The ACIT, Central Circle-2(1), Ahmedabad V. Hina Nitin Parikh, Ahmedabad

ITA 2444/AHD/2008

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1695 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-03-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 27-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P M MEHTA; S N SOPARKAR
• Keywords: Tax effect
• Section: 143(3); 153A; 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABAD (BEFORE HONBLE SHRI G.D. AGRAWAL, V.P. AND HON'BLE SHRI T.K. SHARMA, J.M .) I.T.A. NO. 2444/AHD./2008 : ASSESSMENT YEAR 2000-2001 ACIT, CENTRAL CIRCLE-2(1), AHMEDABAD -VS- HINA NITIN PARIKH, AHMEDABAD (APPELLANT) (PA N : ACVPP 7923N) (RESPONDENT) C.O. NO.189/A/2008 : ASSESSMENT YEAR 2000-2001 (ARISING OUT OF ITA NO.2444/AHD./2008) HINA NITIN PARIKH, AHMEDABAD -VS- ACIT, C ENTRAL CIRCLE-2(1), AHMEDABAD (RESPONDENT) (APPELLANT) APPELLANT BY : SHRI K. MADHUSUDAN, SR. D.R. RESPONDENT BY : S/SHRI S.N.SOPARKAR, SR.ADV. & P .M.MEHTA, A.R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE AND THE CROSS-APP EAL FILED BY THE ASSESSEE ARE AGAINST THE ORDER DATED 31-03-2008 OF THE LEARNED C OMMISSIONER OF INCOME TAX(APPEALS)-III, AHMEDABAD FOR THE ASSESSMENT YEAR 2000-2001. 2. THE ONLY GROUND RAISED BY THE REVENUE IN ITS APP EAL IS AS UNDER: THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF INTEREST EXPENSES U/S 14A OF THE ACT. 2.1 VARIOUS GROUNDS RAISED BY THE ASSESSEE IN CROSS OBJECTION ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE DEPARTMENT'S APPEAL DESERVES NOT TO BE ADMITTED AT ALL IN VIEW OF CIRC ULAR NO.2 OF 2005, F.NO 279/MIS.64/05-ITJ DATED 29 TH MARCH, 2005 AND IN VIEW OF DECISION OF I.T.A.T. AHMEDABAD BENCH C IN ITA NO.3065/AHD/2007 WITH C O NO.310/AHD/2007 IN CASE OF ACIT VS. M/S. VIMAL PUMPS PVT LTD. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN NOT UPHOLDING THE ASSESSEE'S OBJECTIONS TO THE VALIDIT Y OF ASSESSMENTS MADE U/S.153A. IN FACT THE ASSESSMENT FRAMED UNDER SECTION 153A A RE WITHOUT JURISDICTION AND LEGAL BASIS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) SHOULD HAVE ALSO HELD THAT IN VIEW OF THE PROVISO TO SECTION 14A, NO DISALLOWANCE COULD BE MADE FOR A.Y.2000-01 ON RE-OPENING THE CASE. ITA 2444-AHD.-08 & C.O.189-AHD.08 2 3. AT THE OUTSET, SHRI S.N.SOPARKAR, A.R., APPEARIN G ON BEHALF OF THE ASSESSEE, POINTED OUT THAT FOR THE ASSESSMENT YEAR UNDER APPE AL, THE AO FRAMED ASSESSMENT UNDER SECTION 153A(B) READ WITH SECTION 143(3) ON 31.12.2 007 AT A TOTAL INCOME OF RS.2,39,900/, WHICH, INTER ALIA , INCLUDES DISALLOWANCE OF RS.1,05,582/- UNDER SECT ION 14A OF THE I.T.ACT, 1961. THE SAID DISALLOWANCE HAS BEEN DELET ED BY THE CIT(A) IN THE IMPUGNED ORDER, AGAINST WHICH THE REVENUE IS IN APPEAL. HE S UBMITTED THAT THE AMOUNT OF TOTAL DISALLOWANCE IS ONLY RS.1,05,582/- ON WHICH THE TAX EFFECT IS LESS THAN RS.2 LAKHS. THEREFORE, THE APPEAL OF THE REVENUE SHOULD BE TREA TED AS UN-ADMITTED IN VIEW OF CIRCULAR F.NO.279/MISC.-64/05-ITJ DATED 24 TH OCTOBER, 2005 AND THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. CAMCO COLO UR CO. [254 ITR 565 (BOM)] AND THE HONBLE APEX COURT IN THE CASE OF COMMISSIONER OF CUSTOMS VS. INDIAN OIL CORPORATION LTD. [267 ITR 272 (SC)]. ON THIS BASIS, HE SUBMITTED THAT THE APPEAL FILED BY THE REVENUE BE DISMISSED. 4. SHRI K. MADHUSUDAN, SR.D.R., APPEARING ON BEHALF OF THE REVENUE, COULD NOT CONTROVERT THE AFORESAID SUBMISSIONS MADE BY THE LD . COUNSEL OF THE ASSESSEE. HOWEVER, HE SUBMITTED THAT SINCE THE APPEAL OF THE REVENUE I S DISMISSED ON THE GROUND THAT THE REVENUE SHOULD NOT HAVE FILED THE APPEAL, THEREFORE , THE CROSS-OBJECTION FILED BY THE ASSESSEE ALSO BE DISMISSED. 5. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. ADMITTEDLY, THE ONLY GROUND RAIS ED BY THE REVENUE IS AGAINST DELETING DISALLOWANCE OF RS.1,05,582/- WHICH WAS MADE BY THE AO UNDER SECTION 14A OF THE I.T. ACT, 1961. IT IS OBSERVED THAT THE TAX EFFECT IS LE SS THAN RS.2 LAKHS. CBDT VIDE INSTRUCTION NO.2/2005 DATED 24 TH OCTOBER, 2005 ISSUES GUIDELINES TO THE REVENUE AUT HORITIES WITH REGARD TO FILING OF APPEAL BEFORE THE TRIBUNAL, HIG H COURT AND SUPREME COURT. FROM THE ABOVE INSTRUCTION, IT IS EVIDENT THAT SINCE 1987, T HE CBDT IS INSTRUCTING ITS OFFICERS NOT TO FILE THE APPEAL WHERE THE TAX EFFECT IS BELOW CERTA IN MONETARY LIMITS. VIDE INSTRUCTION NO. 1903 DATED 28 TH OCTOBER, 1992, THE MONETARY LIMIT WAS REVISED UPWA RD AND THE OFFICERS WERE DIRECTED NOT TO FILE THE APPEAL BEFORE THE INC OME-TAX APPELLATE TRIBUNAL WHERE THE TAX EFFECT WAS BELOW RS.25,000/-. THE ABOVE MONETAR Y LIMIT WAS FURTHER REVISED UPWARD BY INSTRUCTION NO.1979 DATED 27 TH MARCH, 2000 AND THE OFFICERS WERE DIRECTED NOT TO FILE THE APPEAL TO ITAT WHERE THE TAX EFFECT IS BELOW RS .1 LAC. THEREAFTER IN PARTIAL ITA 2444-AHD.-08 & C.O.189-AHD.08 3 MODIFICATION OF THE ABOVE INSTRUCTION, THE BOARD VI DE INSTRUCTION NO.2/2005 DATED 24.10.2005 HAS FURTHER RAISED THE ABOVE MONETARY LI MIT TO RS. 2 LAKHS WITH THE SAME DIRECTIONS. THUS, THE CBDT SINCE 1987 HAS NOT ONLY TAKEN A CONSISTENT APPROACH OF INSTRUCTING ITS OFFICERS FOR NOT FILING THE APPEAL WHERE THE TAX EFFECT IS BELOW THE MONETARY LIMIT, BUT SUCH MONETARY LIMIT IS ALSO REVISED UPWA RD FROM TIME TO TIME. THE CIRCULAR UNDER INSTRUCTION NO.1979 DATED 27.3.2006 WAS CONSI DERED BY THE BOMBAY HIGH COURT IN THE CASE OF CAMCO COLOUR CO. (SUPRA) AND THEIR LORD SHIPS HELD AT PAGE 568 AS UNDER:- IT APPEARS THAT DESPITE THE ABOVE CIRCULAR, THE RE VENUE HAS CHOSEN TO FILE THE PRESENT APPEAL KNOWING FULLY WELL THAT THE CORRIDOR S OF THE COURTS ARE FLOODED WITH PENDING LITIGATIONS. THE PRESENTATION OF THIS APPEAL IS QUITE CONTRARY TO THE INSTRUCTION ISSUED IN THE CIRCULAR WHICH IS BINDING ON THE REVENUE. IN THE ABOVE VIEW OF THE MATTER, CONSIDERING THE IN STRUCTIONS ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES, WE ARE SATISFIED THA T THE BOARD HAS TAKEN A POLICY DECISION NOT TO FILE APPEAL IN A TYPE OF CAS E IN HAND AND THE SAME IS FINDING ON THE REVENUE (APPELLANT HEREIN). IN THE R ESULT, WE DISMISS THIS APPEAL ON THIS COUNT IN LIMINE WITH NO ORDER AS TO COSTS. 4.1 THE LD. DEPARTMENTAL REPRESENTATIVE HAS RELIED UPON THE CONTRARY DECISIONS GIVEN BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE C ASE OF RANI PALIWAL (SUPRA) AND ALLAHABAD HIGH COURT IN THE CASE OF JUGAL KISHORE A RORA (SUPRA). HOWEVER, WE FIND THAT RECENTLY THE APEX COURT HAS CONSIDERED THE EFFECT O F CIRCULAR ISSUED BY THE CBDT IN THE CASE OF COMMISSIONER OF CUSTOMS VS. INDIAN OIL CORP ORATION LTD. 267 ITR 272. THEIR LORDSHIPS EXAMINED THE EARLIER DECISIONS OF THE APE X COURT WITH REGARD TO BINDING NATURE OF THE CIRCULAR AND LAID DOWN THE FOLLOWING PRINCIP LES AT PAGE 277 OF THE REPORTS :- THE PRINCIPLES LAID DOWN BY ALL THESE DECISIONS AR E (1) ALTHOUGH A CIRCULAR IS NOT BINDING ON A COURT O R AN ASSESSEE, IT IS NOT OPEN TO THE REVENUE TO RAISE A CONTENTION THAT IS C ONTRARY TO A BINDING CIRCULAR BY THE BOARD. WHEN A CIRCULAR REMAINS IN O PERATION, THE REVENUE IS BOUND BY IT AND CANNOT BE ALLOWED TO PLEAD THAT IT IS NOT VALID NOR THAT IT IS CONTRARY TO THE TERMS OF THE STATUTE. (2) DESPITE THE DECISION OF THIS COURT, THE DEPARTM ENT CANNOT BE PERMITTED TO TAKE A STAND CONTRARY TO THE INSTRUCTIONS ISSUED BY THE BOARD. (3) A SHOW CAUSE NOTICE AND DEMAND CONTRARY TO EXIS TING CIRCULARS OF THE BOARD ARE AB INITIO BAD. (4) IT IS NOT OPEN TO THE REVENUE TO ADVANCE AN AR GUMENT OR FILE AN APPEAL CONTRARY TO THE CIRCULARS. (EMPHASIS SUPPLIED) ITA 2444-AHD.-08 & C.O.189-AHD.08 4 4.2 FROM THE ABOVE, IT IS EVIDENT THAT THE HONBLE APEX COURT HAS LAID DOWN THAT IT IS NOT OPEN TO THE REVENUE TO ADVANCE AN ARGUMENT OR F ILE AN APPEAL CONTRARY TO THE CIRCULAR. THE APPEAL UNDER CONSIDERATION HAS CERTAINLY BEEN F ILED CONTRARY TO THE CIRCULAR ISSUED BY THE CBDT VIDE CIRCULAR F. NO. 279/MISC-64/05-ITJ DA TED 24 TH OCTOBER, 2005. THEREFORE, THE ABOVE DECISION OF THE HONBLE APEX COURT WOULD BE SQUARELY APPLICABLE. EVEN OTHERWISE, THE REVENUE HAS BEEN TAKING A CONSISTENT APPROACH SINCE 1987 NOT TO FILE APPEAL WHERE THE REVENUE EFFECT IS BELOW CERTAIN MO NETARY LIMIT TO REDUCE THE LITIGATION PENDING BEFORE THE TRIBUNAL AND THE COURTS. IF THE APPEALS CONTRARY TO SUCH CIRCULAR ARE ADMITTED, IT WOULD FRUSTRATE THE PURPOSE OF ISSUING SUCH INSTRUCTIONS. IN THE ABOVE CIRCUMSTANCES, WE RESPECTFULLY FOLLOWING THE DECISI ON OF THE HONBLE APEX COURT IN THE CASE OF INDIAN OIL CORPORATION LTD. (SUPRA) AND BOM BAY HIGH COURT IN THE CASE OF CAMCO COLOUR CO. (SUPRA), HOLD THAT THE REVENUE SHOULD NO T HAVE FILED THE APPEAL CONTRARY TO THE CIRCULAR ISSUED BY THE CBDT. ACCORDINGLY, THE SAME IS NOT ADMITTED AND BEING DISMISSED IN LIMINE. 4.3 COMING TO THE CROSS-OBJECTION FILED BY THE ASSE SSEE, SINCE THE APPEAL OF THE REVENUE IS DISMISSED IN LIMINE, THEREFORE, THE C.O. FILED BY THE ASSESSEE BECOMES INFRUCTUOUS AND THE SAME IS ALSO DISMISSED AS BEING INFRUCTUOUS. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE A ND THE C.O. FILED BY THE ASSESSEE ARE DISMISSED. THE ORDER PRONOUNCED IN THE OPE N COURT ON 30.03.2011 SD/- SD/- (G.D.AGRAWAL) (T.K. SHARMA) VICE PRESIDENT JUDICIAL MEMBER DATED : 30/03 /2011 COPY OF THE ORDER IS FORWARDED TO:- (1) THE ASSESSEE (2) THE DEPARTMENT. (3) CIT (A.) CONCERNED. (4) CIT CONCERNED. (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AH MEDABAD. TALUKDAR/ SR. P.S. ITA 2444-AHD.-08 & C.O.189-AHD.08 5