ITO, Ward - 5(2), Kolkata, Kolkata V. M/s. Santoor Construction (P) Ltd., Kolkata

ITA 2088/KOL/2008

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48121 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-05-2011
• Assessment Year: misc
• Appeal Filed On: 21-11-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P C NAYAK
• Assessee Lawyers: P J BHIDE
• Keywords: Unexplained investment; Audit objection; Reasonable cause; Tax effect
• Section: 260A; 12A

Judgement Text

, , , , , , ,, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [ , ,, , , ,, , , !' !' !' !' ] [BEFORE HONBLE SMT. DIVA SINGH , JM & HONBLE SRI AKBER BASHA, AM] # # # # / I.T.A NO. 2088/KOL/2008 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEAR : 1993-94 INCOME TAX OFFICER/WARD-5(2) -VS.- M/S. SANTOOR CONSTRUCTION PVT. LTD. KOLKATA. KOLKATA [PA N : AADCS6735 Q] (*+ /APPELLANT ) (-.*+/ RESPONDENT ) / 01 / 01 / 01 / 01 /C.O.NO.145/KOL/2008 # # # # / A/O ITA NO .2088 /KOL/2008 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEAR : 1993-94 M/S. SANTOOR CONSTRUCTION PVT. LTD. -VS.- INCOME TAX OFFICER/WARD-5( 2) KOLKATA [PAN : AADCS6735 Q] KOLK ATA. (*+ /APPELLANT ) (-.*+/ RESPONDENT ) *+ / FOR THE DEPARTMENT : 2 /SHRI P. C. NAYAK -.*+ / FOR THE ASSESSEE : 2 / SHRI P. J. BHIDE ! /O R D E R PER BENCH THE DEPARTMENT HAS FILED THIS APPEAL FOR ASSESSMEN T YEAR 1993-94 AGAINST THE ORDER OF THE CIT(A)-V, KOLKATA DATED 19.08.2008 ON THE FOLLO WING GROUNDS :- (1) THAT ORDER OF LD. CIT(A) IS BAD IN LAW, HENCE NOT ACCEPTABLE. (2) THAT LD. CIT(A) HAD ERRED IN DELETING THE ADDITION OF RS.2,30,000/-, MADE BY THE AO ON THE GROUND OF UNSECURED LOAN, AS IDENTITY OF THE LOAN CREDITOR COULD NOT BE ASCERTAINED AND THE GENUINENESS OF THE TRANS ACTION COULD NOT BE ESTABLISHED. ITA NO. 2088/KOL/2008 & C.O.NO.145/KOL/2008 2 (3) THAT LD. CIT(A) HAD ERRED IN DELETING THE ADDITION OF RS.2,25,000/-, MADE BY THE AO, BEING UNEXPLAINED INVESTMENT IN SHARES AS T HE GENUINENESS OF THE TRANSACTION COULD NOT BE ESTABLISHED. (4) THAT THE APPELLANT CRAVES FOR LEAVE TO ADD, DELETE OR MODIFY ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 2. THE ASSESSEE HAS FILED CROSS OBJECTION ON THE FO LLOWING GROUNDS :- 1. FOR THAT ON FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) WAS NOT JUSTIFIED IN NOT DELETING THE ADDITION OF RS.2,30,000/- U/S. 68 OF THE I.T. ACT, 1961 EVEN THOUGH THE ASSESSEE HAD ESTABLISHED THE IDENTITY AN D GENUINENESS OF THE LOAN CREDITORS. FOR THAT ON FACTS AND CIRCUMSTANCES OF T HE CASE THE ASSESSING OFFICER BE DIRECTED TO DELETE THE ADDITION OF RS.2, 39,393/- 2. FOR THAT ON FACTS AND CIRCUMSTANCES OF THE CA SE THE CIT(A) WAS NOT JUSTIFIED IN NOT DELETING THE ADDITION OF RS.2,25,000/- EVEN THO UGH THE INVESTMENT MADE BY THE ASSESSEE IN SHARES IS GENUINE AND RECORDED I N THE BOOKS AND NOT UNDISCLOSED INVESTMENTS. 3. THE APPEAL FILED BY THE DEPARTMENT IS TIME BARRE D BY 13 DAYS. THE DEPARTMENT HAS FILED APPLICATION PRAYING TO CONDONE THE DELAY. LD. COUNS EL APPEARING ON BEHALF OF THE ASSESSEE HAS NOT OBJECTED TO THE PRAYER OF THE DEPARTMENT. AFTER HEA RING BOTH THE PARTIES AND CONSIDERING THE CONTENTS OF THE APPLICATION, WE ARE OF THE CONSIDERED VIEW T HAT THERE IS A REASONABLE CAUSE FOR DELAY IN FILING APPEAL. HENCE, WE CONDONE THE DELAY AND CONSIDER TH E APPEAL. 4. AT THE OUTSET, IT WAS INFORMED BY LD. COUNSEL FO R THE ASSESSEE THAT TAX EFFECT IN THIS APPEAL IS BELOW THE PRESCRIBED MONETARY LIMITS FOR FILING OF APPEALS BEFORE ITAT AND OTHER SUPERIOR COURTS. THE ONLY ISSUE NOW REMAINS BEFORE US IS THAT WHETHE R THE APPEAL OF THE REVENUE IS BELOW THE PRESCRIBED LIMIT OF TAX EFFECT IN VIEW OF THE BOARD S INSTRUCTION ISSUED FROM TIME TO TIME REVISING TH E MONETARY LIMITS FOR FILING OF APPEALS BY THE DEPART MENT BEFORE ITAT AND OTHER SUPERIOR COURTS. EVEN THOUGH THE APPEAL IS FILED BEFORE 09.02.2011, THE S AME STILL WILL BE COVERED BY INSTRUCTION NO. 3/2011 ISSUED ON 09.02.2011 I.E. THE REVISED MONETARY LIMI T FOR FILING OF APPEAL BEFORE ITAT, WHEREBY THE CBDT HAS FIXED THE LIMIT OF RS. 3 LACS. OUR VIEW IS FORTIFIED BY THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS DELHI RACE CLUB IN ITA NO.128/2008 DATED 03.03.2011 HAS HELD AS UNDER: THE TAX EFFECT INVOLVED IN THE PRESENT APPEAL IS R S.4,65,860/-. AS PER THE RECENT GUIDELINES OF THE CBDT, APPEAL IN THOSE CASES WHERE THE TAX EF FECT IS LESS THAN 10 LACS, ARE NOT TO BE ENTERTAINED. ITA NO. 2088/KOL/2008 & C.O.NO.145/KOL/2008 3 THIS COURT IN THE CASE OF COMMISSIONER OF INCOME TA X-III V. M/S. P. S. JAIN AND CO. BEING ITA NO. 179/1991 DECIDED ON 2 ND AUGUST, 2010 HAS TAKEN A VIEW THAT SUCH CIRCULAR W OULD ALSO APPLY TO PENDING CASES. IN VIEW OF THE DECISION OF HONBLE DELHI HIGH COURT , THE REVISED MONETARY LIMIT OF RS. 3 LACS AS PER INSTRUCTION NO.3/2011 WILL APPLY TO EVEN PENDING AP PEALS. THE RELEVANT CIRCULAR ISSUED BY CBDT READS AS UNDER : INSTRUCTION NO. 3/2011 [F. NO. 279/MISC. 142/2007- ITJ], DATED 9-2-2011 REFERENCE IS INVITED TO BOARD'S INSTRUCTION NO. 5/2 008 DATED 15-5-2008 WHEREIN MONETARY LIMITS AND OTHER CONDITIONS FOR FILING DEPARTMENTAL APPEAL S (IN INCOME-TAX MATTERS) BEFORE APPELLATE TRIBUNAL, HIGH COURTS AND SUPREME COURT WERE SPECIF IED. 2. IN SUPERSESSION OF THE ABOVE INSTRUCTION, IT HAS BE EN DECIDED BY THE BOARD THAT DEPARTMENTAL APPEALS MAY BE FILED ON MERITS BEFORE APPELLATE TRI BUNAL, HIGH COURTS AND SUPREME COURT KEEPING IN VIEW THE MONETARY LIMITS AND CONDITIONS SPECIFIED BELOW. 3. HENCEFORTH APPEALS SHALL NOT BE FILED IN CASES WHER E THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER: S. NO. APPEALS IN INCOME-TAX MATTERS MONETARY LIMIT (IN RS.) 1. APPEAL BEFORE APPELLATE TRIBUNAL 3,00,000 2. APPEAL U/S. 260A BEFORE HIGH COURT 10,00,0 00 3. APPEAL BEFORE SUPREME COURT 25,00,000 IT IS CLARIFIED THAT AN APPEAL SHOULD NOT BE FILED MERELY BECAUSE THE TAX EFFECT IN A CASE EXCEEDS THE MONETARY LIMITS PRESCRIBED ABOVE. FILING OF APP EAL IN SUCH CASES IS TO BE DECIDED ON MERITS OF THE CASE. 4. FOR THIS PURPOSE, TAX EFFECT MEANS THE DIFFERENCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HAVE BEEN CHARGEABL E HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF THE ISSUES AGAIN ST WHICH APPEAL IS INTENDED TO BE FILED (HEREINAFTER REFERRED TO AS 'DISPUTED ISSUES'). HOW EVER THE TAX WILL NOT INCLUDE ANY INTEREST THEREON, EXCEPT WHERE CHARGEABILITY OF INTEREST ITS ELF IS IN DISPUTE. IN CASE THE CHARGEABILITY OF INTEREST IS THE ISSUE UNDER DISPUTE, THE AMOUNT OF INTEREST SHALL BE THE TAX EFFECT. 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. 5. THE ASSESSING OFFICER SHALL CALCULATE THE TAX EFFEC T SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUES IN THE CASE OF EVERY ASSESSEE. IF, IN THE CASE OF AN ASSESSEE, THE DISPUTED ISSUES ARISE IN MORE THAN ONE ASSESSMENT Y EAR, APPEAL, CAN BE FILED IN RESPECT OF SUCH ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IN RESPECT OF THE DISPUTED ISSUES EXCEEDS THE MONETARY LIMIT SPECIFIED IN PARA 3. NO APPEAL SHALL BE FILED IN RESPECT 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, ITA NO. 2088/KOL/2008 & C.O.NO.145/KOL/2008 4 HENCEFORTH, APPEALS CAN BE FILED ONLY WITH REFERENC E TO THE TAX EFFECT IN THE RELEVANT ASSESSMENT YEAR. HOWEVER, IN CASE OF A COMPOSITE ORDER OF ANY HIGH COURT OR APPELLATE AUTHORITY, WHICH INVOLVES MORE THAN ONE ASSESSMENT YEAR AND COMMON I SSUES IN MORE THAN ONE ASSESSMENT YEAR, APPEAL SHALL BE FILED IN RESPECT OF ALL SUCH ASSESS MENT YEARS EVEN IF THE 'TAX EFFECT' IS LESS THAN TH E PRESCRIBED MONETARY LIMITS IN ANY OF THE YEAR(S), I F IT IS DECIDED TO FILE APPEAL IN RESPECT OF THE YEAR(S) IN WHICH 'TAX EFFECT' EXCEEDS THE MONETARY LIMIT PRESCRIBED. IN CASE WHERE A COMPOSITE ORDER/JUDGMENT INVOLVES MORE THAN ONE ASSESSEE, EAC H ASSESSEE SHALL BE DEALT WITH SEPARATELY. 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 MONETARY LIMIT SPECIFIED ABOVE, THE COMMISSIONER OF INCOME-TAX SHALL SPECIFICALLY RECORD THAT 'EVEN THOUGH THE DECISION IS NOT ACCEPTABLE, APPEAL IS NOT BEING FILED ONLY ON THE CONSIDERATION THAT THE TAX EFFECT IS LE SS THAN THE MONETARY LIMIT SPECIFIED IN THIS INSTRUCTION'. FURTHER, IN SUCH CASES, THERE WILL BE NO PRESUMPTION THAT THE INCOME-TAX DEPARTMENT HAS ACQUIESCED IN THE DECISION ON THE DI SPUTED ISSUES. THE INCOME-TAX DEPARTMENT SHALL NOT BE PRECLUDED FROM FILING AN APPEAL AGAINS T THE DISPUTED ISSUES IN THE CASE OF THE SAME ASSESSEE FOR ANY OTHER ASSESSMENT YEAR, OR IN THE C ASE OF ANY OTHER ASSESSEE FOR THE SAME OR ANY OTHER ASSESSMENT YEAR, IF THE TAX EFFECT EXCEEDS TH E 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 TRIBUNAL OR THE COURT O NLY ON THE GROUND THAT THE DEPARTMENT HAS IMPLICITLY ACCEPTED THE DECISION OF THE TRIBUNAL OR COURT IN THE CASE OF THE ASSESSEE FOR ANY OTHER ASSESSMENT YEAR OR IN THE CASE OF ANY OTHER ASSESSE E FOR THE SAME OR ANY OTHER ASSESSMENT YEAR, BY NOT FILING AN APPEAL ON THE SAME DISPUTED ISSUES . THE DEPARTMENTAL REPRESENTATIVES/COUNSELS MUST MAKE EVERY EFFORT TO BRING TO THE NOTICE OF TH E TRIBUNAL OR THE COURT THAT THE APPEAL IN SUCH CASES WAS NOT FILED OR NOT ADMITTED ONLY FOR THE RE ASON OF THE TAX EFFECT BEING LESS THAN THE SPECIFIED MONETARY LIMIT AND, THEREFORE, NO INFEREN CE SHOULD BE DRAWN THAT THE DECISIONS RENDERED THEREIN WERE ACCEPTABLE TO THE DEPARTMENT. ACCORDINGLY, THEY SHOULD IMPRESS UPON THE TRIBUNAL OR THE COURT THAT SUCH CASES DO NOT HAVE A NY PRECEDENT VALUE. AS THE EVIDENCE OF NOT FILING APPEAL DUE TO THIS INSTRUCTION MAY HAVE TO B E PRODUCED IN COURTS, THE JUDICIAL FOLDERS IN THE OFFICE OF CSIT MUST BE MAINTAINED IN A SYSTEMIC MAN NER FOR EASY RETRIEVAL. 8. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING ISSUES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EFFECT ENTAILED IS LES S THAN THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE OR THERE IS NO TAX EFFECT. A. WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVISIONS OF AN ACT OR RULE ARE UNDER CHALLENGE, OR B. WHERE BOARD'S ORDER, NOTIFICATION, INSTRUCTION OR C IRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES, OR C. WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS BEEN ACCEPTED BY THE DEPARTMENT. 9. THE PROPOSAL FOR FILING SPECIAL LEAVE PETITION UNDE R ARTICLE 136 OF THE CONSTITUTION BEFORE THE SUPREME COURT SHOULD, IN ALL CASES, BE SENT TO THE DIRECTORATE OF INCOME-TAX (LEGAL & RESEARCH), NEW DELHI AND THE DECISION TO FILE SPECI AL LEAVE PETITION SHALL BE IN CONSULTATION WITH THE MINISTRY OF LAW AND JUSTICE. 10. THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE SHALL NOT APPLY TO WRIT MATTERS AND DIRECT TAX MATTERS OTHER THAN INCOME-TAX, FILING OF APPEALS IN OTHER DIRECT TAX MATTERS SHALL CONTINUE TO BE ITA NO. 2088/KOL/2008 & C.O.NO.145/KOL/2008 5 GOVERNED BY RELEVANT PROVISIONS OF STATUTE AND RULE S. FURTHER, FILING OF APPEAL IN CASES OF INCOME-TAX, WHERE THE TAX EFFECT IS NOT QUANTIFIABL E OR NOT INVOLVED, SUCH AS THE CASE OF REGISTRATION OF TRUSTS OR INSTITUTIONS UNDER SECTIO N 12A OF THE IT ACT, 1961, SHALL NOT BE GOVERNED BY THE LIMITS SPECIFIED IN PARA 3 ABOVE AND DECISIO N TO FILE APPEAL IN SUCH CASES MAY BE TAKEN ON MERITS OF A PARTICULAR CASE. 11. THIS INSTRUCTION WILL APPLY TO APPEALS FILED ON OR AFTER .. 2011. HOWEVER, THE CASES WHERE APPEALS HAVE BEEN FILED BEFORE 2011 WILL BE GOVERNED BY THE INSTRUCTIONS ON THIS SUBJECT, OPERATIVE AT THE TIME WHEN SUCH APPEAL WAS FILED. 12. THIS ISSUES UNDER SECTION 268(1) OF THE INCOME TAX ACT, 1961. 5. ON QUERY FROM THE BENCH, THE LD. DR COULD NOT PO INT 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 OF AB OVE 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 APPEAL OF THE REVEN UE IN LIMINE WITHOUT GOING INTO MERITS AND AS UNADMITTED. THE CROSS OBJECTION FILED BY ASSESSEE B ECOMES INFRUCTUOUS . 6. IN THE RESULT, BOTH THE APPEALS OF DEPARTMENT AS WELL AS CROSS OBJECTION OF ASSESSEE ARE DISMISSED. ! 3 4$ 5 6 7' ORDER PRONOUNCED IN THE OPEN COURT ON 10. 05 . 2011. SD/- SD/- [ , ] [ , !' ] [ DIVA SINGH ] [ AKB ER BASHA ] JUDICIAL MEMBER ACCOUNTANT M EMBER 7' / DATED : 10TH MAY, 2011. ITA NO. 2088/KOL/2008 & C.O.NO.145/KOL/2008 6 ! 8 -0 9!0&: - COPY OF THE ORDER FORWARDED TO: 1. ! /APPLICANT- THE INCOME TAX OFFICER, WARD-5(2), P -7, CHOWRINGHEE SQUARE, 8 TH FLOOR, KOLKATA-700 069. 2 -.*+ / RESPONDENT : M/S. SANTOOR CONSTN. PVT. LTD., 77, N.S. ROAD, 5 TH FLOOR, KOLKATA-700 001. 3. $ / CIT 4. $ ( )/ CIT(A) 5. ;5 -$ / DR, KOLKATA BENCHES, KOLKATA [ .0 - / TRUE COPY] ! $4 / BY ORDER < / = /DEPUTY/ASSTT. REGISTRAR . [KKC >? $@= A /SR.PS]