The ACIT, Vapi Circle, Vapi V. M/s. Satadhar Enterprises, Vapi

ITA 2356/AHD/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5751 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-07-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 07-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA
• Assessee Lawyers: S N L AGARWAL
• Keywords: Question of law; Difference of opinion; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND N.S. SAINI, A M) ITA NO.2356/AHD/2009 A.Y.: 2003-04 THE A. C. I. T., VAPI CIRCLE, ROOM NO.303, SHIVAM COMMERCIAL COMPLEX, N. H. NO.8, VAPI 396 195 VS M/S. SATADHAR ENTERPRISES, CHANDRALOK SHOPPING COMPLEX, NR. CINE PARK MULTI-COMPLEX, VAPI SILVASSA ROAD, CHANOD, VIA VAPI PA NO. AAPFS 8442 R (APPELLANT) (RESPONDENT) APPELLANT BY SHRI R. K.DHANESTA, DR RESPONDENT BY SHRI S. N. L. AGARWAL,, AR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-II, AHMEDAB AD DATED 23-04-2009 FOR ASSESSMENT YEAR 2003-04, CHALLENGING THE CANCEL LATION OF PENALTY U/S 271 E OF THE IT ACT AMOUNTING TO RS.45,000/-. 2. THE LEARNED CIT(A) NOTED THAT PENALTY WAS LEVIED ON THE GROUND THAT CASH LOAN AMOUNTING TO RS.45,000/- WAS PAID TO THE BOOKING HOLDERS INTRODUCED BY SHRI HEMENDRA SHAH IN VIOLATI ON OF PROVISIONS OF SECTION 269 T OF THE IT ACT. THE LEARNED CIT(A) ALS O NOTED THAT THE AO HIMSELF HELD IN ASSESSMENT YEAR 2004-05 THAT AMOUNT RECEIVED FROM BOOKING HOLDERS WAS TRADING RECEIPT AND HENCE WRITE BACK OF THE SAME WAS TAXABLE U/S 41 (1) OF THE IT ACT. FURTHER, IN A SSESSMENT YEAR 2002- 03 NOTHING ADVERSE WAS FOUND AGAINST THE ASSESSEE. THE LEARNED CIT(A), THEREFORE, NOTED THAT SINCE THE AO HAS STATED THE A MOUNT RECEIVED ITA NO.2356/AHD/2009 ACIT, VAPI CIRCLE VS M/S.SATADHAR ENTERPRISES, VAP I 2 THROUGH SHRI HEMENDRA SHAH IS BOOKING ADVANCE AGAIN ST SALE OF STOCK IN TRADE AND WAS A TRADING INCOME AND THAT GENUINENESS OF THIS TRANSACTION HAS BEEN CONFIRMED BY THE LEARNED CIT(A) IN ASSESSM ENT YEAR 2002-03, THEREFORE, THERE IS A DIFFERENCE BETWEEN LOAN AND B OOKING ADVANCES AND ACCORDINGLY PENALTY IS NOT LEVIABLE AND MOREOVER, T HE GENUINENESS OF THIS TRANSACTION HAS NOT BEEN DISPUTED. PENALTY WAS ACCO RDINGLY DELETED. 3. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SAME SUBMISSIONS AND SUBMITTED THAT TAX EFFECT IS BELOW RS.2 LACS IN THIS APPEAL, THEREFORE, DEPARTMENTAL APPEAL IS NOT MAINT AINABLE BEING COVERED BY THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN TH E CASE OF CIT VS CONCORD PHARMACEUTICALS REPORTED IN 317 ITR 395. TH E LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN ASSESSMENT YEAR 2002-03 IN THE CASE OF THE ASSESSEE SIMILAR ISSUE WAS EXAMINED IN DEPAR TMENTAL APPEAL IN ITA NO.51/AHD/2007 AND THE TRIBUNAL VIDE ORDER DATED 31 ST MAY, 2007 DISMISSED THE DEPARTMENTAL APPEAL ON THE SAME ISSUE IN WHICH BOOKING AMOUNT WAS RECEIVED THROUGH SHRI HEMENDRA SHAH. THE LEARNED COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT ONLY FA CTUAL FACTS HAVE BEEN CONSIDERED, THEREFORE, APPEAL OF THE REVENUE WOULD NOT BE MAINTAINABLE. THE LEARNED DR DID NOT DISPUTE THE ABOVE FACTS. 4. ACCORDING TO THE IMPUGNED ORDER THE TOTAL DEMAND WAS RS.45,000/-. THUS, IT IS NOTICED THAT THE TAX EFFEC T IN THIS APPEAL IS BELOW THE PRESCRIBED LIMIT UNDER INSTRUCTION NO.2/2005 DATED 24-10-2005 AND THE TAX EFFECT ON THIS IS LESS THAN RS.2 LACS. WHEN THIS WAS CONFRONTED TO THE DR, HE HAS NOT DISPUTED THE SAME. 5. IT SEEMS THAT RECENTLY HONBLE GUJARAT HIGH COUR T IN THE CASE OF CIT V. CONCORD PHARMACEUTICALS IN TAX APPEAL NO.402/2001 VIDE ORDER DATED 05-08-2008 HAS FINALLY SETTLED THE ISSUE REGA RDING TAX EFFECT CASES. HONBLE HIGH COURT IN THIS CASE HAS HELD AS UNDER:- ITA NO.2356/AHD/2009 ACIT, VAPI CIRCLE VS M/S.SATADHAR ENTERPRISES, VAP I 3 25. THERE IS ALSO DIFFERENCE OF OPINION AMONGST TH E COURTS WITH REGARD TO THE APPLICABILITY OF THE CIRCULAR. IF ON THE DATE OF FILING OF AN APPEAL, A CIRCULAR IS NOT IN FORCE OR CERTAIN EXCEPTIONS ARE NOT THERE OR MONETARY LIMIT IS LESS THAN WHAT WAS THERE AT THE TIME OF DECIDING THIS APPEAL, IN S UCH CASES, THE TRIBUNAL WILL HAVE TO GIVE DUE WEIGHTAGE TO THE PROVISIONS CONTAINED IN THE CIRCULAR PREVALENT ON THE DATE OF FILING OF APPEAL AND NOT ON THE DATE OF THE DECISION OF THE A PPEAL. IN CIT V. CHHAGER PACKAGING & PLASTICS (P) LTD.,(2008) 214 CTR 389 (BOM), THE BOMBAY HIGH COURT TOOK THE VIEW THAT CIRCULARS / INSTRUCTIONS ISSUED BY THE BOARD ARE AP PLICABLE ONLY PROSPECTIVELY AND IF THERE IS NO REFERENCE TO THEIR APPLICABILITY TO THE PENDING MATTERS, SUCH PENDING MATERS CANNOT BE DECIDED ON THE BASIS OF CIRCULARS / INSTR UCTIONS. 26. IN PITHWA ENGINEERING WORKS CASE [2005] 276 I TR 519 THE BOMBAY HIGH COURT TOOK THE VIEW THAT TAKING JUDICIA L NOTICE OF THE MONEY VALUE HAVING GONE DOWN AND COST OF LITIGA TION EXPENSES HAVING GONE UP AS WELL AS HUGE PENDENCY OF CASES, THE BOARD SHOULD EVOLVE A POLICY OF APPLYING THE CI RCULAR EVEN TO THE OLD REFERENCES WHICH ARE STILL UNDIVIDED. TH E DEPARTMENT SHOULD NOT HAVE PROCEEDED WITH THE APPEA LS / REFERENCES WHEREIN THE TAX IMPACT IS MINIMAL, IRRES PECTIVE OF THEIR DATE OF FILING. 27. THERE IS NO DISPUTE ABOUT THE FACT THAT WHERE S UBSTANTIAL QUESTION OF LAW OF IMPORTANCE IS INVOLVED OR WHERE QUESTION OF LAW IS IMPORTANCE IS INVOLVED OR WHERE QUESTION OF LAW IS REPEATEDLY ARISING OR WHERE THE ISSUE IS COVERED BY THE JUDGMENT OF TERRITORIAL HIGH COURT OR SUPREME COURT , THE TRIBUNAL WILL HAVE TO DECIDE THE APPEAL ON MERITS A ND IN TERMS OF THE LAW DECLARED BY THE SUPREME COURT OR BY THE TERRITORIAL HIGH COURT. HOWEVER, ON THIS GROUND THE MATTERS CA NNOT BE REMANDED TO THE TRIBUNAL DIRECTING THE TRIBUNAL TO DECIDE THE SAME AFRESH. IF NO OBJECTIONS ARE RAISED BY THE DE PARTMENTAL REPRESENTATIVE AT THE TIME OF HEARING OF THE APPEAL AGAINST THE APPLICABILITY OF THE CIRCULAR DESPITE THERE BEING A N EXCEPTION, THE DEPARTMENT HAS MISSED THE BUS AND SECOND INNING CANNOT BE GRANTED FOR THAT PURPOSE. HOWEVER, IN MATTERS W HERE SUCH OBJECTIONS ARE RAISED AND DESPITE THOSE OBJECTIONS OR WITHOUT DEALING WITH THOSE OBJECTIONS IF THE TRIBUNAL HAS D ISMISSED THE APPEAL ONLY ON THE GROUND OF LOW TAX EFFECT IN SUCH MATTER, AN INDULGENCE IS REQUIRED TO BE SHOWN BY THIS COURT AN D FOR THIS LIMITED PURPOSES, THE DEPARTMENT IS PERMITTED TO MO VE AN APPROPRIATE APPLICATION BEFORE THE TRIBUNAL FOR DEC IDING THE APPEAL ON MERITS. ITA NO.2356/AHD/2009 ACIT, VAPI CIRCLE VS M/S.SATADHAR ENTERPRISES, VAP I 4 28. WE ARE OF THE VIEW THAT SIMPLY BECAUSE THE APPE AL IS FILED BY THE DEPARTMENT IN CONTRAVENTION OF THE CIRCULAR THE TRIBUNAL IS NOT BOUND TO DECIDE THE APPEAL ON MERITS. DUE WEIG HTAGE SHOULD INVARIABLY BE GIVEN BY THE TRIBUNAL TO THE C IRCULAR ISSUED BY THE BOARD. EVEN OTHERWISE, THE NEWLY INS ERTED PROVISIONS CONTAINED IN SECTION 268A(4) MAKE IT OBL IGATORY FOR THE TRIBUNAL TO CONSIDER SUCH CIRCULAR. IT IS NOT OPEN FOR THE DEPARTMENT TO CONTEND THAT CIRCULARS ARE INTERNAL M ATTERS OF THE DEPARTMENT AND ASSESSEE CANNOT OBJECT TO FILING OF AN APPEAL ON THE BASIS OF SUCH CIRCULAR. IT IS TRUE T HAT FILING OF AN APPEAL IS A STATUTORY RIGHT BUT IT CAN CERTAINLY BE REGULATED BY THE BOARD BY ISSUANCE OF ORDERS, INSTRUCTIONS OR CI RCULARS. THIS WOULD NOT AMOUNT TO TAKING AWAY THE RIGHT OF F ILING OF APPEAL OR THAT SUCH RIGHT IS PROHIBITED BY EXECUTIV E INSTRUCTIONS. SECTION 268A(1) OF THE ACT NOW RECOG NIZES SUCH RIGHT OF THE BOARD TO REGULATE THE FILING OF APPEAL OR APPLICATION BEFORE THE TRIBUNAL OR THE COURT. IT IS ALSO TRUE THAT WHEN THE HONBLE SUPREME COURT OR THE TERRITORIAL HIGH COURT HAVE DECLARED THE LAW ON A QUESTION, IT IS NOT OPEN TO T HE TRIBUNAL TO DIRECT THAT THE CIRCULAR ISSUED BY THE BOARD PRESCR IBING THE MONETARY LIMIT SHOULD BE GIVEN EFFECT TO AND NOT TH E DECISION OF HONBLE SUPREME COURT OR THE TERRITORIAL HIGH COURT . IT IS, HOWEVER, EQUALLY TRUE THAT THE TRIBUNALS ATTENTION MUST BE DRAWN BY THE DEPARTMENTAL REPRESENTATIVE TO SUCH DE CISION OF THE HONBLE SUPREME COURT OR THE HIGH COURT. AN OB JECTION MUST BE RAISED BY THE DEPARTMENTAL REPRESENTATIVE. . CONSIDERING ALL THE AFORESAID ISSUES, WE DISMISS ALL THESE TAX APPEALS RESERVING LIBERTY TO THE DEPARTME NT ONLY ON THOSE CASES TO APPLY TO THE TRIBUNAL TO DECIDE THE APPEAL ON MERITS WHERE THE OBJECTIONS WERE RAISED BEFORE THE TRIBUNAL EITHER IN THE APPEAL MEMO OR AT THE TIME OF HEARING OF APPEAL RAISING A SPECIFIC CONTENTION THAT A PARTICULAR APP EAL IS COVERED BY AN EXCEPTION AND DESPITE THIS OBJECTION THE TRIBUNAL HAS NOT DEALT WITH THE SAID CONTENTION AND DISMISSED THE APPEAL ON THE GROUND OF LOW TAX EFFECT. IT IS E XPECTED FROM THE TRIBUNAL TO CONSIDER THIS BROAD PARAMETERS WHIL E APPLYING THE RELEVANT CIRCULAR TO THE FACTS OF THE CASE AT T HE TIME OF DECIDING APPEALS. 6. AT THE TIME OF HEARING BEFORE US, THE LD. DEPART MENTAL REPRESENTATIVE WAS SPECIFICALLY ASKED BY THE BENCH, WHETHER THIS APPEAL FALLS UNDER ANY OF THE EXCEPTIONS AS PROVIDED IN BO ARDS INSTRUCTION NO.2/2005 DATED 24-10-2005, THE SUBJECT-MATTER OF THE APPEALS ARE ITA NO.2356/AHD/2009 ACIT, VAPI CIRCLE VS M/S.SATADHAR ENTERPRISES, VAP I 5 COVERED BY ANY OF THE JUDGMENT OF JURISDICTIONAL HI GH COURT OR OF SUPREME COURT, ANY SUBSTANTIAL QUESTION OF LAW IS I NVOLVED OR NOT. THE LD DR STATED THAT IN THESE APPEALS THE ISSUES ARE F ACTUAL AND DOES NOT FALL IN ANY OF THE EXCEPTIONS AS PROVIDED BY BOARD S INSTRUCTION OR ANY OF THE CRITERIA LAID DOWN BY THE HONBLE HIGH COURT IN THE CASE OF CONCORD PHARMACEUTICALS (SUPRA). THE RELEVANT EXCEPTIONS AS PROVIDED IN B OARDS INSTRUCTION NO.1979/2000 DATED 27-03-2000 READS AS UNDER:- 3. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING SHOULD BE CONTESTED IRRESPECTIVE OF REVENUE EFFECT : (I) WHERE REVENUE AUDITED OBJECTION IN THE CASE HA S BEEN ACCEPTED BY THE DEPARTMENT (II) WHERE THE BOARDS ORDER, NOTIFICATION, INSTRUC TION OR CIRCULAR IS THE SUBJECT-MATTER OF AN ADVERSE ORDER. (III) WHERE PROSECUTION PROCEEDINGS ARE CONTEMPLATE D AGAINST THE ASSESSEE. (IV) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVI SIONS OF THE ACT ARE UNDER CHALLENGE. 7. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMIT TED THAT TAX EFFECT IN THIS CASE IS BELOW RS.2,00,000/- WHICH IS NOT D ISPUTED BY THE LEARNED DR. 8. WE FIND THAT THIS APPEAL RELATES TO LOW TAX EFFE CT AND COVERED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CONCORD PHARMACEUTICALS (SUPRA). RESPECTFULLY FOLLOWING CONCORD PHARMACEUTICALS (SUPRA), WE DISMISS THIS APPEAL OF THE REVENUE. ITA NO.2356/AHD/2009 ACIT, VAPI CIRCLE VS M/S.SATADHAR ENTERPRISES, VAP I 6 9. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED ON 16-07-2010 SD/- SD/- (N. S. SAINI) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 16-07-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD