLANT ] [ +,()/ RESPONDENT ] AND - ./ - ./ - ./ - ./ /C.O.NO.158/KOL/2010 !' !' !' !' / A/O ITA NO . 1695/KOL/2010 #$ %& #$ %& #$ %& #$ %&/ // / ASSESSMENT YEAR : 2007-08 SAMIR ENGINEERING WORKS -VS.- INCOME TAX OFFICER/WARD-48( 2) HOWRAH [PAN : AAMFS2649 K] KOLKATA (() /APPELLANT ) (+,()/ RESPONDENT ) () / FOR THE DEPARTMENT : 2 /SHRI S. K. MALAKAR +,() / FOR THE ASSESSEE : 2 / SHRI M. D. DHAR 3 /ORDER [ . . . . . .. . , ] PER S.V. MEHROTRA, A. M. THIS IS AN APPEAL FILED BY DEPARTMENT AGAINST THE ORDER OF CIT(A)-XXX, KOLKATA DATED 17.05.2010 FOR ASSESSMENT YEAR 2007-08 AGAINST WHIC H ASSESSEE HAS ALSO FILED CROSS OBJECTION. BOTH THE APPEAL AND CROSS OBJECTION WERE HEARD TOGE THER AND BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. [ ITA NO. 1695/KOL/2010 & C.O. NO.158/KOL/2010] 2 2. THE GROUNDS TAKEN BY THE DEPARTMENT ARE AS UNDER : (1) WHETHER THE ACTION OF LD. CIT(A) WAS CORRECT IN DELETING PURCHASE OF THE ASSESSEE FROM KARUNA UDYOG WHEN THE ASSESSEE FAILS TO PROVE THE TRANSACTION AS GENUINE BEFORE THE A.O. (2) WHETHER THE ACTION OF LD. CIT(A) WAS CORRECT IN ACC EPTING THE ADDITIONAL EVIDENCE IN VIOLATION OF RULE 46A. (3) WHETHER THE ACTION OF LD. CIT(A) WAS CORRECT IN DELETING THE PAYMENT OF LABOUR CHARGES AS THE ADDITION WAS MADE BY THE A.O. FOR NON-CONFIRMATION OF THE PAYMENT. 3. THE ASSESSEE IN THE CROSS OBJECTION HAS TAKEN FO LLOWING GROUNDS OF APPEAL :- (1) FOR THAT APPELLANT PRODUCED THE BOOKS OF ACCOUN T BEFORE THE A.O. AND PAYMENT DETAILS TO KARUNA UDYOG WAS ALREADY AVAILAB LE BEFORE HER AT THE ASSESSMENT STAGE AND THERE IS NO VIOLATION OF RULE 46A, WHATSOEVER, IN THE INSTANT CASE. THE ADDITION UNLAWFULLY MADE BY ASSES SING OFFICER WAS RIGHTLY DELETED BY THE CIT(A). (2) FOR THAT A.O. MOST ARBITRARILY ADDED BACK THE E NTIRE PAYMENT OF LABOUR CHARGES WHEREAS SHE HAD ATTEMPTED TO CROSS-VERIFY O NLY A SMALL PORTION OF THE SAME. (3) FOR THAT THE CIT(A) ERRED IN FACT WHILE HE ADDE D BACK A SUM OF RS.72,000/- ON ACCOUNT OF PAYMENT OF LABOUR CHARGES TO S.G. ENG INEERING WORKS WHEREAS DURING THE YEAR SAID PARTY RAISED A BILL FO R RS.46,000/- ONLY. THE CLOSING BALANCE OF RS.72,000/- WAS WRONGLY ADDED BA CK WHICH WAS INCLUSIVE OF CARRIED FORWARD OPENING BALANCE OF RS. 26,000/-. 4. AT THE OUTSET, IT WAS INFORMED BY LD. COUNSEL FO R THE ASSESSEE THAT TAX EFFECT IN THIS APPEAL IS BELOW THE PRESCRIBED MONETARY LIMITS FOR FILING OF APPEALS BEFORE ITAT AND OTHER SUPERIOR COURTS. THE ISSUE NOW REMAINS BEFORE US I S WHETHER THE APPEAL OF THE REVENUE IS BELOW THE PRESCRIBED LIMIT OF TAX EFFECT IN VIEW OF THE B OARDS INSTRUCTION ISSUED FROM TIME TO TIME REVISING THE MONETARY LIMITS FOR FILING OF APPEALS BY THE DEPARTMENT BEFORE ITAT AND OTHER SUPERIOR COURTS. EVEN THOUGH THIS APPEAL FILED BEFO RE 09.02.2011, THE SAME STILL WILL BE COVERED BY INSTRUCTION NO. 3/2011 ISSUED ON 09.02.2011 I.E. THE REVISED MONETARY LIMIT FOR FILING OF APPEAL BEFORE ITAT, WHEREBY THE CBDT HAS FIXED THE LIMIT OF RS. 3 LACS. OUR VIEW IS FORTIFIED BY THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS DELHI RACE CLUB IN ITA [ ITA NO. 1695/KOL/2010 & C.O. NO.158/KOL/2010] 3 NO.128/2008 DATED 03.03.2011 HAS HELD AS UNDER: THE TAX EFFECT INVOLVED IN THE PRESENT APPEAL IS R S.4,65,860/-. AS PER THE RECENT GUIDELINES OF THE CBDT, APPEAL IN THOSE CASES WHERE THE TAX EFFECT IS LESS THAN 10 LACS, ARE NOT TO BE ENTERTAINED. THIS COURT IN THE CASE OF COMMISSIONER OF INCOME TA X-III V. M/S. P. S. JAIN AND CO. BEING ITA NO. 179/1991 DECIDED ON 2 ND AUGUST, 2010 HAS TAKEN A VIEW THAT SUCH CIRCULAR WOULD ALSO APPLY TO PENDING CASES. IN VIEW OF THE DECISION OF HONBLE DELHI HIGH COURT , THE REVISED MONETARY LIMIT OF RS. 3 LACS AS PER INSTRUCTION NO.3/2011 WILL APPLY TO PENDING APP EALS. THE RELEVANT CIRCULAR ISSUED BY CBDT READS AS UNDER : INSTRUCTION NO. 3/2011 [F. NO. 279/MISC. 142/2007- ITJ], DATED 9-2-2011 REFERENCE IS INVITED TO BOARD'S INSTRUCTION NO. 5/2 008 DATED 15-5-2008 WHEREIN MONETARY LIMITS AND OTHER CONDITIONS FOR FILING DEPARTMENTAL APPEALS (IN INCOME-TAX MATTERS) BEFORE APPELLATE TRIBUNAL, HIGH COURTS AND SUPREME COURT W ERE SPECIFIED. 2. IN SUPERSESSION OF THE ABOVE INSTRUCTION, IT HAS BE EN DECIDED BY THE BOARD THAT DEPARTMENTAL APPEALS MAY BE FILED ON MERITS BEFORE APPELLATE TRIBUNAL, HIGH COURTS AND SUPREME COURT KEEPING IN VIEW THE MONETARY LIMITS A ND CONDITIONS SPECIFIED BELOW. 3. HENCEFORTH APPEALS SHALL NOT BE FILED IN CASES WHER E THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER: S. NO. APPEALS IN INCOME-TAX MATTERS MONETARY LIMIT (IN RS.) 1. APPEAL BEFORE APPELLATE TRIBUNAL 3,00,000 2. APPEAL U/S. 260A BEFORE HIGH COURT 10,00,0 00 3. APPEAL 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. FILIN G OF APPEAL IN SUCH CASES IS TO BE DECIDED ON MERITS OF THE CASE. 4. FOR THIS PURPOSE, TAX EFFECT MEANS THE DIFFERENCE 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 ISSUES AG AINST WHICH APPEAL IS INTENDED TO BE FILED (HEREINAFTER REFERRED TO AS 'DISPUTED ISSUES' ). HOWEVER THE TAX WILL NOT INCLUDE ANY INTEREST THEREON, EXCEPT WHERE CHARGEABILITY OF INT EREST ITSELF IS IN DISPUTE. IN CASE THE CHARGEABILITY OF INTEREST IS THE ISSUE UNDER DISPUT E, 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 ADDITIONS. IN CASE OF PENALTY ORDERS, THE TAX EFFECT WILL [ ITA NO. 1695/KOL/2010 & C.O. NO.158/KOL/2010] 4 MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE O RDER TO BE APPEALED AGAINST. 5. THE ASSESSING OFFICER SHALL CALCULATE THE TAX EFFEC T SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUES IN THE CASE OF EV ERY ASSESSEE. IF, IN THE CASE OF AN ASSESSEE, THE DISPUTED ISSUES ARISE IN MORE THAN ONE ASSESSME NT YEAR, APPEAL, CAN BE FILED IN RESPECT OF SUCH ASSESSMENT YEAR OR YEARS IN WHICH THE TAX E FFECT IN RESPECT OF THE DISPUTED ISSUES EXCEEDS THE MONETARY LIMIT SPECIFIED 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, HENCEFORTH, APPEALS CAN BE FILED ONLY WITH REFERENCE TO THE TAX EFFECT IN THE RELEVANT ASSESSMENT YEAR. HOWEVER, IN CASE OF A COMPOSITE ORDER OF ANY HIGH COURT OR APPELLATE AUTHORITY, WHICH INVOLVES MORE T HAN ONE ASSESSMENT YEAR AND COMMON ISSUES IN MORE THAN ONE ASSESSMENT YEAR, APPEAL SHA LL BE FILED IN RESPECT OF ALL SUCH ASSESSMENT YEARS EVEN IF THE 'TAX EFFECT' IS LESS T HAN THE PRESCRIBED MONETARY LIMITS IN ANY OF THE YEAR(S), IF IT IS DECIDED TO FILE APPEAL IN RES PECT OF THE YEAR(S) IN WHICH 'TAX EFFECT' EXCEEDS THE MONETARY LIMIT PRESCRIBED. IN CASE WHER E A COMPOSITE ORDER/JUDGMENT INVOLVES MORE THAN ONE ASSESSEE, EACH ASSESSEE SHALL BE DEAL T WITH SEPARATELY. 6. IN A CASE WHERE APPEAL BEFORE A TRIBUNAL OR A COURT IS NOT FILED ONLY ON ACCOUNT OF THE TAX EFFECT BEING LESS THAN THE MONETARY LIMIT SPECI FIED ABOVE, THE COMMISSIONER OF INCOME- TAX SHALL SPECIFICALLY RECORD THAT 'EVEN THOUGH THE DECISION IS NOT ACCEPTABLE, APPEAL IS NOT BEING FILED ONLY ON THE CONSIDERATION THAT THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIED IN THIS INSTRUCTION'. FURTHER, IN SUCH CA SES, THERE WILL BE NO PRESUMPTION THAT THE INCOME-TAX DEPARTMENT HAS ACQUIESCED IN THE DECISIO N ON THE DISPUTED ISSUES. THE INCOME- TAX DEPARTMENT SHALL NOT BE PRECLUDED FROM FILING A N APPEAL AGAINST THE DISPUTED ISSUES IN THE CASE OF THE SAME ASSESSEE FOR ANY OTHER ASSESSM ENT YEAR, OR IN THE CASE OF ANY OTHER ASSESSEE FOR THE SAME OR ANY OTHER ASSESSMENT YEAR, IF THE TAX EFFECT EXCEEDS THE SPECIFIED MONETARY LIMITS. 7. IN THE PAST, A NUMBER OF INSTANCES HAVE COME TO THE NOTICE OF THE BOARD, WHEREBY AN ASSESSEE HAS CLAIMED RELIEF FROM THE TRIBUNAL OR TH E COURT ONLY ON THE GROUND THAT THE DEPARTMENT HAS IMPLICITLY ACCEPTED THE DECISION OF THE TRIBUNAL OR COURT IN THE CASE OF THE ASSESSEE FOR ANY OTHER ASSESSMENT YEAR OR IN THE CA SE OF ANY OTHER ASSESSEE FOR THE SAME OR ANY OTHER ASSESSMENT YEAR, BY NOT FILING AN APPEAL ON THE SAME DISPUTED ISSUES. THE DEPARTMENTAL REPRESENTATIVES/COUNSELS MUST MAKE EVE RY EFFORT TO BRING TO THE NOTICE OF THE TRIBUNAL OR THE COURT THAT THE APPEAL IN SUCH CASES WAS NOT FILED OR NOT ADMITTED ONLY FOR THE REASON OF THE TAX EFFECT BEING LESS THAN THE SP ECIFIED MONETARY LIMIT AND, THEREFORE, NO INFERENCE SHOULD BE DRAWN THAT THE DECISIONS RENDER ED THEREIN WERE ACCEPTABLE TO THE DEPARTMENT. ACCORDINGLY, THEY SHOULD IMPRESS UPON T HE TRIBUNAL OR THE COURT THAT SUCH CASES DO NOT HAVE ANY PRECEDENT VALUE. AS THE EVIDE NCE OF NOT FILING APPEAL DUE TO THIS INSTRUCTION MAY HAVE TO BE PRODUCED IN COURTS, THE JUDICIAL FOLDERS IN THE OFFICE OF CSIT MUST BE MAINTAINED IN A SYSTEMIC MANNER FOR EASY RE TRIEVAL. 8. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING ISSUES 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. [ ITA NO. 1695/KOL/2010 & C.O. NO.158/KOL/2010] 5 A. WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVISIONS OF AN ACT OR RULE ARE UNDER CHALLENGE, OR B. WHERE BOARD'S 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. 9. THE PROPOSAL FOR FILING SPECIAL LEAVE PETITION UNDE R ARTICLE 136 OF THE CONSTITUTION BEFORE THE SUPREME COURT SHOULD, IN ALL CASES, BE S ENT TO THE DIRECTORATE OF INCOME-TAX (LEGAL & RESEARCH), NEW DELHI AND THE DECISION TO F ILE SPECIAL LEAVE PETITION SHALL BE IN CONSULTATION WITH THE MINISTRY OF LAW AND JUSTICE. 10. THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE SHALL NOT APPLY TO WRIT MATTERS AND DIRECT TAX MATTERS OTHER THAN INCOME-TAX, FILING OF APPEAL S IN OTHER DIRECT TAX MATTERS SHALL CONTINUE TO BE GOVERNED BY RELEVANT PROVISIONS OF S TATUTE AND RULES. FURTHER, FILING OF APPEAL IN CASES OF INCOME-TAX, WHERE THE TAX EFFECT IS NOT QUANTIFIABLE OR NOT INVOLVED, SUCH AS THE CASE OF REGISTRATION OF TRUSTS OR INSTITUTIO NS UNDER SECTION 12A OF THE IT ACT, 1961, SHALL NOT BE GOVERNED BY THE LIMITS SPECIFIED IN PA RA 3 ABOVE AND DECISION TO FILE APPEAL IN SUCH CASES MAY BE TAKEN ON MERITS OF A PARTICULAR C ASE. 11. THIS INSTRUCTION WILL APPLY TO APPEALS FILED ON OR AFTER .. 2011. HOWEVER, THE CASES WHERE APPEALS HAVE BEEN FILED BEFORE 201 1 WILL BE GOVERNED BY THE INSTRUCTIONS ON THIS SUBJECT, OPERATIVE AT THE TIME WHEN SUCH APPEAL WAS FILED. 12. THIS ISSUES UNDER SECTION 268(1) OF THE INCOME TAX ACT, 1961. 5. ON QUERY FROM THE BENCH, THE LD. DR COULD NOT PO INT OUT ANY OF THE EXCEPTIONS AS PROVIDED IN THE CIRCULAR AS UNDER: (A) THAT THIS IS A LOSS CASE HAVING TAX EFFECT MOR E THAN THE PRESCRIBED LIMIT, WHICH SHOULD BE TAKEN INTO ACCOUNT, (B) THAT THIS IS A COMPOSITE ORDER FOR MANY ASSESS MENT YEARS WHERE TAX EFFECT WILL BE MORE THAN THE PRESCRIBED LIMIT AS PER PARA 5 OF A BOVE INSTRUCTIONS, (C) THAT THERE IS OTHER YEAR PENDING AS DISPUTED O N THE SINGULAR ISSUE, (D) THAT IN THE CASE OF REVENUE, WHERE CONSTITUTIO NAL VALIDITY OF THE PROVISIONS OF THE ACT OR I.T. RULES 1962 ARE UNDER CHALLENGE , (E) THAT BOARDS ORDER, NOTIFICATION, INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES, (F) THAT REVENUE AUDIT OBJECTION IN THE CASE HAS B EEN ACCEPTED BY THE DEPARTMENT AND THE SAME IS UNDER CHALLENGE. THE LD. DR COULD NOT POINT OUT ANY OF THE EXCEPTION S AS PROVIDED ABOVE. ACCORDINGLY, THIS BEING A TAX EFFECT CASE, WE DISMISS THE APPEAL OF T HE REVENUE IN LIMINE WITHOUT GOING INTO MERITS [ ITA NO. 1695/KOL/2010 & C.O. NO.158/KOL/2010] 6 AND AS UNADMITTED. 6. AT THE TIME OF HEARING LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE DID NOT PRESS THE CROSS OBJECTION. HENCE, THE CROSS OBJECTION IS DIMI SSED BEING NOT PRESSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE A S WELL AS CROSS OBJECTION OF THE ASSESSEE BOTH ARE DISMISSED. 3 3 3 3 4 4 4 4 5 4# 6 7 5 4# 6 7 5 4# 6 7 5 4# 6 7 ORDER PRONOUNCED IN THE OPEN C OURT ON 31. 05. 2011. SD/- SD/- [ ! , ] [ . ., ] [ MAHAVIR SINGH ] [S.V. M EHROTRA , ] JUDICIAL MEMBER ACCOUNTANT M EMBER (8) DATED : 31ST MAY, 2011. 3 9 + . :.%/ COPY OF THE ORDER FORWARDED TO: 1. () /APPELLANT- INCOME TAX OFFICER/WARD-48(2), 3, GOV T. PLACE (W), KOLKATA-1. 2 +,() / RESPONDENT : SAMIR ENGINEERING WORKS, BALTIKURI, NASKAR PARA, HOWRAH. 3. 3#/ THE CIT, 4. 3# ()/ THE CIT(A), KOLKATA. 5. 6 + #/ DR, KOLKATA BENCHES, KOLKATA [,. + / TRUE COPY] 3#4/ BY ORDER, !A /DEPUTY/ASSTT REGISTRAR [ KKC BC #DA E /SR.PS]