DCIT, CC-XIII, Kolkata, Kolkata V. M/s. Atal Properties Pvt. Ltd., Kolkata

ITA 1742/KOL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48096 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 06-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R PUROKAYASTHA
• Assessee Lawyers: N M
• Keywords: Audit objection; Reasonable cause; Tax effect
• Section: 260A

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () , , , !' ) [BEFORE HONBLE SRI MAHAVIR SINGH, JM & HONBLE SHR I AKBER BASHA, AM] # # # # / I.T.A NO. 1742/KOL/2010 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEAR: 2005-06 DEPUTY COMMISSIONER OF INCOME-TAX VS. M/S. ATAL P ROPERTIES PVT. LTD. C.C. XIII, KOLKATA. (PAN-AACCA 2242 H) ()* /APPELLANT ) (+,)*/ RESPONDENT ) & C.O.NO. 170/KOL/2010 IN # # # # / I.T.A NO. 1742/KOL/2010 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEAR: 2005-06 M/S. ATAL PROPERTIES PVT. LTD. VS. DEPUTY COMMIS SIONER OF INCOME-TAX C.C. XIII, KOLKATA. (CROSS OBJECTOR) (+,)*/ RESPONDENT ) & # # # # / I.T.A NO. 1743/KOL/2010 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEAR: 2005-06 DEPUTY COMMISSIONER OF INCOME-TAX VS. M/S. KANKER TRADERS PVT. LTD. C.C. XIII, KOLKATA. (PAN-AABCK 1404 A) ()* /APPELLANT ) (+,)*/ RESPONDENT ) & C.O.NO. 171/KOL/2010 IN # # # # / I.T.A NO. 1743/KOL/2010 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEAR: 2005-06 M/S. KANKER TRADERS PVT. LTD. VS. DEPUTY COMMISS IONER OF INCOME-TAX C.C. XIII, KOLKATA. (CROSS OBJECTOR) (+,)*/ RESPONDENT ) & # # # # / I.T.A NO. 1744/KOL/2010 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEAR: 2005-06 DEPUTY COMMISSIONER OF INCOME-TAX VS. M/S. SHRADH A PROPERTIES PVT. LTD. C.C. XIII, KOLKATA. (PAN-AADCS 7082 E) ()* /APPELLANT ) (+,)*/ RESPONDENT ) 2 ITA 1742-1745/K/201 0 ATAL PROPERTIES PVT. LTD. A.Y. 05-06 & C.O. NOS. 170-173/K/2010 & C.O.NO. 172/KOL/2010 IN # # # # / I.T.A NO. 1744/KOL/2010 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEAR: 2005-06 M/S. SHRADHA PROPERTIES PVT. LTD. VS. DEPUTY COMM ISSIONER OF INCOME-TAX C.C. XIII, KOLKATA. (CROSS OBJECTOR) (+,)*/ RESPONDENT ) & # # # # / I.T.A NO. 1745/KOL/2010 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEAR: 2005-06 DEPUTY COMMISSIONER OF INCOME-TAX VS. M/S. WARSAW PROPERTIES PVT. LTD. C.C. XIII, KOLKATA. (PAN-AAACW 2324 G) ()* /APPELLANT ) (+,)*/ RESPONDENT ) & C.O.NO. 173KOL/2010 IN # # # # / I.T.A NO. 1745/KOL/2010 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEAR: 2005-06 M/S. WARSAW PROPERTIES PVT. LTD. VS. DEPUTY COMMI SSIONER OF INCOME-TAX C.C. XIII, KOLKATA. (CROSS OBJECTOR) (+,)*/ RESPONDENT ) FOR THE APPELLANT/DEPARTMENT: SRI B. R. PUROKAYASTHA FOR THE ASSESSEE/CROSS OBJECTOR: S/ SHRI M. P. THARD & N. M. BHANSALI ! / ORDER PER BENCH: THESE APPEALS BY REVENUE AND CROSS OBJECTION BY AS SESSEE ARE ARISING OUT OF THE ORDERS OF CIT(A)-CENTRAL-II, KOLKATA IN APPEAL NOS. 132,131,129&130/CC- XIII/CIT(A)-C-II/KOL/09-10 VIDE DATED 25.05.2010 RE SPECTIVELY. THE ASSESSMENTS WERE FRAMED BY ACIT, C.C.-XIII, KOLKATA U/S.143(3) OF TH E INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSME NT YEARS 2005-06 VIDE HIS ORDERS DATED 26.11.2007, 22.11.2007, 26.11.2007 AND 26.11. 2007 RESPECTIVELY. FOR THE SAKE OF BREVITY, WE DISPOSE OF ALL THE APPEALS AND THE CROS S OBJECTIONS BY THIS CONSOLIDATED ORDER. 3 ITA 1742-1745/K/201 0 ATAL PROPERTIES PVT. LTD. A.Y. 05-06 & C.O. NOS. 170-173/K/2010 2. AT THE OUTSET, IT WAS INFORMED BY LD. COUNSEL FO R THE ASSESSEE THAT TAX EFFECT IN THESE APPEALS OF REVENUE IS BELOW THE PRESCRIBED MONETARY LIMITS FOR FILING OF APPEALS BEFORE ITAT. IT SEEMS THAT THE REVENUES APPEALS, THE QUANTUM IN VOLVED IN ALL THE CASES I.E. IN EACH OF THE APPEALS IS RS.1,71,288/- ON WHICH TAX EFFECT WILL B E RS.62,679/-. THE ONLY ISSUE NOW REMAINS BEFORE US IS THAT IN THESE APPEALS OF REVENUE IS BE LOW THE PRESCRIBED LIMIT OF TAX EFFECT IN VIEW OF THE BOARDS INSTRUCTION ISSUED FROM TIME TO TIME REVISING THE MONETARY LIMITS FOR FILING OF APPEALS BY THE DEPARTMENT BEFORE ITAT AND OTHER SUP ERIOR COURTS. THE APPEALS RELATE TO ASSESSMENT YEAR 2005-06 AND FILED BEFORE THE TRIBUN AL ON 06.09.2010. SINCE THESE APPEALS FILED ON 06.09.2010, THE SAME WILL BE COVERED BY IN STRUCTION NO. 5 OF 2008 ISSUED ON 15.5.2008 I.E. THE REVISED MONETARY LIMIT FOR FILING OF APPEA L BEFORE ITAT, WHEREBY THE CBDT HAS FIXED THE LIMIT OF RS. 2 LACS. THE RELEVANT CIRCULAR ISS UED BY CBDT READS AS UNDER: INSTRUCTION NO.5/2008, DATED 15-5-2008 REFERENCE IS INVITED TO BOARDS INSTRUCTIONS NO.197 9 DATED 27.3.2000, NO.1985 DATED 29.6.2000, NO.6 OF 2003 DATED 17.7.2003, NO.1 9 OF 2003 DATED 23.12.2003, NO.5/2004 DATED 27.5.2004, NO.2/2005 DATED 24.10.20 05 AND NO.5/2007 DATED 16.7.2007, WHEREIN MONETARY LIMITS FOR FILING DEPAR TMENTAL APPEALS (IN INCOME TAX MATTERS) AND OTHER CONDITIONS WERE SPECIFIED, F OR FILING APPEALS BEFORE APPELLATE TRIBUNALS, HIGH COURTS AND SUPREME COURT. 2. IN SUPERSESSION OF THE ABOVE INSTRUCTION S, IT HAS BEEN DECIDED BY THE BOARD THAT DEPARTMENTAL APPEALS WILL BE FILED BEFOR E APPELLATE TRIBUNALS, HIGH COURTS AND SUPREME COURT AS PER MONETARY LIMITS AND CONDITIONS SPECIFIED BELOW. 3. APPEALS WILL HENCEFORTH BE FILED ONLY IN CASES WHERE THE TAX EFFECT EXCEEDS MONETARY LIMITS GIVEN HEREUNDER:- SR.NO. APPEALS IN INCOME TAX MATTERS MONETARY LIMIT IN RS. 1. APPEAL BEFORE APPELLATE TRIBUNAL 2,00,000/- 2. APPEAL UNDER SECTION 260A BEFORE HIGH COURT 4,00,000/- 3. APPEAL BEFORE SUPREME COURT 10,00,000/- 4. FOR THIS PURPOSE, TAX EFFECT MEANS THE DIFFERENCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSEE AND THE TAX THAT WOULD HA VE BEEN CHARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME I N RESPECT OF THE ISSUE AGAINST WHICH APPEAL IS INTENDED TO BE FILED (HEREA FTER REFERRED TO AS DISPUTED ISSUES). HOWEVER, THE TAX WILL NOT INCLUDE ANY INT EREST THEREON. SIMILARLY, IN LOSS CASES NOTIONAL TAX EFFECT SHOULD BE TAKEN INTO ACCO UNT. IN THE CASES OF PENALTY ORDERS, THE TAX EFFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE ORDER TO BE APPEALED AGAINST. 4 ITA 1742-1745/K/201 0 ATAL PROPERTIES PVT. LTD. A.Y. 05-06 & C.O. NOS. 170-173/K/2010 5. THE ASSESSING OFFICER SHALL CALCULATE TH E TAX SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUES I N THE CASE OF EVERY ASSESSEE. IF, IN THE CASE OF AN ASSESSEE, THE DISPUTED ISSUES ARI SE IN MORE THAN ONE ASSESSMENT YEAR, APPEAL SHALL BE FILED IN RESPECT OF SUCH ASSE SSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IN RESPECT OF THE DISPUTED ISSUES EX CEEDS THE MONETARY LIMIT SPECIFIED IN PARA 3. NO APPEAL SHALL BE FILED IN RE SPECT OF AN ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IS LESS THAN THE MONE TARY LIMIT SPECIFIED IN PARA 3. IN OTHER WORDS HENCEFORTH, APPEALS WILL BE FILED ONLY WITH REFERENCE TO THE TAX EFFECT IN THE RELEVANT ASSESSMENT YEAR. HOWEVER, IN CASE O F A COMPOSITE ORDER OF ANY HIGH COURT OR APPELLATE AUTHORITY, WHICH INVOLVES M ORE THAN ONE YEAR, APPEAL SHALL BE FILED IN RESPECT OF ALL ASSESSMENT YEARS E VEN IF THE TAX EFFECT IS LESS THAN THE PRESCRIBED MONETARY LIMITS IN ANY OF THE Y EAR(S), IF IT IS DECIDED TO FILE APPEAL IN RESPECT OF THE YEAR(S) IN WHICH THE TAX EFFECT EXCEEDS THE MONETARY LIMIT PRESCRIBED. 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 MONET ARY LIMIT SPECIFIED ABOVE, THE COMMISSIONER OF INCOME-TAX SHALL SPECIFICALLY RECOR D THAT EVEN THOUGH THE DECISION IS NOT ACCEPTABLE, APPEAL IS NOT BEING FIL ED ONLY ON THE CONSIDERATION THAT THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIED IN THIS INSTRUCTION. FURTHER, IN SUCH CASES, THERE WILL BE NO PRESUMPTIO N THAT THE INCOME-TAX DEPARTMENT HAS ACQUIESCED IN THE DECISION ON THE DI SPUTED ISSUES IN THE CASE OF THE SAME ASSESSEE FOR ANY OTHER ASSESSMENT YEAR, O R 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 TRI BUNAL OR THE COURT ONLY ON THE GROUND THAT THE DEPARTMENT HAS IMPLICITLY ACCEP TED THE DECISION OF THE TRIBUNAL OR COURT IN THE CASE OF THE ASSESSEE FOR A NY OTHER ASSESSMENT YEAR OR IN THE CASE OF ANY OTHER ASSESSEE FOR THE SAME OR ANY OTHER ASSESSMENT YEAR, BY NOT FILING AN APPEAL ON THE SAME DISPUTED ISSUES. THE D EPARTMENTAL REPRESENTATIVES/ COUNSEL MUST MAKE EVERY EFFORT TO BRING TO THE NOTI CE OF THE TRIBUNAL OR THE COURT THAT THE APPEAL IN SUCH CASES WAS NOT FILED OR NOT ADMITTED ONLY BY REASON OF THE TAX EFFECT BEING LESS THAN THE SPECIFIED MONETARY L IMIT AND THEREFORE, NO INFERENCE SHOULD BE DRAWN THAT THE DECISIONS RENDERED 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. 8. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING SHOU LD BE CONTESTED IRRESPECTIVE OF THE TAX EFFECT. A) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVISIONS OF AN ACT OR RULE ARE UNDER CHALLENGE. B) WHERE BOARDS ORDER, NOTIFICATION, INSTR UCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRAVIRES. C) WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS BEEN ACCEPTED BY THE DEPARTMENT. 5 ITA 1742-1745/K/201 0 ATAL PROPERTIES PVT. LTD. A.Y. 05-06 & C.O. NOS. 170-173/K/2010 9. THE PROPOSAL FOR FILING SPECIAL LEAVE UNDER ARTI CLE 136 OF THE CONSTITUTION BEFORE THE SUPREME COURT SHOULD, IN ALL CASES, BE S ENT TO THE DIRECTORATE OF INCOME TAX (LEGAL AND RESEARCH) NEW DELHI AND THE D ECISION TO FILE SPECIAL LEAVE PETITION SHALL BE IN CONSULTATION WITH THE MI NISTRY OF LAW AND JUSTICE. 10. THE MONETARY LIMITS SPECIFIED IN PARA 3 A BOVE WILL NOT APPLY TO WRIT MATTERS. 11. THIS INSTRUCTION WILL APPLY TO APPEALS FI LED ON OR AFTER 15TH OF MAY 2008. HOWEVER, THE CASES WHERE APPEALS HAVE BEEN FILED BE FORE 1 5TH OF MAY 2008 WILL BE GOVERNED BY THE INSTRUCTIONS ON THIS SUBJECT, OP ERATIVE AT THE TIME WHEN SUCH APPEAL WAS FILED. 12. THIS ISSUES UNDER SECTION 268(1) OF THE INCOME TAX ACT, 1961. ON QUERY FROM THE BENCH, THE LD. DR COULD NOT POINT 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 O F ABOVE 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 BEEN A CCEPTED 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 APPEALS OF THE REVENUE IN LIMINE WITHOUT GOING INTO MERITS AND AS UNADMITTED. 3. THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE D ELAYED BY 20 DAYS AND CONDONATION PETITIONS HAVE BEEN FILED. AFTER HEARING BOTH THE SIDES, WE FIND THAT THERE IS REASONABLE CAUSE FOR NOT FILING THE CROSS OBJECTIONS WITHIN TIME. H ENCE, WE CONDONE THE DELAY AND ACCEPT THE CROSS OBJECTIONS FOR HEARING. 6 ITA 1742-1745/K/201 0 ATAL PROPERTIES PVT. LTD. A.Y. 05-06 & C.O. NOS. 170-173/K/2010 4. THE ASSESSEE/CROSS OBJECTOR HAS RAISED THE FOLL OWING COMMON GROUNDS IN RESPECT OF ALL THE CROSS OBJECTIONS. FOR THE SAKE OF BREVITY, WE REPRODUCE THE GROUNDS OF CROSS OBJECTIONS NO. 170/K/2010 IN M/S. ATAL PROPERTIES PVT. LTD.S CASE. 1. THAT THE APPEAL FILED BY THE DCIT IS NOT MAINTA INABLE AS IT IS AGAINST THE INSTRUCTIONS ISSUED BY THE CBDT AND THE CASE DOES N OT FALL UNDER THE EXCEPTIONAL CIRCUMSTANCES MENTIONED IN THE CBDT INSTRUCTIONS. 2. THAT THE ORDER PASSED U/S. 154 BY THE DCIT WAS W RONG, UNJUSTIFIED AND BAD IN LAW. THE ISSUE INVOLVED DOES NOT COME WITHIN THE AMBIT OF SEC. 154. 3. THAT THE LD. CIT(A) ERRED IN NOT ADJUDICATING TH E GR. NO. 2 OF THE ASSESSEE. HE SHOULD HAVE HELD THAT IN THE EVENT OF DISALLOWING T HE CLAIM FOR EXPENSES OF RS.1,71,288/-, IT WAS INCUMBENT FOR THE A.O. TO RED UCE THE VALUE OF WIP BY THE SIMILAR AMOUNT FOR ARRIVING AT THE CORRECT INCOME. 5. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE FAIRLY STATED THAT SINCE THE APPEALS OF THE REVENUE ARE BEING DISMISSED ON LOW TAX EFFECT CIRCU LAR ISSUED BY BOARD, HE IS NOT PRESSING THE CROSS OBJECTIONS. SINCE THE LD. COUNSEL FOR THE AS SESSEE HAS NOT ARGUED AND NOT PRESSED, THE SAME ARE DISMISSED AS NOT PRESSED. 6. IN THE RESULT, THE APPEALS OF THE REVENUE AND TH E CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED. 7. ORDER PRONOUNCED IN OPEN COURT. SD/- SD/- , !' , (AKBER BASHA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( -' -' -' -') )) ) DATED 2ND MAY, 2011 ./ $01 2 JD.(SR.P.S.) ! 3 +4 5!4&6- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT DCIT, C.C. XIII, KOLKATA. 2 +,)* / RESPONDENT M/S. ATAL PROPERTIES PVT. LTD.,/M/S. KANKER TRADERS PVT. LTD./M/S. SHARADHA PROPERTIES PVT. LTD./M/S. W ARSAW PROPERTIES PVT. LTD., ALL 12C, CHAKRABERIA ROAD (NORTH), KOLKATA-7 00 020. 3 . $ ( )/ THE CIT(A), KOLKATA 4. 5. $ / CIT KOLKATA 4<= +$ / DR, KOLKATA BENCHES, KOLKATA ,4 +/ TRUE COPY, ! $>/ BY ORDER, 1 /ASSTT. REGISTRAR .