The ITO,S.K. Ward-4, Dist.Sabarkanta V. Shri Subhashchandra Dwarkadas Soni, Dist.Sabarkanta

ITA 2640/AHD/2006

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9261 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-07-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 04-12-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOURAV NAHTACA
• Assessee Lawyers: M C PANDIT
• Keywords: Question of law; Difference of opinion; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER, AND SHRI D. C. AGRAWAL, ACCOUNTANT MEMBER ITA NO.2640/AHD/2006 & C.O.NO.30/AHD/2007 ASSESSMENT YEAR:2003-04 DATE OF HEARING:8.7.09 DRAFTED:8.7.09 INCOME TAX OFFICER, SABARKANTHA, WARD-4, MODASA SUBHASCHANDRA DWARKADAS SONI, HIRALAL BHUVAN, BAZAR, MODASA PAN NO.AVMPS1522Q V/S . V/S . SHRI SUBHASCHANDRA DWARKADAS SONI, HIRALAL BHAVAN, BAZAR, MODASA, DIST. SUBARKANTHA ITO, SABARKANTHA, WARD- 4, MODASA (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI M.C. PANDIT, SR. DR REVENUE BY:- SHRI GOURAV NAHTA,CA O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY THE REVENUE AND CROSS OBJECTION (CO ) BY THE ASSESSEE ARE ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME- TAX (APPEALS)-IX, AHMEDABAD IN APPEAL NO. CIT(A)-IX/ITO WD-4/MDS/22/06-07 DATED 19 -09-2006. THE ASSESSMENT WAS FRAMED BY THE INCOME-TAX OFFICER, SABARKANTHA, WARD-4, MODASA U/S.143(3) R.W.S. 147 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 30-03-2006 FOR THE ASSESSMENT YEAR 2003 -04. 2. AT THE OUTSET, IT WAS BROUGHT TO OUR NOTICED THA T THE TAX EFFECT IN THIS APPEAL IS BELOW THE PRESCRIBED LIMIT UNDER INSTRUCTION NO.2/2005 DATED 24-10-2005 . THE ASSESSEE FILED CALCULATION OF TAX EFFECT, WHEREIN T HE QUANTUM UNDER DISPUTE IS AMOUNTING TO RS.4,74,476/- AND THE TAX EFFECT IS RS .1,49,460/-. WHEN THIS WAS CONFRONTED TO THE DR, HE HAS NOT DISPUTED THE SAME. ITA NO.2640/AHD/2006 & CO 30/AHD/2007 A.Y. 2003-04 ITO SKANTHA WD-4, MODASA V. SH. SUBHASHCHANDRA D SONI P AGE 2 3. 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 05-08-2 008 HAS FINALLY SETTLED THE ISSUE REGARDING TAX EFFECT CASES. HONBLE HIGH COURT IN THIS CASE HAS HELD AS UNDER:- 20. 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 SUCH CASES, THE TRIBUNAL WILL HAVE TO GIVE DUE WEIGHTAGE TO THE PROVISIONS C ONTAINED IN THE CIRCULAR PREVALENT ON THE DATE OF FILING OF APPEAL AND NOT O N THE DATE OF THE DECISION OF THE APPEAL. IN CIT V. CHHAGER PACKAGING & PLASTIC S (P) LTD.,(2008) 214 CTR 389 (BOM), THE BOMBAY HIGH COURT TOOK THE VIEW THAT CIRCULARS / INSTRUCTIONS ISSUED BY THE BOARD ARE APPLICABLE ONLY PROSPECTIVE LY AND IF THERE IS NO REFERENCE TO THEIR APPLICABILITY TO THE PENDING MAT TERS, SUCH PENDING MATERS CANNOT BE DECIDED ON THE BASIS OF CIRCULARS / INSTR UCTIONS. IN CIT V. PITHWA ENGINEERING WORKS 276 ITR 519 (BOM), THE BOMBAY HIG H COURT TOOK THE VIEW THAT TAKING JUDICIAL NOTICE OF THE MONEY VALUE HAVI NG GONE DOWN AND COST OF LITIGATION EXPENSES HAVING GONE UP AS WELL AS HUGE PENDENCY OF CASES, THE BOARD SHOULD EVOLVE A POLICY OF APPLYING THE CIRCUL AR EVEN TO THE OLD REFERENCES WHICH ARE STILL UNDIVIDED. THE DEPARTMEN T SHOULD NOT HAVE PROCEEDED WITH THE APPEALS / REFERENCES WHEREIN THE TAX IMPACT IS MINIMAL, IRRESPECTIVE OF THEIR DATE OF FILING. 21. 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 ARI SING OR WHERE THE ISSUE IS COVERED BY THE JUDGMENT OF TERRITORIAL HIG H COURT OR SUPREME COURT, THE TRIBUNAL WILL HAVE TO DECIDE THE APPEAL ON MERITS AND IN TERMS OF THE LAW DECLARED BY THE SUPREME COURT OR B Y THE TERRITORIAL HIGH COURT. HOWEVER, ON THIS GROUND THE MATTERS CA NNOT BE REMANDED TO THE TRIBUNAL DIRECTING THE TRIBUNAL TO DECIDE TH E SAME AFRESH. IF NO OBJECTIONS ARE RAISED BY THE DEPARTMENTAL REPRESENT ATIVE AT THE TIME OF HEARING OF THE APPEAL AGAINST THE APPLICABILITY OF THE CIRCULAR DESPITE THERE BEING AN EXCEPTION, THE DEPARTMENT HAS MISSED THE BUS AND SECOND INNING CANNOT BE GRANTED FOR THAT PURPOSE. HOWEVER, IN MATTERS WHERE SUCH OBJECTIONS ARE RAISED AND DESPITE THOSE OBJECTIONS OR WITHOUT DEALING WITH THOSE OBJECTIONS IF THE TRIBUN AL HAS DISMISSED 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 MOVE AN AP PROPRIATE APPLICATION BEFORE THE TRIBUNAL FOR DECIDING THE AP PEAL ON MERITS. 22. WE ARE OF THE VIEW THAT SIMPLY BECAUSE THE APPE AL IS FILED BY THE DEPARTMENT IN CONTRAVENTION OF THE CIRCULAR THE TRI BUNAL IS NOT BOUND TO DECIDE THE APPEAL ON MERITS. DUE WEIGHTAGE SHOULD INVARIABLY BE GIVEN BY THE TRIBUNAL TO THE CIRCULAR ISSUED BY THE BOARD . EVEN OTHERWISE, THE NEWLY INSERTED PROVISIONS CONTAINED IN SECTION 268A(4) MAKE IT OBLIGATORY FOR THE TRIBUNAL TO CONSIDER SUCH CIRCUL AR. IT IS NOT OPEN FOR ITA NO.2640/AHD/2006 & CO 30/AHD/2007 A.Y. 2003-04 ITO SKANTHA WD-4, MODASA V. SH. SUBHASHCHANDRA D SONI P AGE 3 THE DEPARTMENT TO CONTEND THAT CIRCULARS ARE INTERN AL MATTERS OF THE DEPARTMENT AND ASSESSEE CANNOT OBJECT TO FILING OF AN APPEAL ON THE BASIS OF SUCH CIRCULAR. IT IS TRUE THAT FILING OF AN APPEAL IS A STATUTORY RIGHT BUT IT CAN CERTAINLY BE REGULATED BY THE BOAR D BY ISSUANCE OF ORDERS, INSTRUCTIONS OR CIRCULARS. THIS WOULD NOT AMOUNT TO TAKING AWAY THE RIGHT OF FILING OF APPEAL OR THAT SUCH RIGHT IS PROHIBITED BY EXECUTIVE INSTRUCTIONS. SECTION 268A(1) OF THE ACT NOW RECOG NIZES SUCH RIGHT OF THE BOARD TO REGULATE THE FILING OF APPEAL OR APPLI CATION BEFORE THE TRIBUNAL OR THE COURT. IT IS ALSO TRUE THAT WHEN T HE HONBLE SUPREME COURT OR THE TERRITORIAL HIGH COURT HAVE DECLARED T HE LAW ON A QUESTION, IT IS NOT OPEN TO THE TRIBUNAL TO DIRECT THAT THE C IRCULAR ISSUED BY THE BOARD PRESCRIBING THE MONETARY LIMIT SHOULD BE GIVE N EFFECT TO AND NOT THE DECISION OF HONBLE SUPREME COURT OR THE TERRIT ORIAL HIGH COURT. IT IS, HOWEVER, EQUALLY TRUE THAT THE TRIBUNALS ATTEN TION MUST BE DRAWN BY THE DEPARTMENTAL REPRESENTATIVE TO SUCH DECISION OF THE HONBLE SUPREME COURT OR THE HIGH COURT. AN OBJECTION MUST BE RAISED BY THE DEPARTMENTAL REPRESENTATIVE. 23. CONSIDERING ALL THE AFORESAID ISSUES, WE DISMIS S ALL THESE TAX APPEALS RESERVING LIBERTY TO THE DEPARTMENT ONLY ON THOSE CASES TO APPLY TO THE TRIBUNAL TO DECIDE THE APPEAL ON MERIT S WHERE THE OBJECTIONS WERE RAISED BEFORE THE TRIBUNAL EITHER I N THE APPEAL MEMO OR AT THE TIME OF HEARING OF APPEAL RAISING A SPECI FIC CONTENTION THAT A PARTICULAR APPEAL IS COVERED BY AN EXCEPTION AND DE SPITE THIS OBJECTION THE TRIBUNAL HAS NOT DEALT WITH THE SAID CONTENTION AND DISMISSED THE APPEAL ON THE GROUND OF LOW TAX EFFECT. IT IS EXPEC TED FROM THE TRIBUNAL TO CONSIDER THIS BROAD PARAMETERS WHILE APPLYING TH E RELEVANT CIRCULAR TO THE FATS OF THE CASE AT THE TIME OF DECIDING APP EALS. 4. AT THE TIME OF HEARING BEFORE US, THE LD. DEPART MENTAL REPRESENTATIVE WAS SPECIFICALLY ASKED BY THE BENCH, WHETHER THIS APPEA L FALLS UNDER ANY OF THE EXCEPTIONS AS PROVIDED IN BOARDS INSTRUCTION NO.2/2005 DATED 24-10-2005, THE SUBJECT-MATTER OF THE APPEALS ARE COVERED BY ANY OF THE JUDGMENT OF JURISDICTIONAL HIGH COURT OR OF SUPREME COURT, ANY SUBSTANTIAL QUE STION OF LAW IS INVOLVED OR NOT. THE LD DR STATED THAT IN THIS APPEAL THE ISSUES ARE FACTUAL AND DOES NOT FALL IN ANY OF THE EXCEPTIONS AS PROVIDED BY BOARDS INSTRUCTION O R ANY OF THE CRITERIA LAID DOWN BY THE HONBLE HIGH COURT IN THE CASE OF CONCORD PHARMACEUTICALS (SUPRA). THE RELEVANT EXCEPTIONS AS PROVIDED IN BOARDS INSTRUCT ION 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 B THE DEPARTMENT ITA NO.2640/AHD/2006 & CO 30/AHD/2007 A.Y. 2003-04 ITO SKANTHA WD-4, MODASA V. SH. SUBHASHCHANDRA D SONI P AGE 4 (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. 5. 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. NOW COMING TO ASSESSEES CO NO.30/AHD/2007. 6. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE HAS N OT PRESSED THE CO. ACCORDINGLY, WE DISMISS THE CO OF ASSESSEE AS NOT P RESSED. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED AND TH AT OF CO OF ASSESSEE IS DISMISSED AS NOT PRESSED. ORDER PRONOUNCED IN OPEN COURT ON 28/08/2009 SD/- SD/- (D.C.AGRAWAL) (MAHAV IR SINGH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED : 28/08/2009 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-IX, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD