ITO, Karaikudi V. Dr.M.Saravanan, Devakottai

ITA 2/CHNY/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52157 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 14-12-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 01-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R B NAIK
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained cash credit; Audit objection; Tax effect
• Section: 260A; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NOS. 1, 2, 3 & 4/MDS/2010 (ASSESSMENT YEARS : 2002-03 TO 2005-06) THE INCOME TAX OFFICER, WARD I(3), KARAIKUDI. (APPELLANT) V. DR. M. SARAVANAN, 12, SILAMBANI SANNATHI STREET, DEVAKOTTAI. PAN : AMIPS0673B (RESPONDENT) APPELLANT BY : SHRI R.B. NAIK, CIT-DR RESPONDENT BY : SHRI S. SRIDHA R, ADVOCATE DATE OF HEARING : 14.12.2011 DATE OF PRONOUNCEMENT : 14.12.2011 O R D E R PER BENCH : THESE ARE APPEALS FILED BY THE REVENUE AGAINST A COMMON ORDER DATED 13.10.2009 OF COMMISSIONER OF INCOME TA X (APPEALS)-I, MADURAI, FOR THE IMPUGNED ASSESSMENT YEARS. REVENU E HAD ORIGINALLY FILED COMMON GROUNDS OF APPEAL FOR ALL T HE YEARS, BUT THE ADDITIONS TO INCOME INVOLVED WERE DIFFERENT FOR THE VARIOUS YEAR. I.T.A. NOS. 1 TO 4/MDS/10 2 REVENUE SUBSEQUENTLY FILED A FRESH SET OF GROUNDS O F APPEAL FOR EACH YEAR SEPARATELY CLEARLY MENTIONING THE ITEMS ON WHI CH IT WAS AGGRIEVED. 2. WHEN THE MATTER CAME UP BEFORE US, LEARNED COUNS EL FOR THE ASSESSEE POINTED OUT THAT TAX EFFECT WAS MUCH LESS THAN ` 3 LAKHS AND MOREOVER, THERE WAS NO CASCADING EFFECT BECAUSE THE ADDITIONS INVOLVED WERE DIFFERENT IN EACH YEAR. HOWEVER, LEA RNED D.R. SUBMITTED THAT IN VIEW OF THE DECISION OF HON'BLE A PEX COURT IN THE CASE OF CIT V. SURYA HERBAL LTD. IN T.C. NO.13694/2 011 DATED 29.8.2011, INSTRUCTION NO.3 OF 2008 DATED 9.2.2011 SPECIFYING LIMITS FOR FILING APPEALS BEFORE VARIOUS FORUMS, WOULD NOT APPLY FOR PENDING APPEALS. 3. WE HAVE HEARD THE RIVAL CONTENTIONS. AS PER TH E GROUNDS OF APPEAL FILED BY THE REVENUE, THE UNEXPLAINED CREDIT DELETED BY THE CIT(APPEALS) FOR ASSESSMENT YEAR 2002-03 IS ONLY ` 1,20,000/- AND INTEREST THEREON IS ` 8,600/-. THERE ARE NO OTHER GROUNDS IN THE SAID YEAR. FOR ASSESSMENT YEAR 2003-04, THE ADDITIONS D ELETED TOTAL TO ` 4,06,000/- AND THESE WERE AMOUNTS RECEIVED BY THE A SSESSEE FROM I.T.A. NOS. 1 TO 4/MDS/10 3 VARIOUS PERSONS, NAMELY, SHRI M. MANICKAVASAGAM, HI S FATHER, SMT. C.T. KARUPAYEE, HIS GRAND MOTHER, SHRI S.P. CHIDAMB ARAM, HIS GRAND FATHER, SMT. KALIAMMAL, HIS GRAND MOTHER AND SMT. S OUNDARAM, HIS MOTHER. AS FOR ASSESSMENT YEAR 2004-05, THE ADDITI ONS AGAINST WHICH THE REVENUE HAS APPEALED, COMES TO ` 2 LAKHS ONLY. IN SO FAR AS ASSESSMENT YEAR 2005-06 IS CONCERNED, THE ADDITI ON DELETED WAS ON ACCOUNT OF UNEXPLAINED MARRIAGE EXPENSE OF ` 3 LAKHS. SO, IN EACH OF THE YEARS, THE TAX EFFECT WAS LESS THAN ` 3 LAKHS AND EVEN LOWER THAN ` 2 LAKHS. THERE IS NO CASCADING EFFECT BECAUSE EVE N IF THE ADDITIONS FOR ASSESSMENT YEARS 2002-03 TO 2004- 05 WERE CONSIDERED TOGETHER, THE TAX EFFECT WOULD STILL BE LESS THAN ` 3 LAKHS. THERE ARE NO OTHER GROUNDS IN THE APPEALS OF THE RE VENUE FOR THESE YEARS. IF THE ADDITIONS ARE CONSIDERED CREDITOR-WI SE, ONLY SHRI M. MANICKAVASAGAM, FATHER OF THE ASSESSEE, HAD GIVEN A MOUNTS IN TWO ASSESSMENT YEARS WHICH WERE ASSESSMENT YEARS 2003-0 4 AND 2004- 05, AND THE TOTAL THEREFORE WOULD COME TO ` 1,07,000/- ONLY. ONLY OTHER PERSON WHO GAVE MONEY TO THE ASSESSEE FOR TWO ASSESSMENT YEARS, WAS ASSESSEES MOTHER SMT. SOUNDARAM, AND TH E TOTAL COME TO ` 3,25,000/- ONLY. THUS, VIEWED FROM ANY ANGLE, THE TAX EFFECT FOR I.T.A. NOS. 1 TO 4/MDS/10 4 EACH OF THE YEAR IS LESS THAN ` 3 LAKHS AND THERE IS NO CASCADING EFFECT INVOLVED SINCE THE CONCERNED INDIVIDUALS FRO M WHICH ASSESSEE HAD TAKEN THE AMOUNTS WERE DIFFERENT FOR DIFFERENT YEARS. AS FAR AS ASSESSMENT YEAR 2005-06 IS CONCERNED, AS ALREADY ME NTIONED BY US, THE ADDITION WAS FOR UNEXPLAINED MARRIAGE EXPENSES ` 3 LAKHS ONLY, WHICH WAS DELETED BY LD. CIT(APPEALS). THUS, IN VI EW OF THE CIRCULAR NO.3 OF 2008 DATED 9.2.2011 PRESCRIBING LIMIT FOR A PPEAL BEING FILED BEFORE VARIOUS FORUMS, THESE APPEALS ARE NOT MAINTA INABLE. THE QUESTION WHETHER SUCH CIRCULAR CAN BE APPLIED FOR P ENDING APPEALS, HAS ALREADY BEEN CONSIDERED BY THIS TRIBUNAL ON 4.3 .2011 IN I.T.A. NO. 1707/MDS/2010. HOWEVER, FOR THE SAKE OF CONVEN IENCE AND BREVITY, WE ARE CONSIDERING THE IMPACT OF SUCH CIRC ULARS ON PENDING PROCEEDINGS ONCE AGAIN:- RELEVANT CIRCULARS ARE GIVEN HEREUNDER: INSTRUCTION NO.5 OF 2008, DT.15 TH MAY,2008. S UBJEC T : REV ISI ON O F MONETARY LIMITS FOR FILING A PP EA LS BY THE D E PARTM E NT BEFORE I N C OME - TAX APP E LLA TE TRIBUNAL S , HIGH COURTS AND SUPREME COURT - MEASURES FOR REDUCING L ITI GATION - REG . R E F E R E N C E I S I NVIT E D TO BO A R D 'S IN S TRU C T I ON S 1\10 . 1 97 9 DT . 2 7 TH MAR C H , 2000 , NO . 1 9 8 5 DT . 2 9 TH J UN E., 2 000, . (' . 6 OF 2 003 , DT . 1 7TH JULY, I.T.A. NOS. 1 TO 4/MDS/10 5 2 0 03, O . 1 9 OF 2 00 3, DT . 2 3 RD D EC ., 2 003, O . C; O F 2004, D T. 2 7 TH M A Y , 200 4 , N O . 2 O F 2 0 05 , DT . 24T H OCT., 2005 [( 2005 ) 1 9 8 C TR ( S T ) 4 1] A ND NO . 5 O F 20 0 7, D T . 16TH J U LY, 2 00 7 [( 20 0 7) 21 0 CT R (ST) 76 ] W H E RE I N M O N ETA RY L I MIT S F O R FI L IN G DE PA R T M E NT A L A P P E A L S (I N INCOM E -T AX MATT E R S) AND OTH E R CONDITI O N S WE R E S P E C IFI E D , F OR F IL I NG APPEA L S B E F O R E AP P E LL AT E T RI BUNAL S, H IGH C OU RT S A ND SU P R E M E C O URT. 2 . IN S UP E R S ESS I ON OF TH E A BOV E IN ST RU C TIO N S , I T HA S B EE N D EC ID E D B Y TH E BOAR D THA T D E P A RTM E N TA L AP P EA L S W ILL B E FIL E D B E F O R E APPELLAT E T RIBUN A L S, HIGH C O URT S AND SUPR E M E CO UR T A S P E R M O N E T A R Y L I M IT S A ND C ON DI TI O N S S P E CIFI E D B E L OW : 3. APPEA L S W I LL H E N CEF OR T H B E F I L E D O NL Y I N C A S E S W H E R E TH E TA X E F F E C T EX C EE D S MON E T A R Y LI M IT S G IVEN HERE UN D E R: SL.NO. APPEALS IN INCOME- TAX MATTERS MONETARY LIMIT (IN RS) 1. APPEAL BEFORE INCOME-TAX TRIBUNAL 2, 00,000 2. APPEAL U/S 260A BEFORE HIGH COURT 4,00,00 0 3. APPEAL BEFORE SUPREME COURT 10, 00,000 4. FOR T H I S PUR P OSE , ' TAX E FF EC T ' M EA N S TH E DIFF E R E N C E B E T W EE N TH E T AX ON T H E T O TA L I N C OM E ASSESSE D A N D TH E TA X T H A T W OULD HA V E B EE N CHARG EABLE H A D S UCH TOT A L I NC OM E B EE N R E D U C E D B Y T HE A MO UNT OF INCOM E I N R E S P E C T OF TH E I S S U E AG A IN S T W H I C H APPEAL I S INT E ND E D T O B E FIL E D ( H E R E AF T ER R E FE RR E D T O A S ' D I S PUT E D I SS U ES ' ). HO WEV E R , T H E T AX W IL L 'LO T I N C LUD E A N Y IN T E R ES T TH E R E ON . S IM I LA R L Y, IN L O SS CA SE S NO T I ONAL T A X E F FEC T S HO U LD B E TAK E N I N T O ACCOU N T . IN TH E CA SE OF P E N A L TY O RD E R S , TH E TA X E F F EC T W ILL M E A N Q UA N TUM O F PE N A L T Y D E L E T E D OR R E DU CE D IN TH E O RD E R T O B E APP EA L E D AG A IN S T . 5. TH E A SSESS IN G O F FI C E R S H A L L CA L CU L A T E TH E T A X E F F E CT S E P AR A TE L Y F O R E V E RY A SSESS M E NT Y E A R IN RE S PEC T O F T H E DI S P U T E D I S S U E I N T HE CA S E O F E V E R Y ASSESSEE. IF, I N T H E CASE O F A N ASSESSEE, TH E DI S P U T E D I SS U E S A R I S E I N MOR E TH A N O N E A SSESS M E NT Y E A R , A PP E A L S HA L L B E F IL E D IN R ES P E C T O F S UCH A SSES S ME NT Y EA R O R Y EA R S I N W H I C H T H E TAX E FF EC T IN R ES P EC T O F TH E D I S P U T E D I SS U E EXCEE D S TH E MO N ETAR Y LIMIT S PEC IFI E D IN PA R A 3 . 'I APP EA L S H A LL B E FIL E D I N R E S P E C T O F A N A SSESS M E N T Y E A R OR YEA R S IN W HI C H T H E T A X EFF E CT I S L ES S TH A N T H E MON E T ARY LIM IT S PECIFI E D IN P A RA 3 . IN O T H E R W ORD S , HE N CE F O RT H , A PP EA L S W ILL B E FIL E D O NLY W I T H R E F E R ENCE T O I.T.A. NOS. 1 TO 4/MDS/10 6 THE TA X E FF EC T I N TH E R E L E V A N T ASSESS M E NT YEA R . H OW E V E R , I N C ASE OF A C OMP OS I TE OR D E R OF A N Y HIGH COURT OR A PP E LL A T E A UTH OR IT Y, W H I C H I N VO L VES M O RE TH A N O N E Y E A R , A P PE AL S HA L L B E FI L E D I N RE S PE CT OF A LL A SSESS M E NT Y EA R S E V E N IF TH E 'TAX E FF EC T ' I S L ESS T H A N T H E PR E SC R I B E D M O N E T ARY L I M I TS IN A N Y O F T H E Y EA R (S), I F I T I S DEC ID E D TO FI L E A PP E A L IN R ES P E C T O F TH E YEAR( S) IN W H I C H ' TAX E FF ECT ' EX CEE D S T H E MON E T A RY LIM IT PRE SC RIB E D. 6. IN A CASE WHERE APPEAL BEFORE A TRIBUNAL OR COUR T IS NOT FILED ONLY ON ACCOUNT OF THE TAX EFFECT BEING LESS THAN THE MONET ARY LIMIT PRESCRIBED ABOVE, THE CIT SHALL SPECIFICALLY RECORD THAT EVASI ON THOUGH THE DECISION IS NOT ACCEPTABLE, APPEAL IS NOT BEING FILED ONLY ON TH E 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. THE INCOME-TAX DEPARTMENT SHALL NOT BE PRECLUDED FROM F ILING AN APPEAL AGAINST THE DISPUTED ISSUES IN THE CASE OF THE SAME ASSESSE E FOR ANY OTHER ASSESSMENT 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 . I N T H E P AS T , A NUM B E R OF I N S T A NC E S H A V E C OM E T O TH E NOT I CE OF TH E BO A RD, W H E R E B Y A S A SSESSEE H AS C L A I M E D R E LI E F FR O M T H E T RIBUN A L O R TH E C OURT ON L Y O N TH E G R O UND TH A T TH E D E P A RTM E NT HA S I MP LI C I T L Y ACCE PT E D T H E D EC I S I O N O F T H E T RI BU N A L OR CO URT IN TH E CAS E O F T H E AS S ESSE E F O R ANY O TH E R A SS ESS M E N T YEA R O R IN T H E C A SE OF ANY OTH E R A SS E SS EE FOR T H E S A M E OR A NY O TH E R A SSESS M E N T Y EA R, BY T F IL I NG A N A PP E A L O N TH E SA M E DI S P U T E D I SS U ES. T H E D EPA RTM E N TA L R EP R ESE NT A T I V ES/CO U N SE L M U S T MAKE E V ER Y E FF O RT TO BRING T O TH E NOTICE O F TH E T RI B U NA L O R T H E CO UR T TH A T TH E A PP EA L I N S U C H C A SES WAS NOT F IL E D O R NOT A DM I TT E D ON L Y BY R EASON OF T H E TA X E F FEC T B E ING L ESS THAN T H E S P E C IF I E D M O N E T ARY LI M I T A ND T H E R E FOR E , I NF E R E N CE S H O UL D B E D RAWN TH A T T H E D EC I S I O N S R E N DE R E D TH E R E I N WE R E ACCE P T AB L E T O TH E D E P A RTM E NT . A CCO RDI NGLY , TH E Y S H O UL D IMP R ESS U PO N T H E T R I B U N A L O R TH E CO UR T T HA T S U C H CA SE S D O NOT HAV E ANY P R ECEDE N T VA LU E . 8. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING SHOU LD BE I.T.A. NOS. 1 TO 4/MDS/10 7 CONTESTED IRRESPECTIVE OF THE TAX EFFECT: (A) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVI SION OF AN ACT OR RULE ARE ;UNDER CHALLENGE. ( B) W H E R E BOA RD ' S OR D E R , NO T IFIC A TIO N , I N S T R U C TION O F CIRCULAR H A S B EE N H E LD TO B E I LL E G A L O F U LTR A VI R ES. (C) WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS BE EN ACCEPTED BY THE DEPARTMENT. 9. THE P R O P OSA L F O R FI L I N G S P E C I A L L EA V E P E T I T I O N UN D E R A RTI C L E 1 36 OF T H E C ON S TI T U T I O N B E F O R E T H E SUPREME CO U R T S HO ULD IN A L L CASES , B E SE N T T O T H E D I R E CTO R A T E O F IN CO M E - TA X ( L E GA L & R ESEA R C H ) N E W DEL HI AND TH E D EC I S I O N TO F I L E S P E C I A L L EAVE P E TITION S H A L L B E I N C ON S ULTATI ON W I TH T H E MI NI S T RY OF L AW A N D J U S TI CE . 10. THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE W ILL NOT APPLY TO WRIT MATTERS. 1 1 . T HI S IN S T R U C T I O N W IL L A PP L Y TO A PP E A L S F I L E D ON O R A FT E R 1 5 T H O F M A Y , 2 00 8. HO WEVE R , T HE CASES WHERE A PP EA L S H AV E B EE N F IL E D BE FO R E 1 5 T H O F M AY, 200 8 W I LL B E G OV E RN E D B Y T H E I N S TR U C T I O N S ON TH I S S U B J E CT, OP E R A TIV E A T T HE TIM E W H E N S U C H A P P E AL WA S F IL E D . 12. THIS ISSUES UNDER SECTION 268A(1) OF THE INCOME -TAX ACT, 1961. INSTRUCTION NO.3/2011[F.NO.279/MISC.142/2007-ITJ], DATED 9-2-2011. R E F E R E N CE I S IN V IT E D TO B OA RD' S IN ST RU C TI O N NO. 5 / 2 008 D A T E D 1 5 - 5 - 2 00 8 I.T.A. NOS. 1 TO 4/MDS/10 8 W H E R EI N M O N ETA R Y LIMIT S A ND O TH E R CO NDITION S FO R F ILIN G D E P A RTM E NT A L A PP EA L S ( IN IN CO M E -TA X M A T TE R S) B EFO R E A PP E LL A T E T RIBUN A L , HI G H CO URT S A ND S UPR E M E CO URT WE R E S P EC I F I E D. 2. IN S UP ERSESS I O N OF TH E A B OVE I N S TRU C TI O N , IT H AS B EE N D EC ID E D BY TH E B OA RD T H A T D E P A R T M E N TA L A PP E AL S M AY B E F IL E D O N M E RIT S BEF O R E A PP E LL ATE T RIBUN A L , HI G H CO UR TS A ND S UPR E M E CO URT KE E PIN G IN V I EW TH E M O NETAR Y LIMIT S A ND CO NDITI O N S S P EC IFI E D B E L OW . 3 . H E N CE F O RTH A PPEA L S S H A LL N O T B E FIL E D IN C AS E S W HER E THE T AX EF F EC T D OES N O T E XCEE D TH E M O N E T A R Y LIMIT S G IVEN H E R E UND E R :- S. NO. A PP EA L S IN IN CO M E - T AX M A TT E R S M O NET A R Y LIMIT ( IN R S. ) I . A PP E AL B E FOR E APPELL A T E TRIBUNAL 3, 00 , 000 2 . A PP EA L U /S 260A B E FOR E HI G H COURT 10 , 00 , 0000 3. A PP EA L BEF O RE S UP RE M E CO URT 2 5 , 00 , 000 IT I S C L A R IF I E D T H AT AN A PP EA L S H O ULD N O T B E FIL E D M E R E L Y B ECA U SE TH E T AX EFFEC T IN A CASE EXCEE D S T H E M O N E T ARY LI M I TS P R ESC RI BE D A B OVE . F ILIN G OF A PP EA L IN S U C H CASES IS TO BE D EC I DE D O N MER I TS OF TH E CASE. 4. FO R T HI S PUR POSE, 'TAX EFFEC T ' M EA N S TH E DI F F E R E N CE B E T WEE N TH E TAX O N TH E T O T A L IN CO M E ASSESSE D A ND TH E T AX TH A T WO ULD H AVE B EE N C H A R G E A BL E H A D S U C H T O T A L IN CO M E B EE N RED U CED BY T H E A M O UNT OF IN CO M E IN R ES P EC T OF TH E I SS U ES AGAI N ST W HI C H A PP EA L I S IN TE ND E D TO BE F IL E D ( H ERE IN AF T E R R EFE RR E D T O AS ' DI S PUT E D I SS U ES ' ). H OWEVE R TH E TAX W ILL N O T IN C LUD E A N Y INT E R ES T TH EREO N , EXCE PT W H E R E C H A R GEA B I LIT Y O F INT E R ES T I T SE L F I S IN DI S PUT E. IN CASE TH E C H A R GEA BILIT Y OF INT E RE S T I S TH E I SS U E UND E R DI S PUTE , I.T.A. NOS. 1 TO 4/MDS/10 9 TH E A M O UNT OF INT E R ES T S H A LL B E TH E T AX EF F ECT . IN CASES W H E RE R E TURN E D L OSS I S R E DU CE D OR ASS E SSE D AS IN CO M E, TH E T AX EFFEC T WO ULD IN C LUD E N O TI O N A L T AX ON DI S PUT E D A DDITI O N S. IN C AS E OF P E N A LT Y O RD E R S, TH E T AX EFFEC T W ILL M EA N QU A NTUM O F PEN A LT Y D E L E T E D O R R E DU C ED IN TH E ORD E R T O B E A PP EA L E D A G AIN S T . 5. T H E ASSESS IN G OFFIC E R S H A LL CA LCUL A T E TH E T AX E FF E CT SE P A R A T E L Y F O R E V E R Y ASSESS M E NT YEA R IN R ES P EC T O F THE DI S PUT E D I SS U ES IN TH E C ASE O F E V E R Y ASSESSEE . IF , IN TH E CASE OF A N ASSESSEE, TH E DI S PUTED I SS U ES A RI SE IN M O R E THAN O N E ASSESS M E NT YEA R , A PPE A L , CA N B E F IL E D IN R ES P EC T OF S U C H ASSESS M E NT YEA R O R YEA R S IN W HI C H T H E T AX EF F EC T IN R ES P EC T OF T H E D I SP U TE D ISS U ES EXCE ED S TH E M O N E T A R Y LIMIT S P EC IFI E D IN P A R A 3 . NO A PP EA L S H A LL B E F IL E D IN R ES P ECT OF AN ASSESS M E NT YEAR OR YEA R S I N W HI C H TH E T AX EF F EC T I S L ESS TH A N TH E M O N ETA R Y LIMI T S P EC I F I E D IN P A R A 3. IN O TH E R WO RD S, H E N CE F ORT H , A PP EA L S CA N B E FIL E D O NL Y WIT H R EFE R E N CE T O TH E T A X EFFEC T IN T H E R E L EVA NT ASSESS M E NT YEA R . HOWEVER, I N CASE OF A CO MP OSI T E OR D E R OF AN Y HI G H CO UR T OR A PP E LL ATE A U T H O RI TY, W HI C H I N VO L VES M ORE TH A N O N E ASSESS M E N T YEA R A ND CO MM O N ISS U ES I N M O R E TH A N O N E ASSESS M E NT YEA R , A PP EA L S H A LL BE F IL ED IN R ES P ECT OF A LL S U C H ASSESS M E N T YEA R S EVE N IF T H E 'TAX EFFECT' I S L ESS TH A N T H E P RESC RIB E D M O N E T A R Y LIM I T S IN A N Y OF TH E YEA R (S), I F IT I S D ECI D E D TO F IL E A PP EA L I N R ES P EC T OF T H E YEA R (S) IN W HI C H ' T AX EFFEC T ' EXCEE D S TH E M O N E T A R Y LIM I T PR ESC RIB E D . IN CASE W H ERE A CO MP OS IT E O RD E R / J UD G M E NT IN VO L VES M O R E TH A N O N E A SSESSEE, EAC H ASSESSEE S H A LL B E DEA L T W ITH SE P A R A T E L Y. I.T.A. NOS. 1 TO 4/MDS/10 10 6 . IN A CASE W H E R E A PP EA L B E F O R E A T RIBUN AL O R A CO URT I S N O T F IL E D O NL Y O N ACCO UN T OF TH E TAX EFFEC T BE IN G L ESS TH AN TH E M O N E T ARY LIM I T S P EC I F I E D A B OVE , T H E CO MMI SSIO N E R OF I NCO M E -T AX S HALL S P EC IFI C ALL Y R ECO RD TH AT 'E V E N TH O U G H TH E D EC I S I O N I S N O T ACCE PT A BL E, AP P EA L I S N O T B E IN G FI L E D O NL Y O N THE CO N S ID E R A TI O N TH AT T H E TAX EFFEC T I S L ESS TH A N TH E MO N E T ARY LIMIT S P EC IFI E D IN THI S IN S TRU C TI O N '. F URTH E R , IN S U C H C ASES, TH E R E W ILL B E N O PR ES UMP T I O N TH A T TH E IN CO M E -T AX D E PARTM E NT H AS AC QUI ESCE D IN TH E D EC I S I O N O N TH E D IS PU TE D ISS U ES . T H E IN CO M E -T AX D E P A RTM E NT S H A LL N O T B E P REC LUD E D FR O M FI LIN G A N A PP EA L AGAI N S T T H E DI SP U TE D I SS U ES IN TH E CASE OF TH E SA M E ASSESSEE FO R A N Y O TH E R ASSESS M E NT YEA R , O R I N TH E CASE OF A N Y O TH E R ASSESSEE F O R TH E SA M E O R A N Y O TH E R ASSESS M E N T YEA R , IF TH E T AX EFFECT EXCEE D S T H E S P ECI FI E D M O N E T A R Y LIMIT S. 7. IN T H E PAST , A NUM BER OF IN S T A N CES H AVE CO M E T O TH E N O TI CE OF TH E B OA R D, W H EREBY A N ASSESSEE H AS C L A IM E D R E LI E F FR O M TH E TRIBUN A L O R TH E CO UR T O NL Y O N THE G R O UND TH AT T H E DE P AR TM E NT H AS IMPLI C ITL Y A C C EPTED TH E D EC I S I O N OF TH E T RIBUN A L O R CO UR T IN TH E CASE OF T H E ASSESSEE FO R A N Y O TH E R ASSESS M E NT YEA R O R I N TH E CASE O F A N Y O TH ER ASSESSEE FOR T H E SA M E O R A N Y O TH E R ASSESS M E N T YEA R , B Y N O T FILIN G A N A PP EA L O N TH E SA M E DI S PUT E D I SS U ES . T H E D E P AR TM E N TA L RE PR ES ENT A TI V E S / CO UN SE L S MU S T M A K E EVE R Y EFFO RT T O B R IN G TO T H E N O TI CE OF TH E T RIBUN A L OR TH E CO U R T TH AT TH E A PP EA L IN S U C H CAS E S WAS N O T FIL E D O R N O T A DMITT E D O NL Y F O R TH E R EASO N OF TH E T AX EF F ECT BE IN G L ESS TH A N TH E S P EC IFI E D M O N E T A R Y LIMI T A ND , T H E R EFORE, N O IN FE R E N CE S H O ULD BE DR AW N TH A T TH E D EC I S I O N S R E N DE R E D TH E R E IN WE R E ACCEPTA BL E T O TH E D E P AR TM E NT. ACCOR DIN G L Y, TH EY S H O ULD IMP RESS UP O N TH E T RIBUN A L O R TH E I.T.A. NOS. 1 TO 4/MDS/10 11 CO U R T T H A T S U C H CASES D O N O T H AVE A N Y PR ECE D E NT V A LU E . AS TH E EV ID E N CE OF N OT FI LIN G A PP EA L D U E T O THI S I N S T R U C TI O N M AY H AVE T O B E PR O DU CE D IN CO URT S, T H E J UDI C I A L FO LD E R S IN T H E OFFICE OF C I T MU S T B E M A INTAIN E D IN A SYS T E MI C M A NN E R FO R E ASY R E TRI EVA L. 8. A D VE R SE J UD G M E NT S R E L A TIN G TO TH E FO LL OW IN G I SS U ES S H O ULD B E CO NT ES T E D O N M ER IT S N OTW ITH S T A NDIN G TH A T TH E T AX EFFEC T E NT A IL E D I S L ESS THAN TH E M O N E T A R Y LIMIT S S P ECIFIE D IN PA R A 3 A B OVE O R TH E R E I S N O T AX EFFE CT. (A) W H E R E TH E CO N S TITUT IO N A L VA LIDIT Y OF TH E PR OV I S I O N S OF A N AC T O R RUL E A R E UND ER C H A LL E N GE , O R (B) W H ERE BOAR D 'S O RD E R , NO TIFI C ATI O N , IN S TRUCTI O N O R C IR C UL A R H AS B EE N H E LD T O BE ILL EGA L O R U LTR A VI R ES, OR (C) W H E R E R EVE NU E A UDIT O BJ EC TI O N I N TH E CASE H AS B EE N ACCE PT E D B Y TH E D EPAR TM E N T . 9. T H E PR OPOSA L FO R FILIN G S P ECIA L LEAVE PE TITI O N UND ER A RTICLE 13 6 OF TH E CO N S TI T UT ION BEFO R E T H E S U P R E M E CO UR T S H O ULD , I N A LL C A SES , B E SE NT T O THE DIR EC T ORA T E OF IN CO M E -T A X (LEGA L & R ESEARC H ), NEW D E LHI AND THE D EC I S I O N T O FIL E S P EC I A L L EAVE P E TITI O N S H A LL B E IN CO N S U L T AT I O N W ITH TH E MIN IST R Y OF LAW AND JU S TI CE . 10. T H E M O N E T ARY LIMIT S S P ECIF I E D IN P A R A 3 A B OVE S H A LL N OT A PPL Y TO W RIT M AT T E R S A ND D I REC T T AX M A TT E R S O TH E R TH A N IN CO M E -T AX, FILIN G O F A PP EA L S I N O TH E R DIR EC T T AX M A TT ERS S H A LL CO NTINU E T O B E GOVER N E D B Y R E L EVA NT I.T.A. NOS. 1 TO 4/MDS/10 12 PR OV I S I O N S OF S T A TUT E A ND RUL ES. F UR T H E R , F ILIN G OF A PP EA L IN CASES O F IN CO M E - TA X , W H E R E T H E T AX EF F ECT I S N OT QU A NTIFI A BL E OR N O T INVO L VE D , S U C H AS TH E CASE OF R EG I S TR AT I O N OF T RU S T S O R IN S TITUTI O N S UND E R SEC TI O N 1 2A OF TH E I T ACT , 1 96 1 , S H A LL N O T B E GOVE RN E D B Y TH E LIM I T S S P EC I FIE D IN P A R A 3 A B OVE A ND D ECISIO N TO F IL E APPEA L IN S U C H CASES M AY B E T AKE N O N M E R I T S OF A P ART I C UL A R CASE. 11. T HI S IN S TRU CT I O N W IL L A PPL Y T O A PP E AL S FIL E D O N O R A FTE R 9 TH FEBRUARY, 2011. H OWEVER, T H E CASES W H E R E A PP EA L S HA VE B EE N FIL E D BEF O R E 9 TH JANUARY 2011 I W ILL B E GO V E RN E D B Y TH E IN S TRU C TI O N S O N THI S S UBJ EC T , O P E R A TI VE A T TH E TIM E W H E N S U C H APP E AL WAS F IL E D . 12. THIS ISSUES UNDER SEC. 268A(1) OF THE INCOME-TA X ACT, 11961. 4. IT CAN BE SEEN THAT BOTH THE ABOVE SAID INSTRUCT IONS CARRIED SIMILAR CLAUSE NO.11. THE WORDINGS BEING SAME EXCEP T FOR THE DATES. WHEREAS IN INSTRUCTION NO.5 OF 2008 THE DATE MENTIO NED WAS 15-05- 2008, IN INSTRUCTION NO.3 OF 2011 DATE MENTIONED IS 09-02-2011. ADMITTEDLY, APPEAL HERE HAS BEEN FILED BY THE REVEN UE 09-02-2011 AND AFTER 15-05-2008. THE QUESTION AS TO WHICH INST RUCTION WOULD APPLY IS AN ISSUE WHICH IN OUR OPINION RESOLVED BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. S. SUMATHI (317 ITR I.T.A. NOS. 1 TO 4/MDS/10 13 422). ONE OF THE QUESTIONS RAISED BY THE REVENUE IN THE SAID APPEAL IS REPRODUCED HEREUNDER: WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE TRIBUNAL WAS RIGHT IN REJECTING ;THE REVENUES APPL ICATION FOR RECTIFICATION OF ITS APPELLATE ORDER FOR THE ASST. YR. 1994-95 ( IN RESPECT OF TAX CASE NO.258 OF 2005) 1995-96 (IN RES PECT OF TAX CASE NO.259 OF 2005) IN THE ASSESSEES OWN CASE WHE REIN THE TRIBUNAL HAS SUMMARILY DISMISSED THE REVENUES APPEA L ON THE GROUND THAT THE MONETARY LIMIT WAS LESS THAN `1,00,0 00 WHEREAS AT THE TIME OF FILING APPEAL ON 3 RD MARCH, 2000, THE MONETARY LIMIT WAS ONLY `25,000 AS PER INSTRUCTION NO.1777 OF THE BOARD DT. 4TH NOV. 1987? 5. IT WAS HELD BY THE HONBLE JURISDICTIONAL HIGH C OURT IN PARAS 5 TO 8 AS UNDER: 5 . A I SS U E S IMI L AR T O TH E I S S U E I N T HI S CA S E CAM E UP FOR CONSI D E RA T I ON B E FOR E A D I V I S I ON BE N C H O F THI S CO U R T IN TH E C A S E O F CWT VS . S. A NN A M A LAI (S UPR A ) W H E R E IN I T WAS H E L D TH A T IN O RD E R T O R E DU CE T H E LITIGATION F O R F ILING D E PARTM E NTAL A P P EA L S/ R E F E R E NC ES B E FOR E T H E T RIBUNA L , H I G H C OURT S A ND T H E S UPR E M E COURT , TH E CB DT , BY C I R CULAR F . N O . 2 7 9/1 2 6/ 1 9 9 8 -IT , DT. 2 7T H M A R C H , 2 0 00 , R EF I XE D T H E R RY IRS , H OWEVE R , CAS T I NG OUT CE RT AI N EXCEP TI O N S. T H E EXCEP TI ONS S TAT E D AR E ( I ) WH E RE THE REVE NU E A UDI T O BJ EC T I O N IN T H E CA SE HA S B EE N A C CE P TE D B Y T H E D E PAR T M E N T, ( II ) W H ER E T HE BOAR D 'S O R DE R , NOT I FI C AT I O N , I N STRUC TI O N O R CI R CU L A R IS T H E SUBJ E CT - MATT E R O F AN ADV E R SE ORD E R, (III ) WH E RE PROSEC UT I O N PROCEED IN G S A R E C O N TE M P L AT E D AG A I N S T TH E A S SES SEE , A N D ( IV) W H E R E TH E C O N ST I TUT I O N A L VA LID I TY OF TH E PRO V I S ION S O F TH E A C T A R E UND E R C H A L L E N GE . I.T.A. NOS. 1 TO 4/MDS/10 14 6 . TH E REVENU E H AD NOT MADE O U T A CA S E T HAT T H E I SS U E I NVO L VE D IN TH E APP EA L B E FOR E T H E T R I B U NA L FA LL S WI THIN THE E XCEPTIONS PRO VI DE D I N T HE C IR C UL AR . 7. I T MAY B E NOTED T H A T T HIS CO UR T CO N SI D E R ED A S IMI L A R I SS U E I N T H E CA S E O F C I T V S . AS S OCIAT E D E L EC TR I C A L AG E N C I ES ( 200 8) 214 CT R ( M A D ) 5 1 8 : (2 00 7 ) 29 5 I T R 4 96 ( M AD) W H E R E IN THI S C OURT H E L D AS FO LL OW S ( P . 5 0 0) : 'WE A R E O F T H E CO N S I D E R E D VIEW T H A T N ONE OF TH E EX C E PTION S S T A T E D I N T H E CIRCU L AR ARE APPL I CABL E TO TH E F AC T S OF T H E PR ESE NT C ASE. T H E C IR C U LA R WAS S T A T E D TO B E I SS U ED BY I N VOK I NG THE STATUTORY P OW ER UND E R S. 1 1 9 O F T H E I T AC T. T H E APPEAL I S FIL E D UND E R SECTION . 2 60 A OF THE IT A C T. I T I S W E L L SE TTL E D PRINC IPL E OF LA W THAT EAC H A N D E V E R Y PR OV I SI ON OF A ST ATUT E H A S T O B E GIV E N TH E S A M E IM P O R TANCE. ON E P R OV I S ION CA NN OT B E E L E V ATE D T O A HI G H E R P E D ES T A L T H AN TH E OTH E R P R OV I S I ON, O F CO UR SE , UNL ESS OR O TH E RW I SE S P ECI F I CA LL Y S T A T E D E ITH E R IN T H E SC H E M E, TH E AC T O R IN TH E P R OV I S I O N I T SE LF TH A T A P A R T I C UL A R P R OV I S ION I S S UB JECT E D TO OR Q U A L IF I ED BY ANY O T HE R P R OV I S ION OR T H E P ROV I S I O N CA N B E GIV E N EFF E CT T O NO T W ITH S TANDING A N YTHING C O NT A I N E D I N A NY OTHE R P R OV I S I O N S BY ASS I GNI N G OV E R R I D IN G E F F E C T . H E NC E, T HE C ONT E NT I ON THAT NOT W I TH S T A ND ING T H E CIRC U LAR, W H I C H W A S I SS U ED UND ER S . 119 OF T H E I T A CT , TH E A PP EA L COULD B E F I L E D B Y T H E REVE NU E U ND ER S. 2 6 0 A H A S TO BE R E J EC T E D F OR T H E R E A S ON TH AT I F THE CO NT E NTIO N I S A CC E P TE D , O N E O F T HE S E CT I O N S WO ULD B EC OM E V IRTU A LL Y OTIO SE A N D TH AT CA N NO T B E T H E I NT E N TI O N O F TH E L AW MAK E R S . ' 8. THU S, FO LL OWI N G TH E L O NG L I N E OF CA S E LA W R EP ORT ED IN CI T V S . RAJA S T H A N PATR I KA LTD. (2 00 2) 1 7 8 C T R ( RAJ) 4 1 4 : (2 0 0 2 ) 2 58 I T R 3 0 0 ( RAJ ), P . S .T.S . THI RU VIRATHNAM & SO N S ( 2 00 4 ) 1 8 6 C T R ( MAD ) 400 : ( 200 3) 2 6 1 I T R 4 06 ( M AD), T O W H IC H ONE O F US IS A P A RTY (K . RA V I R A J A PA N D I A N J .) , CI T VS . DIG V IJAY S INGH I.T.A. NOS. 1 TO 4/MDS/10 15 (2 007) 2 13 C T R (M P ) 4 90 : ( 2 007 ) 2 9 2 IT R 3 14 ( MP ) AND C IT V S. C AM CO CO L O U R C O. (2 00 2 ) 173 C T R ( BOM ) 2 5 5 : ( 2 00 2) 2 5 4 I T R 5 6 5 ( 80M ), THI S C OU R T H E LD TH A T TH E UNI FO R M LIN E OF J UDI C I A L OPI NI O N I S T H A T IF T HE T AX E FF EC T I S L ESS THAN WH A T I S ST A T E D IN TH E C IRCUL A R , T H E R E VE NU E N EE D NOT AGITA T E TH E I SS U E O N A PP EA L AND T HAT TH E C IR C U LAR I S BI N DING ON TH E REVE NU E . 6. IN VIEW OF THE ABOVE REFERRED DECISION OF THE JU RISDICTIONAL HIGH COURT, INSTRUCTIONS PRESCRIBING THE MONETARY LIMIT OF TAX EFFECT FOR FILING APPEALS WOULD APPLY FOR ALL PENDING APPEALS AS WELL . WE ARE FORTIFIED IN TAKING THIS VIEW BY THE DECISION OF HONBLE PUNJ AB & HARYANA HIGH COURT IN THE CASE OF CIT VS. ABHINASH GUPTA (327 IT R 61). THERE CONTENTION RAISED BY THE REVENUE IS THAT CIRCULAR N O.5 OF 2008 DATED 15-05-2008 WAS NOT APPLICABLE TO APPEALS FILED PRIO R TO THAT DATE. IT WAS HELD BY THEIR LORDSHIPS THAT THE CIRCULAR WAS A PPLICABLE TO APPEALS WHICH WERE PENDING BEFORE THE COURT EITHER FOR ADMISSION OR FOR FINAL DISPOSAL, ON THE DATE OF THE CIRCULAR AND THE SAME WAS BINDING ON THE REVENUE. IN TAKING THIS VIEW, HONBL E P&B HIGH COURT RELIED ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. MADHUKAR K. INAMDAR (318 ITR 141), WHERE AL SO THE SAME ISSUE WAS AGITATED BY THE REVENUE. WE ARE, THEREFO RE, OF THE OPINION THAT INSTRUCTION NO.3/2011 DATED 09-02-2011 WOULD A LSO APPLY FOR I.T.A. NOS. 1 TO 4/MDS/10 16 PENDING APPEALS BEFORE THIS TRIBUNAL. MONETARY LIMI T FOR FILING APPEAL BEFORE THIS TRIBUNAL AS PER INSTRUCTION NO.3/2011 D ATED 09-02-2011 IS RS. 3 LAKHS. HERE, AS ALREADY NOTED BY US, THE TAX EFFECT FOR ASSESSMENT YEARS WAS MUCH LESS THAN RS. 3 LAKHS. TH ERE IS NO CASE FOR THE REVENUE THAT THESE APPEALS FELL IN ANY OF T HE EXCEPTIONS MENTIONED IN THE CIRCULAR. AS FOR THE RELIANCE PLA CED BY THE LEARNED D.R. ON THE DECISION OF HON'BLE APEX COURT IN THE C ASE OF CIT V. SURYA HERBAL LTD. (SUPRA) THE FACTS THERE WERE ENTI RELY DIFFERENT. HON'BLE APEX COURT WAS DEALING WITH APPLICABILITY O F THE CIRCULAR WHEN THE MATTER HAD A CASCADING EFFECT OR WHERE A C OMMON PRINCIPLE WAS INVOLVED IN A LARGE NUMBER OF MATTER OR GROUP O F CASES. HERE THERE IS NO CASE FOR THE REVENUE THAT THE ISSUE INV OLVED HAD ANY CASCADING EFFECT ON ANY CLASS OR GROUP OF ASSESSEE. NO DOUBT LEARNED D.R. HAS ALSO PLACED STRONG RELIANCE ON CBD T LETTER DATED 2.9.2011, WHICH SAYS THAT DECISION OF HON'BLE APEX COURT IN THE CASE OF SURYA HERBAL LTD. (SUPRA) WOULD IMPLY THAT ITS E ARLIER CIRCULAR NO.3/2011 DATED 9.2.2011 WILL NOT APPLY TO PENDING CASE. HOWEVER, WE CANNOT FIND ANY RATIONALE IN REACHING SUCH A CON CLUSION FROM THE DECISION OF HON'BLE APEX COURT, AS ALREADY MENTIONE D BY US. IN OUR I.T.A. NOS. 1 TO 4/MDS/10 17 OPINION, THE DECISION OF HON'BLE APEX COURT ONLY RE -INFORCES THE VIEW TAKEN BY HON'BLE DELHI HIGH COURT IN THE CASE OF CI T V. DELHI RACE CLUB LTD. (I.T.A. NO. 128/2008 DATED 03.03.2011) TH AT CIRCULAR NO.3/2011 WILL APPLY TO PENDING APPEALS AS WELL. 7. IN THE RESULT, APPEALS OF THE REVENUE FOR ALL TH E YEARS STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON 14 TH DECEMBER, 2011. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 14 TH DECEMBER, 2011. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-I, MADURAI (4) CIT-I, MADURAI (5) D.R. (6) GUARD FILE