ITO, Ward - 34(3), Kolkata, Kolkata V. Deepak Shah, Kolkata

ITA 1714/KOL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9386 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2011
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2001-2002
• Appeal Filed On: 02-09-2010
• Court: TRIBUNAL
• Keywords: Gift; Tax effect

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL : 'C BENCH : KOLKATA (BEFORE SRI B.R.MITTAL, J. M. AND SRI B.K.HALDAR, A .M.) I.T. A. NO. 1714/KOL/ 2010 ASSESSME NT YEAR 2001-02 INCOME TAX OFFICER, WARD 34(3),KOLKATA VS. DEEPAK SHAH (APPELLANT) (RESPONDENT) C.O. NO.5(KOL)/2011 (ITA N O. 1714(KOL)/2010) ASSESSM ENT YEAR : 2001-02 DEEPAK SHAH VS INCOME TAX OFFICER,WARD 34(3), KOLKATA (CROSS OBJECTOR) (RESPONDENT) APPELLANT BY : SRI S.K.MALAKAR. CROSS OBJECTOR B Y : SRI AVIJIT DEY. O R D E R PER B.R.MITTAL, J.M. IN THIS REVENUES APPEAL, THE REVENUE HAS AGITATED THE FOLLOWING GROUNDS:- 1. ON THE FACT & CIRCUMSTANCES OF THE CASE, LEAR NED CIT(APPEALS) ERRED IN FACT AS WELL AS IN LAW, TO DIRECT TO DE LETE THE ADDITIONS MADE BY ASSESSING OFFICER TREATING GIFT AS UNDISCLOS ED INCOME OF THE ASSESSEE. 2. THE LEARNED CIT(APPEALS) ERRED IN TREATING T HE GIFT TRANSACTION AS GENUINE. THE ASSESSEE NEVER PRODUCED THE DONOR AT ASSESSMENT STAGE OR EVEN AT REMAND STAGES TOM PROVE THE GEN UINETY OF GIFT. 3. THAT LEARNED CIT(APPEALS) ERRERD IN ARRIVIN G AT THE CONCLUSION THAT DONOR HAD THE CAPACITY TO GIFT RS. ONE LAKH ON 02/04/2000, WHEN HE WAS EVEN NOT HAVING A BANK ACCOUNT NOR WAS SUBJECT TO TAX AS ON 31.03.2000. 2 2. THE ASSESSEE FILED THE CROSS OBJECTION ON THE FOLLOWING GROUNDS : 1. THAT THE ASSESSMENT ORDER DATED 08.12.2006 FRAMED U/S 144/147 IS VOID AND NULLITY IN THE EYE OF LAW AS THERE AR E NO RECORDED REASONS TO BELIEF THAT THE INCOME CHARGEABLE TO TAX H AS ESCAPED ASSESSMENT. 2. THAT WITHOUT PREJUDICE TO THE GROUND NO. 1 STATED ABOVE, THE RECORDED REASONS ARE INVALID AND IMPROPER AND A S SUCH, THE ASSESSMENT FRAMED VIDE ORDER DATED 08.12.2006 IS B AD IN THE EYE OF LAW. 3. THAT THE APPEAL FILED BY THE REVENUE IS LIA BLE TO REJECTED SINCE THE TAX EFFECT INVOLVED IN THE INSTANT APPEAL IS BELOW RS.2,00,000. 3. AT THE TIME OF HEARING, THE LEARNED A.R. SUBMIT TED THAT THE TAX EFFECT IS LESS THAN RS.2 LAKHS. 4. THE LD. D.R. HAS NOT DISPUTED THE FACT THAT TH E TAX EFFECT IS LESS THAN RS.2 LAKHS. HE COULD NOT MAKE OUT A CASE THAT IT FALLS IN ANY OF THE EXCEPTIONS. THE LEARNED D.R. WAS ASKED WHY THE A PPEAL OF THE REVENUE SHOULD NOT BE TREATED AS UNADMITTED IN VIEW OF THE CIRCULAR F. NO. 279/MISC.- 64/05-ITJ DATED 24 TH OCTOBER, 2005 AND THE DECISION OF THE HONBLE HIGH COURT IN THE CASE OF CIT VS. CAMCO COLOUR CO. [ 254 ITR 565 (BOM)] AND THE HONBLE APEX COURT IN THE CASE OF COMMISSIONER OF C USTOMS VS. INDIAN OIL CORPORATION LTD. [ 267 ITR 272 (SC) ]. THE LD. D. R. CONTENDED THAT THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF RANI PALIWAL VS. CIT [268 ITR 220 ] AND ALLAHABAD HIGH COURT IN THE CASE OF JUGAL KISHORE ARORA VS. DCIT [ 269 ITR 133 ] HAVE TAKEN THE VIEW THAT O NCE AN APPEAL IS FILED BY THE REVENUE, THE TRIBUNAL SHOULD DISPOSE OF THE APP EAL ON MERITS AND THE ASSESSEE CANNOT RAISE THE OBJECTION AGAINST THE MAI NTAINABILITY OF SUCH APPEAL. 5. WE HAVE HEARD BOTH THE PARTIES. WE FIND THAT TH E CBDT VIDE INSTRUCTION NO. 2/2005 DATED 24 TH OCTOBER, 2005 ISSUES GUIDELINES TO THE REVENUE AUTHORITIES WITH REGARD TO FILING OF APPEAL BEFORE THE TRIBUNAL, HIGH COURT AND SUPREME COURT. FROM THE ABOVE INSTRUCTIO N, IT IS EVIDENT THAT SINCE 1987, THE CBDT IS INSTRUCTING ITS OFFICERS NOT TO F ILE THE APPEAL WHERE THE TAX EFFECT IS BELOW CERTAIN MONETARY LIMITS. VIDE INST RUCTION NO. 1903 DATED 28 TH OCTOBER, 1992, THE MONETARY LIMIT WAS REVISED UPWAR D AND THE OFFICERS WERE DIRECTED NOT TO FILE THE APPEAL BEFORE THE INCOME-T AX APPELLATE TRIBUNAL WHERE 3 THE TAX EFFECT WAS BELOW RS.25,000/-. THE ABOVE MON ETARY LIMIT WAS FURTHER REVISED UPWARD BY INSTRUCTION NO. 1979 DATED 27 TH MARCH,2000 AND THE OFFICERS WERE DIRECTED NOT TO FILE THE APPEAL TO IT AT WHERE THE TAX EFFECT IS BELOW RS. 1 LAC. THEREAFTER IN PARTIAL MODIFICATIO N OF THE ABOVE INSTRUCTION, THE BOARD VIDE INSTRUCTION NO. 2/2005 DATED 24.10.2 005, FURTHER RAISED THE ABOVE MONETARY LIMIT TO RS.2 LAKHS WITH THE SAME DI RECTIONS. THUS, THE CBDT SINCE 1987 HAS NOT ONLY TAKEN A CONSISTENT APPROACH OF INSTRUCTING ITS OFFICERS FOR NOT FILING THE APPEAL WHERE THE TAX EFFECT IS B ELOW THE MONETARY LIMIT, BUT SUCH MONETARY LIMIT IS ALSO REVISED UPWARD FROM TIM E TO TIME. THE CIRCULAR UNDER INSTRUCTION 1979 DATED 27.3.2006 WAS CONSIDER ED BY THE BOMBAY HIGH COURT IN THE CASE OF CAMCO COLOUR CO. ( SUPRA ) AND THEIR LORDSHIPS HELD AT PAGE 568 AS UNDER:- IT APPEARS THAT DESPITE THE ABOVE CIRCULAR, THE RE VENUE HAS CHOSEN TO FILE THE PRESENT APPEAL KNOWING FULLY WELL THAT THE CORRIDORS OF THE COURTS ARE FLOODED WITH PENDING LITIGATIONS. THE P RESENTATION OF THIS APPEAL IS QUITE CONTRARY TO THE INSTRUCTION ISSUED IN THE CIRCULAR WHICH IS BINDING ON THE REVENUE. IN THE ABOVE VIEW OF THE MATTER, CONSIDERING THE IN STRUCTIONS ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES, WE ARE SATISFIED THAT THE BOARD HAS TAKEN A POLICY DECISION NOT TO FILE APPEAL IN A TYP E OF CASE IN HAND AND THE SAME IS BINDING ON THE REVENUE (APPELLANT HER EIN). IN THE RESULT, WE DISMISS THIS APPEAL ON THIS COUNT IN LIMINE WITH NO ORDER AS TO COSTS. 6. THE LD. D.R. HAS RELIED UPON THE CONTRARY DECISI ONS GIVEN BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF RANI PALIWAL (SUPRA) AND ALLAHABAD HIGH COURT IN THE CASE OF JUGAL KISHORE ARORA ( SUPRA ). HOWEVER, WE FIND THAT RECENTLY THE APEX COURT HAS CONSIDERED THE EFFECT OF CIRCULAR ISSUED BY THE CBDT IN THE CASE OF COMMISSIONER OF C USTOMS VS. INDIAN OIL CORPORATION LTD. REPORTED IN 267 ITR 272. THEIR LO RDSHIPS EXAMINED THE EARLIER DECISIONS OF THE APEX COURT WITH REGARD TO BINDING NATURE OF THE CIRCULAR AND LAID DOWN THE FOLLOWING PRINCIPLES AT PAGE 277 OF THE REPORTS:- THE PRINCIPLES LAID DOWN BY ALL THESE DECISIONS A RE - (1) ALTHOUGH A CIRCULAR IS NOT BINDING ON A COUR T OR AN ASSESSEE, IT IS NOT OPEN TO THE REVENUE TO RAISE A CONTENTION THAT IS CONTRARY TO A BINDING CIRCULAR BY THE BOARD. WHEN A CIRCULAR REM AINS IN OPERATION, 4 THE REVENUE IS BOUND BY IT AND CANNOT BE ALLOWED TO PLEAD THAT IT IS NOT VALID NOR THAT IT IS CONTRARY TO THE TERMS OF THE S TATUTE. (2) DESPITE THE DECISION OF THE COURT, THE DEP ARTMENT CANNOT BE PERMITTED TO TAKE A STAND CONTRARY TO THE INSTRUCTI ONS ISSUED BY THE BOARD. (3) A SHOW CAUSE NOTICE AND DEMAND CONTRARY TO EXIS TING CIRCULARS OF THE BOARD ARE AB INITIO BAD. (4) IT IS NOT OPEN TO THE REVENUE TO ADVANCE AN ARG UMENT OR FILE AN APPEAL CONTRARY TO THE CIRCULARS. ( EMPHASIS SUPPLIED ) FROM THE ABOVE, IT IS EVIDENT THAT THE HONBLE APEX COURT HAS LAID DOWN THAT IT IS NOT OPEN TO THE REVENUE TO ADVANCE AN ARGUMENT O R FILE AN APPEAL CONTRARY TO THE CIRCULAR. THE APPEAL UNDER CONSIDERATION H AS CERTAINLY BEEN FILED CONTRARY TO THE CIRCULAR ISSUED BY THE CBDT VIDE CI RCULAR F. NO. 279/MISC- 64/05-ITJ DATED 24 TH OCTOBER, 2005. THEREFORE, THE ABOVE DECISION OF T HE HONBLE APEX COURT WOULD BE SQUARELY APPLICABLE. EV EN OTHERWISE, THE REVENUE HAS BEEN TAKING A CONSISTENT APPROACH SINCE 1987 NOT TO FILE APPEAL WHERE THE REVENUE EFFECT IS BELOW CERTAIN MONETARY LIMIT TO REDUCE THE LITIGATION PENDING BEFORE THE TRIBUNAL AND THE COUR TS. IF THE APPEALS CONTRARY TO SUCH CIRCULAR ARE ADMITTED, IT WOULD FRUSTRATE T HE PURPOSE OF ISSUING SUCH INSTRUCTIONS. IN THE ABOVE CIRCUMSTANCES, WE RESPE CTFULLY FOLLOWING THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF I NDIAN OIL CORPORATION LTD. (SUPRA) AND THE BOMBAY HIGH COURT IN THE CASE OF CA MCO COLOUR CO. ( SUPRA ), HOLD THAT THE REVENUE SHOULD NOT HAVE FILED THE APPEAL CONTRARY TO THE CIRCULAR BY THE CBDT. ACCORDINGLY, THE SAME IS NOT ADMITTED AND DISMISSED IN LIMINE. 7. CONSEQUENTLY, THE C.O. FILED BY THE ASSESSEE I S DISMISSED. 5 8. IN THE RESULT, BOTH THE APPEAL FILED BY THE REVE NUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.01.2011 SD/- SD/- ( B.K.HALDAR ) ( B.R.MITTAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 27.01.2011 COPY FORWARDED TO :- 1) ITO, WARD-34(3), KOLKATA 2) DEEPAK SHAH, C/O SHAH ELECTRTICALS, 18, EZRA ST REET, SHOP NO. 9, KOLKATA-700 001 3) CIT( A) , KOLKATA 4) CIT, KOLKATA 5) D.R., ITAT, KOLKATA BY ORDER ASSISTANT REGISTRAR I.T.AT., KOLKATA. BCD/SR.P.S