I.T.O., W-12(2), Kolkata, Kolkata V. M/s Eastern Engineering & Technologies Pvt. Ltd., Kolkata

ITA 1978/KOL/2016

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 4279 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 07-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR CIT SRDR
• Assessee Lawyers: S M SURANA
• Keywords: Unexplained cash credit; Tax effect
• Section: 68

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 1978 / KOL / 20 2016 ASSESSMENT YEAR :2012-13 INCOME TAX OFFICER, WARD-12(2), 7 TH FLOOR, P-7, CHOWRINGHEE SQUARE, AAYAKAR BHAWAN, KOLKATA-700 069 V/S . M/S EASTERN ENGINEERING & TECHNOLOGIES PVT. LTD. 3B, HINDUSTAN PARK, KOLKATA-700029 [ PAN NO.AABCE 2336 H ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI SAURABH KUMAR, ADDL. CIT-SR-DR /BY RESPONDENT SHRI S.M. SURANA, ADVOCATE /DATE OF HEARING 09-10-2018 /DATE OF PRONOUNCEMENT 10-10-2018 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2012-13 A RISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-4, KOLKATAS O RDER DATED 20.07.2016, PASSED IN CASE NO.357/CIT(A)-4/WARD-12(2)/KOL/15-16 , REVERSING ASSESSING OFFICERS ACTION IN MAKING SECTION 68 ADDITION OF 50 LAC UNEXPLAINED CASH CREDITS IN PROCEEDINGS U/S. 144/143(3) OF THE INCOM E TAX ACT, 1961; IN SHORT THE ACT. 2. IT IS SEEN AT THE OUTSET THAT THE TAX EFFECT ON THE DISPUTED ADDITIONS BEFORE US IS LESS THAN RS. 20 LACS IN CASES I.E. LE SS THAN THE PRESCRIBED REVISED THRESHOLD LIMIT IN CBDTS LATEST CIRCULAR N O. 3/2018 DATED ITA NO.1979/KOL/2016 A.Y. 2012-13 ITO WD-12(2), KOL. VS. M/S EASTERN ENG INEERING & TECHNOLOGIES PVT. LTD. PAGE 2 11.07.2018. IT WILL BE PERTINENT TO REPRODUCE THE R ELEVANT PORTION OF THE SAID CIRCULAR NO. 3/2018 DATED 11.07.2018:- 3 . HENCEFORTH, APPEALS/ SLPS SHALL NOT BE FILED I N CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HE REUNDER: SL. NO. APPEALS/SLPS IN INCOME-TAX MATTERS MONETARY LIMIT (IN RS) 1. BEFORE APPELLATE TRIBUNAL 20,00,000/- 2. BEFORE HIGH COURT 50,00,000/- 3. BEFORE SUPREME COURT 1,00,00,000/- IT IS CLARIFIED THAT AN APPEAL SHOULD NOT BE FILED MERELY BECAUSE THE TAX EFFECT IN A CASE EXCEEDS THE MONETARY LIMITS PRESCR IBED ABOVE. FILING OF APPEAL IN SUCH CASES IS TO BE DECIDED ON MERITS OF THE CASE. 4. FOR THIS PURPOSE, 'TAX EFFECT' MEANS THE DIFFERE NCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HA VE BEEN CHARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF THE ISSUES AGAINST WHICH APPEAL IS INTEN DED TO BE FILED (HEREINAFTER REFERRED TO AS 'DISPUTED ISSUES). FUR THER, 'TAX EFFECT' SHALL BE TAX INCLUDING APPLICABLE SURCHARGE AND CESS. HOWEVE R, THE TAX WILL NOT INCLUDE ANY INTEREST THEREON, EXCEPT WHERE CHARGEAB ILITY OF INTEREST ITSELF IS IN DISPUTE. IN CASE THE CHARGEABILITY OF INTERES T IS THE ISSUE UNDER DISPUTE, THE AMOUNT OF INTEREST SHALL BE THE TAX EF FECT. 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 MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE ORDER TO BE APPEALED AGAINST. 3.1 WE FIND THAT INTENTION BEHIND THE CIRCULAR NO3/ 2018 DATED 11.07.2018 NEEDS TO BE UNDERSTOOD IN THE FOLLOWING PERSPECTIVE :- BY PASSAGE OF TIME, THE MONEY VALUE HAS GONE DOWN, THE COST OF LITIGATION EXPENSES HAS GONE UP, NUMBER OF ASSESSE S ON THE FILES OF THE DEPARTMENT HAVE BEEN INCREASED AND CONSEQUENTLY, TH E BURDEN ON THE DEPARTMENT IS ALSO INCREASED TO A TREMENDOUS EXTENT . THE CORRIDORS OF THE SUPERIOR COURTS ARE CHOKED WITH HUGE PENDENCY O F CASES. IN THIS VIEW OF THE MATTER, THE CBDT HAS RIGHTLY TAKEN A DE CISION TO REVISE THE MONETARY LIMITS IN TUNE WITH THE PRESENT VALUE OF M ONEY AND WITH A VIEW TO REDUCE THE LITIGATION AND OFFERING RELIEF TO S MALL TAX PAYERS. THIS IS ALSO IN VIEW OF THE FACT THAT TIME AND ENERGY OF TH E DEPARTMENT COULD BE USED MORE PRODUCTIVELY AND EFFICIENTLY TO CATCH HOL D OF BIG FISHES, WHO IN TURN WOULD CONTRIBUTE MORE TO THE DEVELOPMENT OF TH E COUNTRY. 3.2. ON PERUSAL OF THE CIRCULAR NO. 3/2018 DATED 11 .07.2018 AND THE MATERIALS AVAILABLE ON RECORD, WE DO NOT SEE THIS C ASE FALLING UNDER ANY OF THE ITA NO.1979/KOL/2016 A.Y. 2012-13 ITO WD-12(2), KOL. VS. M/S EASTERN ENG INEERING & TECHNOLOGIES PVT. LTD. PAGE 3 EXCEPTIONS CONTEMPLATED IN THE SAID CIRCULAR PER SE . WE ALSO FIND THAT THIS CIRCULAR MAKES IT VERY CLEAR THAT THE REVISED MONET ARY LIMITS SHALL APPLY RETROSPECTIVELY TO PENDING APPEALS AS WELL. H ONBLE APEX COURT IN COMMISSIONER OF CUSTOMS VS INDIAN OIL CORPORATION L TD REPORTED IN 267 ITR 272 (SC) HAS SETTLED THE LAW THAT CBDTS CIRCULARS ARE VERY MUCH BINDING ON REVENUE AUTHORITIES. WE THUS HOLD THAT THIS REVENUE S APPEAL DESERVE TO BE DISMISSED IN TERMS OF LOW TAX EFFECT. WE MAKE IT CL EAR THAT IT SHALL VERY MUCH OPEN FOR THE REVENUE TO SEEK NECESSARY RECTIFICATIO N IN CASE IT IS FOUND THAT ANY OF THESE APPEALS INVOLVE OPERATIONS OF EXCEPTIO N CLAUSES IN THE TAX EFFECT CIRCULAR AS PER LAW. 4. THIS REVENUES APPEAL IS DISMISSED FOR INVOLVING LOWER THAN THE PRESCRIBED MINIMUM TAX EFFECT. ORDER PRONOUNCED IN THE OPEN COURT 10/10/2018 SD/- SD/- ( %) (' %) (DR. A.L. SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S (- 10 / 10 /201 8 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ITO WARD-12(2), P-7, 7 TH FLOOR, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQ URE, KOLKATA-69 2. /RESPONDENT-M/S EASTERN ENGINEERING & TECHNOLOGIES PVT. LTD. 3B, HINDUSTAN PARK, KOLKATA-29 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 ''3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 3,