DCIT, V. Sri. S. Shivashankarappa,

ITA 224/BANG/2013

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2353 (ITAT-BANGALORE)
• Duration Of Justice: 6 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-08-2019
• Assessment Year: 2007-2008
• Appeal Filed On: 19-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S T SESHADRI
• Assessee Lawyers: S PARTHASARTHI
• Keywords: Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI A.K.GARODIA, ACCOUNTANT MEMBER ITA NO.224/BANG/2013 ASSESSMENT YEAR : 2007-08 THE DY. COMMISSIONER OF INCOME- TAX, CIRCLE-1, DAVANGERE. VS. SRI S SHIVASHANKARAPPA, NO.22/1-2, CHOWKIPET, DAVANGERE. PAN ASMPS 0084 N APPELLANT RESPONDENT ITA NO.246/BANG/2013 ASSESSMENT YEAR : 2007-08 SRI S SHIVASHANKARAPPA, NO.22/1-2, CHOWKIPET, DAVANGERE. PAN ASMPS 0084 N VS. THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-1, DAVANGERE. APPELLANT RESPONDENT REVENUE BY : SHRI S.T SESHADRI, JCIT (DR) ASSESSEE BY : SHRI S PARTHASARTHI, ADVOCATE DATE OF HEARING : 28.08.2019 DATE OF PRONOUNCEMENT : 04 .0 9 .2019 O R D E R ITA NO.224/BANG/2013 IS AN APPEAL BY THE REVENUE WH ILE ITA NO.246/BANG/2013 IS AN APPEAL BY THE ASSESSEE. BOTH THESE ITA NOS.224 & 246/BANG/2013 PAGE 2 OF 9 APPEALS ARE DIRECTED AGAINST THE ORDER DATED 20/11/ 2012 OF CIT-(A), HUBBALLI RELATING TO ASST. YEAR 2007-08. 2. IN THE LIGHT OF THE CBDT CIRCULAR DATED 8.8.201 9, THE APPEAL BY THE REVENUE HAVE TO BE DISMISSED AS THE TAX EFFECT IN ALL THESE APPEALS ARE LESS THAN RS.50 LACS. THE ITAT AHMED ABAD A BENCH, IN THE CASE OF ITO WARD 3 (2), AHMEDABAD VS. DINESH MADHAVLAL PATEL AND 627 OTHER APPEALS VIDE ITS ORDER DATED 14.8.2019 ANALYZED THE AFORESAID CIRCULAR OF CBDT AND HAS DISMISSED TH E APPEALS OF THE REVENUE ON THE GROUND THAT THE TAX EFFECT IN TH E SAID APPEALS WAS BELOW RS.50 LACS. THE FOLLOWING WERE THE RELEV ANT OBSERVATIONS OF THE TRIBUNAL. 2. IT IS IN THIS BACKDROP THAT WE ARE PLEASED TO T AKE NOTE OF A VERY PRAGMATIC AND TAXPAYER FRIENDLY POLICY DECISIO N BY THE GOVERNMENT OF INDIA FOR REDUCING THE INCOME TAX LIT IGATION. VIDE CBDT CIRCULAR DATED 8TH AUGUST, 2019, THE INCO ME TAX DEPARTMENT HAS FURTHER LIBERALIZED ITS POLICY FOR N OT FILING APPEALS AGAINST THE DECISIONS OF THE APPELLATE AUTH ORITIES IN FAVOUR OF THE TAXPAYERS, WHEREIN TAX INVOLVED IS BE LOW CERTAIN THRESHOLD LIMITS, AND ANNOUNCED ITS POLICY DECISION NOT TO FILE, OR PRESS, THE APPEALS, BEFORE THIS TRIBUNAL, AGAINS T THE APPELLATE ORDERS FAVOURABLE TO THE ASSESSEE IN THE CASES IN WHICH OVERALL TAX EFFECT, EXCLUDING INTEREST-EXCEPT WHEN INTEREST ITSELF IS IN DISPUTE, IS RS 50,00,000 OR L ESS. WHAT IT MEANS, IN PLAIN WORDS, IS THAT WHEN A COMMISSIONER (APPEALS) GIVES THE TAXPAYER TAX RELIEF OF UPTO RS 50 LAKHS IN AN APPEAL IN AN ASSESSMENT YEAR, THE MATTER ENDS TH ERE AND THE RELIEF SO GRANTED BY THE COMMISSIONER (APPEALS) CANNOT BE CHALLENGED BEFORE THIS TRIBUNAL, THAT WHEN THIS TRI BUNAL GIVES THE TAXPAYER RELIEF OF UPTO RS 1 CRORE IN AN APPEAL IN AN ASSESSMENT YEAR, THE MATTER ENDS THERE AND THE RELI EF SO GRANTED BY THE TRIBUNAL CANNOT BE CHALLENGED BEFORE THE HONBLE HIGH COURT, AND THAT WHEN HONBLE HIGH COUR T GIVES RELIEF OF UPTO RS 2 CRORE TO THE TAXPAYER IN AN APP EAL IN AN ASSESSMENT YEAR, THAT RELIEF CANNOT BE CHALLENGED B EFORE HONBLE SUPREME COURT. THESE MONETARY THRESHOLD LIM ITS FOR FILING OF APPEALS BY THE INCOME TAX AUTHORITIES DO NOT TAKE INTO ITA NOS.224 & 246/BANG/2013 PAGE 3 OF 9 ACCOUNT INTEREST AND OTHER COROLLARIES OF THE TAX D EMANDS BEING CONFIRMED SUCH AS PENALTIES, EXCEPT WHEN A PE NALTY ITSELF IS SUBJECT MATTER OF LITIGATION, AND PROSECU TIONS. THE ENHANCEMENT OF THESE MONETARY LIMITS IS AT AN UNPRE CEDENTED SCALE. THE MONETARY LIMIT FOR APPEALS BEFORE THIS T RIBUNAL, WHICH WAS RS 3,00,000 TILL 10TH JULY 2014, HAS BEEN IN EFFECT ENHANCED TO ALMOST 1,700% IN THE LAST FIVE YEARS. T HIS SUBSTANTIAL RELAXATION IS CERTAINLY A HUGE STEP WHI CH SIGNIFIES TRUST REPOSED BY THE GOVERNMENT OF INDIA IN THE DEC ISIONS OF THE APPELLATE FORUMS, AND SUBSTANTIALLY CUTS DOWN T IME TAKEN IN THE FINALITY OF THE APPELLATE PROCESS. IT IS IND EED HEARTENING TO NOTE THAT IN ONE STROKE, THE GOVERNMENT HAS NOT ONLY PREVENTED, BUT HAS, IN EFFECT, SET THE STAGE FOR WI THDRAWAL OF THOUSANDS OF APPEALS BEFORE THIS TRIBUNAL AND BEFOR E HONBLE COURTS ABOVE. IN AN ENVIRONMENT IN WHICH RETROSPECT IVITY WAS ATTACHED ONLY TO THE TAXATION AND NOT TO TAX RELIEF S OR CONCESSIONS, SUCH AN APPROACH IS A PLEASANT DEPARTU RE FROM LEGACY PRACTICES. 3. IN VIEW OF THE ABOVE FACTUAL BACKGROUND AND THE GENEROUS CONCESSION BY THIS BENEVOLENT CBDT CIRCULA R, ALL THESE APPEALS MUST BE DISMISSED AS WITHDRAWN AND TH E RELATED CROSS OBJECTIONS MUST BE DISMISSED AS INFRU CTUOUS. THERE IS, HOWEVER, A SMALL ISSUE THAT WE MUST DEAL WITH. 4. SMT APARNA AGARWAL, LEARNED DEPARTMENTAL REPRESENTATIVE, HOWEVER, HAS A POINT TO MAKE. SHE P OINTS OUT THAT THE CIRCULAR DATED 8TH AUGUST 2019 IS NOT CL EARLY RETROSPECTIVE INASMUCH AS IT SPECIFICALLY STATES IN PARA 4 THAT (T)HE SAID MODIFICATIONS SHALL COME INTO EFFECT FR OM THE DATE OF ISSUE OF THIS CIRCULAR. IT IS THUS POINTED OUT THAT THIS SENTENCE GIVES AN IMPRESSION THAT IS ONLY AFTER THE DATE OF THE SAID CIRCULAR THAT THE DEPARTMENTAL APPEALS WILL NO T BE FILED IN THE CASES WITHIN THE SPECIFIED TAX EFFECT LIMITS. W E ARE URGED TO BEAR IN MIND THE IMPACT OF THIS OBSERVATION WHIL E GIVING EFFECT TO THE CIRCULAR DATED 8TH AUGUST, 2019. SHE, HOWEVER, HASTENS TO ADD THAT SHE IS YET TO HAVE ANY SPECIFIC INSTRUCTIONS ON THE ISSUE AND SHE LEAVES IT FOR THE BENCH TO TAKE THE APPROPRIATE CALL. LEARNED REPRESENTATIVES APPEARING FOR THE TAXPAYERS VEHEMENTLY OPPOSE THE SUGGESTION IMPLICIT IN HER SUBMISSIONS. ALL OF THEM ARE UNANIMOUS IN TH EIR ARGUMENT THAT THE CIRCULAR MUST BE HELD TO HAVE RET ROSPECTIVE APPLICATION AND MUST EQUALLY APPLY TO THE PENDING A PPEALS AS WELL. SHRI J P SHAH, SENIOR ADVOCATE, POINTS OUT TH AT THE ITA NOS.224 & 246/BANG/2013 PAGE 4 OF 9 CIRCULAR DATED 8TH AUGUST 2019 IS NOT A STANDALONE CIRCULAR AND IT IS REQUIRED TO BE READ WITH THE OLD CIRCULAR NO. 3 OF 2018 WHICH IS WHAT IT SEEKS TO MODIFY. THIS CIRCULA R, ACCORDING TO THE LEARNED COUNSEL, ONLY ENHANCES THE MONETARY LIMITS AND GIVES FURTHER RELAXATION. HE URGES US NO T TO READ THE CIRCULAR IN A MANNER SO AS TO NULLIFY THE UNDER LYING APPROACH AND OBJECT OF REDUCING LITIGATION. SHRI SO PARKAR, LEARNED SENIOR ADVOCATE, SUBMITS THAT ALL THAT THE PRESENT CIRCULAR DOES IS TO MODIFY THE MONETARY LIMITS AND NOTHING MORE, AND, THEREFORE, IT CANNOT BE TREATED TO FOLLO W ANY OTHER APPROACH OTHER THAN THE APPROACH FOLLOWED IN THE OL D CIRCULAR. THE OLD CIRCULAR, BEYOND ANY DISPUTE OR C ONTROVERSY, CATEGORICALLY APPLIED TO THE PENDING APPEALS AS ON THE DATE OF ISSUANCE OF CIRCULAR. SHRI TUSHAR HEMANI, LEARNED S ENIOR ADVOCATE, POINTS OUT THAT THE CIRCULAR DATED 8TH AU GUST 2019 ONLY GIVES FURTHER RELIEF NOT ONLY IN TERMS OF THE MONETARY LIMITS BUT ALSO IN TERMS OF THE MANNER IN WHICH THE APPLICATION OF CIRCULAR TO ORDERS DEALING WITH MORE THAN ONE YEAR IS TO MADE. SHRI S N DIVETIA, LEARNED COUNSEL FOR THE ASSESSEE, SUBMITS THAT UNLIKE IN THE CASES OF EARLI ER CBDT CIRCULARS, WHICH USED TO BE IN SUPERSESSION OF EARL IER CIRCULARS ON THE ISSUES, THE CIRCULAR DATED 8TH AUG UST 2019 ONLY MODIFIES THE EARLIER CIRCULAR WHICH, INTER ALI A, PROVIDED FOR ITS RETROSPECTIVE APPLICATION. OUR ATTENTION IS INVITED TO SOME JUDICIAL PRECEDENTS IN SUPPORT OF THE CONTENTI ON THAT THE BENEVOLENT CIRCULAR, SUCH AS THE ONE IN QUESTION, I S TO BE GIVEN EFFECT IN RESPECT OF THE PENDING APPEALS AS W ELL. MS URVASHI SHODHAN, LEARNED COUNSEL FOR THE ASSESSEE, POINTS OUTS THAT ITS PLAINLY CONTRARY TO THE SCHEME OF THE LITIGATION POLICY OF THE GOVERNMENT OF INDIA TO GIVE THIS CIRC ULAR ONLY PROSPECTIVE EFFECT. SHRI S K SADHWANI, LEARNED COUN SEL FOR THE ASSESSEE, INVITES OUR ATTENTION TO THE LETTER DATED 16TH JULY 2018 ISSUED BY MEMBER CBDT TO THE ALL THE PRINCIPAL CHIEF COMMISSIONERS OF INCOME TAX, IN THE CONTEXT OF CIRC ULAR DATED 11 TH JULY 2018 THAT THE PRESENT CIRCULAR SEEKS TO MODIF Y, SEEKING REPORT ON WITHDRAWAL OF THE APPEALS COVERED BY THE CIRCULAR. HE THEN POINTS OUT THAT IT IS THE OLD CIR CULAR IS STILL ALIVE TODAY AND THE ONLY CHANGE IS WITH RESPECT TO THE MONETARY LIMITS. IN ALL FAIRNESS, THEREFORE, THE SA ME APPROACH REGARDING WITHDRAWAL OF PENDING APPEALS MUST BE FOL LOWED FOR THIS CIRCULAR AS WELL. ON THE SAME LINES, ARGUMENTS ARE ADVANCED BY THE LEARNED REPRESENTATIVES WHICH, FOR THE SAKE OF BREVITY AND TO AVOID REPETITION, WE ARE NOT REFE RRING TO IN ITA NOS.224 & 246/BANG/2013 PAGE 5 OF 9 MORE SPECIFIC DETAILS. IN BRIEF REJOINDER, LEARNED DEPARTMENTAL REPRESENTATIVE GRACIOUSLY LEAVES THE MATTER TO US. 5. HAVING CONSIDERED THE RIVAL SUBMISSIONS AND HAVING PERUSED THE MATERIAL ON RECORD, WE DO NOT HA VE SLIGHTEST OF HESITATION IN HOLDING THAT THE CONCESS ION EXTENDED BY THE CBDT NOT ONLY APPLIES TO THE APPEAL S TO BE FILED IN FUTURE BUT IT IS ALSO EQUALLY APPLICABL E TO THE APPEALS PENDING FOR DISPOSAL AS ON NOW. OUR LINE OF REASONING IS THIS. THE CIRCULAR DATED 8TH AUGUST 2019 IS NOT A STANDALONE CIRCULAR. IT IS TO BE READ IN CONJUNCTIO N WITH THE CBDT CIRCULAR NO 3 OF 2018 (AND SUBSEQUENT AMENDMEN T THERETO), AND ALL IT DOES IS TO REPLACE PARAGRAPH N OS. 3 AND 5 OF THE SAID CIRCULAR. THIS IS EVIDENT FROM THE FOLL OWING EXTRACTS FROM THE CIRCULAR DATED 8TH AUGUST 2019: 2. AS A STEP TOWARDS FURTHER MANAGEMENT OF LITIGATION. IT HAS BEEN DECIDED BY THE BOARD THAT MONETARY LIMITS FOR FILING OF APPEALS IN INCOME-TAX CASES BE ENHANCED FURTHER THROUGH AMENDMENT IN PARA 3 OF THE CIRCULAR MENTIONED ABOVE AND ACCORDINGLY. THE TABLE FOR MONETARY LIMITS SPECIFIED IN PARA 3 OF THE CIRCULAR SHALL READ AS FOLLOWS: S.NO. APPEALS/SLPS IN INCOME-TAX MATTERS MONETARY LIMIT (RS.) 1BEFORE APPELLATE TRIBUNAL50,00,000 2BEFORE HIGH COURT 1,00,00,000 3BEFORE SUPREME COURT2,00,00,000 3. FURTHER, WITH A VIEW TO PROVIDE PARITY IN FILING OF APPEALS IN SCENARIOS WHERE SEPARATE ORDER IS PASSED BY HIGHER APPELLATE AUTHORITIES FOR EACH ASSESSMENT YEAR VIS-A-VIS WHERE COMPOSITE ORDER FOR MORE THAN ONE ASSESSMENT YEARS IS PASSED. PARA 5 OF THE CIRCULAR IS SUBSTITUTED BY THE FOLLOWING PARA: 5. THE ASSESSING OFFICER SHALL CALCULATE THE TAX EFFECT SEPARATELY ITA NOS.224 & 246/BANG/2013 PAGE 6 OF 9 FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUES IN THE CASE OF EVERY ASSESSEE. IF IN THE CASE OF AN ASS ESSEE, THE DISPUTED ISSUES ARISE IN MORE THAN ONE ASSESSMENT YEAR, 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 MONETARY LIMIT SPECIFIED IN PARA 3. FURTHER, EVEN IN THE CASE OF COMPOSITE ORDER OF ANY HIGH COURT OR APPELLATE AUTHORITY WHICH INVOLVES MORE THAN ONE ASSESSMENT YEAR AND COMMON ISSUES IN MORE THAN ONE ASSESSMENT YEAR NO APPEAL SHALL BE FILED IN RESPECT OF AN ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIED IN PARA 3. IN CASE WHERE A COMPOSITE ORDER/ JUDGEMENT INVOLVES MORE THAN ONE ASSESSEE, EACH ASSESSEE SHALL BE DEALT WITH SEPARATELY 4. THE SAID MODIFICATIONS SHALL COME INTO EFFECT FROM THE DATE OF ISSUE OF THIS CIRCULAR. 6. CLEARLY, ALL OTHER PORTIONS OF THE CIRCULAR NO. 3 OF 2018 (SUPRA) HAVE REMAINED INTACT. THE PORTION WHICH HAS REMAINED INTACT INCLUDES PARAGRAPH 13 OF THE AFORES AID CIRCULAR WHICH IS AS FOLLOWS: 13. THIS CIRCULAR WILL APPLY TO SLPS/ APPEALS/ CROSS OBJECTIONS/ REFERENCES TO BE FILED HENCEFORTH IN SC/HCS/TRIBUNAL AND IT SHALL ALSO APPLY RETROSPECTIVELY TO PENDING SLPS/ APPEALS/ CROSS OBJECTIONS/REFERENCES. PENDING APPEALS BELOW THE SPECIFIED TAX ITA NOS.224 & 246/BANG/2013 PAGE 7 OF 9 LIMITS IN PARE 3 ABOVE MAY BE WITHDRAWN/ NOT PRESSED. 7. IN VIEW OF THE ABOVE DISCUSSIONS, WE HEREBY HOLD T HAT THE RELAXATION IN MONETARY LIMITS FOR DEPARTMENTAL APPEALS, VIDE CBDT CIRCULAR DATED 8TH AUGUST 2019 (SUPRA) SH ALL BE APPLICABLE TO THE PENDING APPEALS IN ADDITION TO TH E APPEALS TO BE FILED HENCEFORTH. 8. LEARNED COMMISSIONER (DR) THEN SUBMITS LIBERTY MAY KINDLY BE GIVEN TO POINT OUT, UPON NECESSARY FURTHE R VERIFICATIONS, AND TO SEEK RECALL THE DISMISSAL OF APPEALS AND RESTORATION OF THE APPEALS IN THE CASES (I) IN WHIC H IT CAN BE DEMONSTRATED THAT THE APPEALS ARE COVERED BY THE EX CEPTIONS, AND (II) WHICH ARE INADVERTENTLY INCLUDED IN THIS B UNCH OF APPEALS, WHEREIN THE TAX EFFECT, IN TERMS OF THE CB DT CIRCULAR (SUPRA), EXCEEDS RS 50,00,000. NONE OPPOSES THIS PR AYER; WE ACCEPT THE SAME. WE MAKE IT CLEAR THAT THE APPELLAN TS SHALL BE AT LIBERTY TO POINT OUT THE CASES WHICH ARE WRON GLY INCLUDED IN THE APPEALS SO SUMMARILY DISMISSED, EIT HER OWING TO WRONG COMPUTATION OF TAX EFFECT OR OWNING TO SUC H CASES BEING COVERED BY THE PERMISSIBLE EXCEPTIONS- OR FOR ANY OTHER REASON, AND WE WILL TAKE APPROPRIATE REMEDIAL STEPS IN THIS REGARD. 9. IN THE LIGHT OF THE ABOVE DISCUSSIONS, ALL THE APP EALS STAND DISMISSED AS WITHDRAWN. AS THE APPEALS FILED BY THE REVENUE ARE FOUND TO BE NON-MAINTAINABLE AND AS ALL THE RELATED CROSS-OBJECTIONS OF THE ASSESSEE ARISE ONLY AS A RESULT OF THOSE APPEALS AND MERELY SUPPORT THE ORDER OF TH E CIT(A), THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE ALSO DISMISSED AS INFRUCTUOUS. ORDERED, ACCORDINGLY. 3. RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF TH E TRIBUNAL, WE DISMISS THE APPEAL OF THE REVENUE. 4. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. 5. AS FAR AS APPEAL OF THE ASSESSEE IS CONCERNED, T HE LD COUNSEL APPEARING FOR THE ASSESSEE DID NOT PRESS FOR ADJUDI CATION OF THE APPEAL OF THE ASSESSEE. THEREFORE THE APPEAL OF TH E ASSESSEE IS DISMISSED AS NOT PRESSED. ITA NOS.224 & 246/BANG/2013 PAGE 8 OF 9 6. IN THE RESULT, THE APPEAL OF THE REVENUE AND APPEAL OF THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 4 TH DAY OF SEPTEMBER, 2019. SD/- SD/- ( A.K.GARODIA ) ( N.V. V ASUDEVAN) ACCOUNTANT MEMBER VICE PRESI DENT BANGALORE, DATED, THE 4 TH SEPTEMBER, 2019. /VMS/ COPY TO: 1. APPELLANT (S) / CROSS OBJECTOR(S) 2. RESPONDENT(S) 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.