The ACIT, Sagar V. Shri Kamlesh Kumar Sahu, Sagar

ITA 202/JAB/2008

• Counselvise Citation: 20222714 RSA 2008
• Duration Of Justice: 2 year(s) 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 11-04-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 17-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KESHAVE SAXENA
• Assessee Lawyers: H P VERMA; GIRISH AGRAWAL
• Keywords: Gift; Search and seizure; Question of law; Tax effect
• Section: 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER & SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.202/JAB/2008 AY 2004-05 ACIT, CIRCLE-SAGAR APPELLANT VS. KAMLESH KUMAR SAHU, JAWAHARGANJ, SAGAR RESPONDENT APPELLANT BY SHRI KESHAVE SAXENA, CIT(DR) RESPONDENT BY S/SHRI H.P. VERMA & GIRISH AGRAWAL O R D E R PER R.C. SHARMA, AM THE ABOVE APPEAL OF THE REVENUE IS DIRECTED AGAINS T THE ORDER PASSED BY LD. CIT(A)-I, JABALPUR ON 28.3.2008 FOR T HE AY 2004-05. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. 3. AT THE OUTSET OF THE HEARING, LD. COUNSEL FOR AS SESSEE POINTED OUT THAT TAX EFFECT INVOLVED IN THIS APPEAL IS BELO W THE PRESCRIBED LIMIT. IN SUPPORT OF HIS ASSERTION, HE FILED COPY O F THE ITS-150. LD. CIT, DR DID NOT DISPUTE THE SAME. IN VIEW OF THIS, WE FIND FROM THE RECORD THAT THE APPEAL OF THE REVENUE IS NOT MAINTA INABLE AS THE TAX 2 EFFECT IS BELOW THE PRESCRIBED LIMIT. HENCE, THIS A PPEAL IS NOT MAINTAINABLE IN VIEW OF THE INSTRUCTION ISSUED BY T HE CBDT BECAUSE QUESTION OF FACT IS THE ISSUE IN DEPARTMENTAL APPEA L. 4. IT IS NOT IN DISPUTE THAT IN THIS APPEAL, TAX EF FECT ON GROUNDS OF APPEAL RAISED IS BELOW THE PRESCRIBED LIMIT. THE CB DT VIDE INSTRUCTION NO.1979 DATED 27 TH MARCH, 2000 DIRECTED THAT THE APPEALS WILL BE FILED BY THE DEPARTMENT ONLY IN CAS ES WHERE TAX EFFECT EXCEEDS THE REVISED MONETARY LIMIT OF RS.1 L AC IN CASE THE APPEAL IS FILED BEFORE THE APPELLATE TRIBUNAL. THES E INSTRUCTIONS WERE APPLICABLE FROM 1.4.2000. THE AFORESAID MONETA RY LIMIT FOR FILING THE DEPARTMENTAL APPEALS BY THE DEPARTMENT B EFORE THE APPELLATE TRIBUNAL WAS FURTHER REVISED VIDE INSTRUC TION NO. 2/05 DATED 24 TH OCTOBER, 2005 AND IT WAS DIRECTED THAT THE APPEALS BEFORE THE TRIBUNAL SHALL BE FILED IN THE CASES WHE RE THE TAX EFFECT EXCEEDS THE REVISED MONETARY LIMIT OF RS.2 LACS. TH ESE INSTRUCTIONS ARE APPLICABLE FROM 31 ST OCTOBER, 2005. THE CBDT VIDE F.NO.279 DATED 17.7.03 CLARIFIED THE WORD MONETARY LIMIT & TAX EFFECT IN THE INSTRUCTION TO BE READ AS REVENUE EFFECT, WHI CH DENOTES THE AMOUNT OF INTEREST, PENALTY, FINE OR OTHER SUM INVO LVED. VIDE INSTRUCTION NO.5 OF 2007 DATED 16.7.2007 CBDT CLARI FIED THAT TAX 3 EFFECT MEANS THE TAX ONLY I.E. TAX EXCLUDING INTERE ST, IT SHOWED INTENTION OF CBDT TO DIRECT THE AUTHORITIES BELOW N OT TO PREFER DEPARTMENTAL APPEALS IN BELOW TAX EFFECT AS ABOVE. ITAT HYDERABAD BENCH IN THE CASE OF DCWT VS. NB. SYED JAFFAR ALI K HAN & OTHERS, REPORTED IN 275 ITR (AT) 113, CONSIDERING THE ABOVE INSTRUCTION HELD THAT MONETARY LIMIT WOULD APPLY WITH REFERENCE TO E ACH CASE TAKEN SINGLY AND IT IS DUTY OF REVENUE AUTHORITIES TO SCR UPULOUSLY FOLLOW THE POLICY, DECISION TAKEN BY THE CBDT AND DEPARTME NTAL AUTHORITY SHOULD NOT PREFER APPEAL BEFORE TRIBUNAL WHERE TAX EFFECT IS LESS THAN PRESCRIBED LIMIT. THE HONBLE M.P. HIGH COURT (INDORE BENCH) IN THE CASE OF CIT VS. BHAGWAN CLOTH STORES (2003), 181 CTR (MP) 315 VIDE ORDER DATED 10.7.2002 HELD AS UNDER: - 2. AT THE OUTSET IT IS SEEN THAT THE AMOUNT INVOLV ED IN THIS REFERENCE IS A PETTY AMOUNT OF RS.8,400 COVERING FOUR ASSESSMENT YEARS. WE ARE AFRAID, IT WAS NOT ADVISABLE FOR THE REVENUE TO SEEK REFERENCE IN THE CASE INVOLVING SUCH A PETTY AMOUNT. EARLIER THIS COURT, VIDE ITS ORDER DT. 24 TH FEB., 1999, IN IT REF. NOS. 69/98 AND 70/98 HAS DECLINED TO ENTERTAIN REFERENCE APPLICATION IN A CASE, WHICH INVOLVED AN AMOUNT OF RS.13,700. THE APPEAL PREFERRED AGAINST THE SAID ORDER OF THIS COURT BY THE REVENUE BEFORE THE SUPREME COURT WAS ALSO DISMISSED. 3. CBDTS CIRCULAR IS THERE AGAINST MAKING REFERENC E OF A DISPUTE INVOLVING LESS THAN RS.50,000, WHICH I S NOW RAISED TO RS.1,00,000. 4 4. IN THIS VIEW OF THE MATTER, WE DECLINE TO ANSWER THE REFERENCE, LEAVING THE QUESTIONS INVOLVED IN THIS REFERENCE TO BE DECIDED IN SOME OTHER APPROPRIATE MATTER. 4.1 HONBLE M.P. HIGH COURT IN THE CASE OF ACIT VS. ARADHANA OIL MILLS, 30 ITC 446 VIDE ITS ORDER DATED 30.7.2002 HE LD AS UNDER: - NO EXPLANATION IS FURNISHED BY THE LEARNED COUNSEL FOR APPELLANT AS TO WHY THE DEPARTMENT HAS CHOSEN TO COME IN APPEAL BEFORE THIS COURT WHEN THE TAX EFFECT IS ONLY RS.1,30,000, IN CONTRAVENTION OF THE INSTRUCTION NO.1979 DATED 27 TH MARCH, 2000 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES (CBDT), IN EXERCISE OF THE POWER CONFERRED BY SECTION 119 OF THE INCOME-TAX ACT. THE SUPREME COURT ON MORE THAN ONE OCCASIONS HAD HELD THAT THESE INSTRUCTIONS ARE BINDING ON THE VARIOUS TAXING AUTHORITIES. 4.2 HONBLE M.P. HIGH COURT IN ITS RECENT DECISION IN THE CASE OF CIT VS. SURESH CHAND GOYAL REPORTED IN 209 CTR 410 HELD AS UNDER: - TAX LIABILITY INVOLVED BEING LESS THAN RS.2 LAKHS, APPEAL FILED BY THE REVENUE UNDER S. 260A IS NOT MAINTAINABLE IN VIEW OF CBDT CIRCULAR DT. 27 TH MARCH, 2000. 4.3 THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CI T VS. PITHWA ENGG. WORKS; 276 ITR 519 HAS OBSERVED AS UNDER: - THIS COURT CAN VERY WELL TAKE JUDICIAL NOTICE OF THE FACT THAT BY PASSAGE OF TIME MONEY VALUE HAS GONE DOWN, THE COST OF LITIGATION EXPENSES HAS GONE UP, THE ASSESSEE ON THE FILE OF THE DEPARTMENTS HAVE INCREASED; CONSEQUENTLY, THE BURDEN ON THE DEPARTMENT HAS ALSO INCREASED TO A 5 TREMENDOUS EXTENT. THE CORRIDORS OF THE SUPERIOR COURTS ARE CHOKED WITH HUGE PENDENCY OF CASES. IN THIS VIEW OF THE MATTER, THE BOARD HAS RIGHTLY TAKEN A DECISION NOT TO FILE REFERENCES IF THE TAX EFFECT IS LESS THAN RS.2 LAKHS. THE SAME POLICY FOR OLD MATTERS NEEDS TO BE ADOPTED BY THE DEPARTMENT. IN OUR VIEW, THE BOARDS CIRCULAR DATED MARCH 27, 2000 IS VERY MUCH APPLICABLE EVEN TO THE OLD REFERENCES WHICH ARE STILL PENDING. THE DEPARTMENT IS NOT JUSTIFIED IN PROCEEDING WITH THE OLD REFERENCES WHEREIN THE TAX IMPACT IS MINIMUM. THUS, THERE IS NO JUSTIFICATION TO PROCEED WITH DECADES OLD REFERENCES HAVING NEGLIGIBLE TAX EFFECT. 5. THE PRELIMINARY OBJECTION OF THE ASSESSEE WAS UP HELD BY THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, IN THE CASE OF ITO V. JAI KUMAR REPORTED IN 31 ITC 32. THIS BENCH IS CONS ISTENTLY TAKING THE SAME VIEW THAT WHERE THE DEPARTMENTAL APPEALS A RE FILED AGAINST THE INSTRUCTIONS OF THE CBDT IN THE CASES W HERE TAX EFFECT WAS BELOW THE PRESCRIBED LIMIT THEN THE DEPARTMENTA L APPEALS SHALL NOT BE MAINTAINABLE. SINCE IN THIS CASE, THE TAX EF FECT IS BELOW THE PRESCRIBED LIMIT, INSTRUCTION NO. 2/05 IS APPLICABL E TO THIS APPEAL WHICH IS FILED IN THE YEAR 2008 BEFORE THE TRIBUNAL . NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED. THESE INSTRUCTIONS WIL L APPLY TO LITIGATION UNDER OTHER DIRECT TAXES ALSO I.E. WEALT H-TAX, GIFT-TAX, ESTATE DUTY ETC. ITAT, RAJKOT BENCH IN THE CASE OF ACIT VS. RAJOO 6 ENGINEERS LTD., 100 ITD 555 HELD THAT THE CIRCULAR DATED 24.10.05 ISSUED BY THE BOARD TAKING A POLICY DECISION NOT TO FILE APPEALS IN CASES, WHICH DO NOT COME WITH NEW LIMITS PRESCRIBED BY CIRCULAR AND THAT CIRCULAR IS BINDING EVEN TO APPEALS FILED BEFO RE 31.10.05. HONBLE SUPREME COURT IN THE CASE OF UCO BANK, 237 ITR 889 HELD THAT CIRCULARS OF CBDT HAVING EFFECT OF RELAXING RI GOUR OF LAW BINDING ON I.T. AUTHORITIES. SIMILARLY, HONBLE SUPREME COU RT IN THE CASE OF INDIAN OIL CORPORATION LTD., 267 ITR 272 HELD THAT CIRCULARS OF CENTRAL BOARD ARE BINDING IN NATURE, OFFICERS ARE N OT ENTITLED TO ISSUE NOTICE & ADJUDICATE CONTRARY TO INSTRUCTION I N CIRCULAR. 6. THE HONBLE JURISDICTIONAL HIGH COURT OF MP, BEN CH AT INDORE IN THE CASE OF CIT VS. MADHU BAI LODHA REPORTED IN 10 ITJ 211 HAS HELD IN PARA 5 & 6 AS UNDER: 5. WE MAY POINT OUT THAT THE CIRCULAR ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES AS REFERRED TO ABOVE CARVES OUT ONLY ONE EXCEPTION WITH REGARD TO THE PERMISSIBILITY OF FILING OF APPEALS ETC. NOTWITHSTANDING THE EMBARGO CONTAINED IN THE CIRCULAR OF THE MONETARY LIMIT. IT IS ONLY IN CASES INVOLVING SUBSTANTIAL QUESTION OF LAW OF IMPORTANCE AS WELL AS CASES WHERE THE SAME QUESTION OF LAW WILL REPEATEDLY ARISE EITHER IN THE CASE CONCERNED OR IN SIMILAR CASES THAT THE DEPARTMENT WILL NOT BE HINDERED BY THE MONETARY LIMITS. THE QUESTION, THEREFORE ARISES AS TO WHETHER THE DEPARTMENT CAN BE LEFT AT 7 LIBERTY TO DEFEAT THE CIRCULAR OF CBDT RESTRAINING ITS POWER TO FILE APPEAL IN CASE OF THE TAX EFFECT BEING BELOW THE MONETARY LIMIT BY CAPRICIOUSLY TAKING SUBTERFUGE UNDER THE SPECIOUS PLEA THAT THE CASE IS ONE OF THE EXCEPTED CATEGORY OF CASES. IT HAS NOT BEEN BROUGHT TO OUR NOTICE THAT THE INCOME-TAX DEPARTMENT HAS DEVISED ANY PROCEDURE TO CONSIDER WHETHER A PARTICULAR CASE FALLS WITHIN THE EXCEPTED CATEGORY THUS, PERMITTING THE REVENUE TO AGITATE THE MATTER BEFORE THE HIGHER FORUMS. IN CASE WHERE NO SUCH PROCEDURE HAS BEEN DEVISED, IT IS EXPECTED THAT WHILE FILING APPEAL IN NON-ADHERENCE OF THE CIRCULAR, THE DEPARTMENT WOULD PLACE MATERIAL BEFORE THE APPELLATE FORUM THAT THE CASE FALLS WITHIN THE EXCEPTED CATEGORY AND, THEREFORE, IS NOT COVERED BY THE RESTRAINT CONTAINED IN THE CIRCULAR. THE LEARNED SENIOR COUNSEL FOR THE APPELLANTS HAS ALSO INVITED ATTENTION TO THE DECISION OF THE PUNJAB & HARYANA COURT IN RANI PALIWAL V COMMISSIONER OF INCOME-TAX 268 ITR 220, OF DELHI HIGH COURT IN COMMISSIONER OF INCOME TAX V BLAZE ADVERTISING (DELHI) PVT. LTD 255 ITR 460 AND OF MADRAS HIGH COURT IN COMMISSIONER OF INCOME-TAX V KODANANAD TEA ESTATES CO. 275 ITR 244. WE ARE HOWEVER, OF THE VIEW THAT, AS HELD BY THIS COURT IN CIT VS SURESH CHAND GOYAL (SUPRA), WHERE TAX LIABILITY OF THE ASSESSEE IS BELOW THE MONETARY LIMIT PRESCRIBED, REVENUE CANNOT FILE AN APPEAL IN TRANSGRESSION OF THE CIRCULAR BY WHICH IT IS BOUND. HOWEVER, WE MAY ADD THAT IN A CASE WHICH FALLS WITHIN THE EXCEPTED CATEGORY, IT WOULD ALWAYS BE OPEN TO THE DEPARTMENT TO BRING IT TO THE NOTICE OF THE FORUM APPROACHED AND TO INSIST THAT THE QUESTION BEING COVERED BY THE EXCEPTIONS CONTAINED IN CLAUSE 3 OF THE CIRCULAR DATED 24.10.2005 AS MODIFIED BY THE 8 INSTRUCTION NO. 5 OF 2007 DATED 16.7.2007, THE SAME DESERVES TO BE CONSIDERED BY THE SUPERIOR FORUM, THE CIRCULAR OF THE CBDT NOTWITHSTANDING. 6. IN VIEW OF THE ABOVE, WE ANSWER THE QUESTION RAISED IN THESE APPEALS AGAINST THE DEPARTMENT SUBJECT TO THE LIBERTY THAT IF A CASE FALLS WITHIN THE EXCEPTED CATEGORY, IT WOULD BE OPEN TO THE DEPARTMENT TO BRING THE SAID FACT TO THE NOTICE OF THE COURT OR THE TRIBUNAL SO THAT THE APPROPRIATE AUTHORITY/COURT APPLIES ITS MIND TO THE NECESSITY OF FORMULATING THE QUESTION FOR RENDERING DECISION THEREON. 7. LD. DR DID NOT DISPUTE THE ABOVE FACTS. 8. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF T HE CASE AND ALSO RELYING ON THE DECISION MENTIONED ABOVE, PARTI CULARLY JURISDICTIONAL HIGH COURT OF M.P INDORE BENCH, WE H OLD THAT THE APPEAL OF THE REVENUE IS NOT MAINTAINABLE AS THE SA ME IS IN VIOLATION OF CBDTS INSTRUCTIONS AND NO SUBSTANTIAL QUESTION OF LAW INVOLVED, THEREFORE, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.4.2011. SD/- SD/- (JOGINDER SINGH) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 21.4.2011 !VYAS!