D.CI.T , CENTRAL CIRCLE - II, JALANDHAR V. SH. SUBASH GANDHI , JALANDHAR

ITA 351/ASR/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1007 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-11-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 02-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARVINDER KAUR
• Keywords: Audit objection; Tax effect
• Section: 115JB; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. N. K. SAINI, HONBLE VICE PRESIDENT AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER ITA NO. 351/ASR./2017 : ASSTT. YEAR : 2008-09 DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-II, JALANDHAR VS SH. SUBHASH GANDHI, PROP. K. C. RESTAURANT & HOTEL BANGA ROAD, NAWANSHAHR (APPELLANT) (RESPONDENT) PAN NO. AFAPG0076R ASSESSEE BY : NONE REVENUE BY : SMT. PARVI NDER KAUR, CIT DR DATE OF HEARING : 29.11.2018 DATE OF PRONOUNCEMENT : 29.11.2018 ORDER PER N. K. SAINI, VICE PRESIDENT: THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORD ER DATED 30.03.2017 OF LD. CIT(A)-5, LUDHIANA. 2. NOBODY WAS PRESENT ON BEHALF OF THE ASSESSEE NOR AN ADJOURNMENT WAS SOUGHT. WE, THEREFORE, PROCEEDED EX -PARTE QUA THE ASSESSEE. IT IS NOTICED THAT THE TAX EFFECT IN THIS APPEAL IS LESS THAN RS.20,00,000/-. 3. THE LD. DR, SUBMITTED THAT THE LD. CIT(A) DECIDE D THE LEGAL ISSUE, THE CASE WAS NOT DECIDED ON MERIT AND THAT C IRCULAR NO.3/2018 IS NOT A BLANKET BAR ON FILING OF APPEALS BEFORE ITAT AND PARA 10 DETAILS THE EXCEPTIONS TO FILE THE APPEAL W HERE TAX EFFECT IS LESS THAN RS.20 LACS AND ALSO CLARIFIES THAT IN CAS ES WHERE TAX EFFECT ITA NO. 351/ASR./2017 SUBHASH GAN DHI 2 IS LESS THAN RS.20 LAKHS AND THAT WHERE TAX EFFECT CANNOT BE QUANTIFIED AS IN THE CASE OF REGISTRATION U/S 12AA, THE MONETARY LIMIT WOULD NOT BE APPLICABLE. IT WAS FURTHER SUBM ITTED THAT THE AFORESAID CIRCULAR NO.3/18 HAS BEEN AMENDED VIDE LE TTER F.NO.279/MISC.142/2007-ITJ(PT) DATED 20 TH JULY, 2018 AS UNDER:- (A) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVIS IONS OF AN ACT OR RULE IS UNDER CHALLENGE, OR (B) WHERE BOARDS ORDER, NOTIFICATION, INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES , OR (C) WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS B EEN ACCEPTED BY THE DEPARTMENT, OR (D) WHERE ADDITION RELATES TO UNDISCLOSED FOREIGN INCOME/UNDISCLOSED FOREIGN ASSETS INCLUDING FINANCI AL ASSETS/UNDISCLOSED FOREIGN BANK ACCOUNT. (E) WHERE ADDITION IS BASED ON INFORMATION RECEIVE D FROM EXTERNAL SOURCES IN THE NATURE OF LAW ENFORCEM ENT AGENCIES SUCH AS CBI/ED/DRI/SFIO/DIRECTORATE GENERA L OF GST INTELLIGENCE (DGGI). (F) CASES WHERE PROSECUTION HAS BEEN FILED BY THE DEPARTMENT AND IS PENDING IN THE COURT. 4. AFTER CONSIDERING THE SUBMISSIONS OF THE LD. D.R . AND THE MATERIAL ON RECORD. IN OUR OPINION, THE AMENDED CIR CULAR IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE, IN THE SAID AMENDED CIRCULAR NOWHERE IT IS MENTIONED THAT THE ISSUE DEC IDED BY THE FIRST APPELLATE AUTHORITY ON LEGAL ISSUE WHERE MONETARY L IMIT IS LESS THAN RS.20 LACS IS NOT COVERED BY THE ORIGINAL CIRC ULAR NO.3/18 DATED 11.07.2018, VIDE WHICH THE CBDT HAS REVISED T HE MONETARY LIMIT TO RS.20,00,000/- FOR NOT FILING THE APPEAL BEFORE THE TRIBUNAL, THE SAID CIRCULAR READS AS UNDER: SUBJECT: REVISION OF MONETARY LIMITS FOR FILING OF APPEALS BY THE DEPARTMENT BEFORE INCOME TAX APPELLATE TRIBU NAL, ITA NO. 351/ASR./2017 SUBHASH GAN DHI 3 HIGH COURTS AND SLPS/APPEALS BEFORE SUPREME COURT- MEASURES FOR REDUCING LITIGATION-REG. REFERENCE IS INVITED TO BOARDS CIRCULAR NO. 21 OF 2015 DATED 10.12.2015 WHEREIN MONETARY LIMITS AND OTHER CONDITIONS FOR FILING DEPARTMENTAL APPEALS (IN INCO ME-TAX MATTERS) BEFORE INCOME TAX APPELLATE TRIBUNAL, HIGH COURTS AND SLPS/ APPEALS BEFORE SUPREME COURT WERE SPECIFIED. 2. IN SUPERSESSION OF THE ABOVE CIRCULAR, IT HAS BE EN DECIDED BY THE BOARD THAT DEPARTMENTAL APPEALS MAY BE FILED ON MERITS BEFORE INCOME TAX APPELLATE TRIBUNA L AND HIGH COURTS AND SLPS/ APPEALS BEFORE SUPREME COURT KEEPING IN VIEW THE MONETARY LIMITS AND CONDITIONS SPECIFIED BELOW. 3. HENCEFORTH, APPEALS/ SLPS SHALL NOT BE FILED IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY L IMITS GIVEN HEREUNDER: S NO APPEALS/SLPS IN INCOME-TAX MATTERS MONETARY LIMIT (IN RS) 1 BEFORE APPELLATE TRIBUNAL 20,00,000/- 2 BEFORE HIGH COURT 50,00,000/- 3 BEFORE SUPREME COURT 1,00,00,000/- IT IS CLARIFIED THAT AN APPEAL SHOULD NOT BE FILED MERELY BECAUSE THE TAX EFFECT IN A CASE EXCEEDS THE MONETA RY LIMITS PRESCRIBED ABOVE. FILING OF APPEAL IN SUCH CASES IS TO BE DECIDED ON MERITS OF THE CASE. 4. FOR THIS PURPOSE, TAX EFFECT MEANS THE DIFFERE NCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND TH E TAX THAT WOULD HAVE BEEN CHARGEABLE HAD SUCH TOTAL INCO ME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF THE ISSUES AGAINST WHICH APPEAL IS INTENDED TO BE FILED (HEREINAFTER REFERRED TO AS DISPUTED ISSUES). FURT HER, TAX EFFECT SHALL BE TAX INCLUDING APPLICABLE SURCHARGE AND ITA NO. 351/ASR./2017 SUBHASH GAN DHI 4 CESS. HOWEVER, THE TAX WILL NOT INCLUDE ANY INTERES T THEREON, EXCEPT WHERE CHARGEABILITY OF INTEREST ITSELF IS IN DISPUTE. IN CASE THE CHARGEABILITY OF INTEREST IS THE ISSUE UND ER DISPUTE, THE AMOUNT OF INTEREST SHALL BE THE TAX EFFECT. IN CASES WHERE RETURNED LOSS IS REDUCED OR ASSESSED AS INCOM E, THE TAX EFFECT WOULD INCLUDE NOTIONAL TAX ON DISPUTED A DDITIONS. IN CASE OF PENALTY ORDERS, THE TAX EFFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE ORDER TO BE AP PEALED AGAINST. 5. THE ASSESSING OFFICER SHALL CALCULATE THE TAX EF FECT 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 T HAN 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 S PECIFIED IN PARA 3. NO APPEAL SHALL BE FILED IN RESPECT OF A N ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIED IN PARA 3. IN OTHER WO RDS, 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 ISSUES IN MORE THAN ONE ASSESSMENT YEAR, APPEALS SHALL BE FILED IN RESPECT OF ALL SUCH ASSES SMENT YEARS EVEN IF THE TAX EFFECT IS LESS THAN THE PRESC RIBED MONETARY LIMITS IN ANY OF THE YEAR(S), IF IT IS DEC IDED TO FILE APPEAL IN RESPECT OF THE YEAR(S) IN WHICH TAX EFFEC T EXCEEDS THE MONETARY LIMIT PRESCRIBED. IN CASE WHERE A COMP OSITE ORDER/JUDGEMENT INVOLVES MORE THAN ONE ASSESSEE, EA CH ASSESSEE SHALL BE DEALT WITH SEPARATELY. 6. FURTHER, WHERE INCOME IS COMPUTED UNDER THE PROV ISIONS OF SECTION 115JB OR SECTION 115JC, FOR THE PURPOSES OF DETERMINATION OF TAX EFFECT, TAX ON THE TOTAL INC OME ASSESSED SHALL BE COMPUTED AS PER THE FOLLOWING FOR MULA- (A B) + (C D) WHERE, ITA NO. 351/ASR./2017 SUBHASH GAN DHI 5 A = THE TOTAL INCOME ASSESSED AS PER THE PROVISIONS OTHER THAN THE PROVISIONS CONTAINED IN SECTION 115JB OR S ECTION 115JC (HEREIN CALLED GENERAL PROVISIONS); B = THE TOTAL INCOME THAT WOULD HAVE BEEN CHARGEABL E HAD THE TOTAL INCOME ASSESSED AS PER THE GENERAL PROVISIONS BEEN REDUCED BY THE AMOUNT OF THE DISPUT ED ISSUES UNDER GENERAL PROVISIONS; C = THE TOTAL INCOME ASSESSED AS PER THE PROVISIONS CONTAINED IN SECTION 115JB OR SECTION 115JC; D = THE TOTAL INCOME THAT WOULD HAVE BEEN CHARGEABL E HAD THE TOTAL INCOME ASSESSED AS PER THE PROVISIONS CONTAINED IN SECTION 115JB OR SECTION 1I5JCWAS REDU CED BY THE AMOUNT OF DISPUTED ISSUES UNDER THE SAID PROVISIONS: HOWEVER, WHERE THE AMOUNT OF DISPUTED ISSUES IS CON SIDERED BOTH UNDER THE PROVISIONS CONTAINED IN SECTION 115J B OR SECTION 115JC AND UNDER GENERAL PROVISIONS, SUCH AM OUNT SHALL NOT BE REDUCED FROM TOTAL INCOME ASSESSED WHI LE DETERMINING THE AMOUNT UNDER ITEM D. 7. IN A CASE WHERE APPEAL BEFORE A TRIBUNAL OR A C OURT IS NOT FILED ONLY ON ACCOUNT OF THE TAX EFFECT BEING L ESS THAN THE MONETARY LIMIT SPECIFIED ABOVE, THE PR. COMMISS IONER OF INCOME-TAX/ COMMISSIONER OF INCOME TAX SHALL SPECIF ICALLY RECORD THAT EVEN THOUGH THE DECISION IS NOT ACCEPT ABLE, APPEAL IS NOT BEING FILED ONLY ON THE CONSIDERATION THAT THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIE D IN THIS CIRCULAR. FURTHER, IN SUCH CASES, THERE WILL BE NO PRESUMPTION THAT THE INCOME-TAX DEPARTMENT HAS ACQUIESCED IN THE DECISION ON THE DISPUTED ISSUES. THE INCOME-TAX DEPARTMENT SHALL NOT BE PRECLUDED FROM F ILING AN APPEAL AGAINST THE DISPUTED ISSUES IN THE CASE O F THE SAME ASSESSEE FOR ANY OTHER ASSESSMENT YEAR, OR IN THE CASE OF ANY OTHER ASSESSEE FOR THE SAME OR ANY OTHER ASS ESSMENT YEAR, IF THE TAX EFFECT EXCEEDS THE SPECIFIED MONET ARY LIMITS. ITA NO. 351/ASR./2017 SUBHASH GAN DHI 6 8. IN THE PAST, A NUMBER OF INSTANCES HAVE COME TO THE NOTICE OF THE BOARD, WHEREBY AN ASSESSEE HAS CLAIME D RELIEF FROM THE TRIBUNAL OR THE COURT ONLY ON THE GROUND T HAT THE DEPARTMENT HAS IMPLICITLY ACCEPTED THE DECISION OF THE TRIBUNAL OR COURT IN THE CASE OF THE ASSESSEE FOR A NY 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 THE TRIBUNAL OR THE COURT THAT THE AP PEAL IN SUCH CASES WAS NOT FILED OR NOT ADMITTED ONLY FOR T HE REASON OF THE TAX EFFECT BEING LESS THAN THE SPECIFIED MON ETARY LIMIT AND, THEREFORE, NO INFERENCE SHOULD BE DRAWN THAT T HE DECISIONS RENDERED THEREIN WERE ACCEPTABLE TO THE DEPARTMENT. ACCORDINGLY, THEY SHOULD IMPRESS UPON T HE TRIBUNAL OR THE COURT THAT SUCH CASES DO NOT HAVE A NY PRECEDENT VALUE AND ALSO BRING TO THE NOTICE OF THE TRIBUNAL/ COURT THE PROVISIONS OF SUB SECTION (4) O F SECTION 268A OF THE INCOME-TAX ACT, 1961 WHICH READ AS UNDE R : (4) THE APPELLATE TRIBUNAL OR COURT, HEARING SUCH APPEAL OR REFERENCE, SHALL HAVE REGARD TO THE ORDER S, INSTRUCTIONS OR DIRECTIONS ISSUED UNDER SUB-SECTION (1) AND THE CIRCUMSTANCES UNDER WHICH SUCH APPEAL OR APPLICATION FOR REFERENCE WAS FILED OR NOT FILED IN RESPECT OF ANY CASE. 9. AS THE EVIDENCE OF NOT FILING APPEAL DUE TO THI S CIRCULAR MAY HAVE TO BE PRODUCED IN COURTS, THE JUDICIAL FOL DERS IN THE OFFICE OF PR. CSIT/CSIT MUST BE MAINTAINED IN A SYSTEMIC MANNER FOR EASY RETRIEVAL. 10. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING ISS UES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EFFECT ENTAILED IS LESS THAN THE MONETARY LIMITS SP ECIFIED IN PARA 3 ABOVE OR THERE IS NO TAX EFFECT: (A) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVIS IONS OF AN ACT OR RULE IS UNDER CHALLENGE, OR ITA NO. 351/ASR./2017 SUBHASH GAN DHI 7 (B) WHERE BOARDS ORDER, NOTIFICATION, INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA FIRES , OR (C) WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS B EEN ACCEPTED BY THE DEPARTMENT, OR (D) WHERE THE ADDITION RELATES TO UNDISCLOSED FOREI GN ASSETS/ BANK ACCOUNTS. 11. THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE S HALL NOT APPLY TO WRIT MATTERS AND DIRECT TAX MATTERS OTHER THAN INCOME TAX. FILING OF APPEALS IN OTHER DIRECT TAX M ATTERS SHALL CONTINUE TO BE GOVERNED BY RELEVANT PROVISION S OF STATUTE AND RULES. FURTHER, IN CASES WHERE THE TAX EFFECT IS NOT QUANTIFIABLE OR NOT INVOLVED, SUCH AS THE CASE OF REGISTRATION OF TRUSTS OR INSTITUTIONS UNDER SECTIO N 12A/ 12AA OF THE IT ACT, 1961 ETC., FILING OF APPEAL SHA LL NOT BE GOVERNED BY THE LIMITS SPECIFIED IN PARA 3 ABOVE AN D DECISION TO FILE APPEALS IN SUCH CASES MAY BE TAKEN ON MERITS OF A PARTICULAR CASE. 12. IT IS CLARIFIED THAT THE MONETARY LIMIT OF RS. 20 LAKHS FOR FILING APPEALS BEFORE THE ITAT WOULD APPLY EQUALLY TO CROSS OBJECTIONS UNDER SECTION 253(4) OF THE ACT. CROSS O BJECTIONS BELOW THIS MONETARY LIMIT, ALREADY FILED, SHOULD BE PURSUED FOR DISMISSAL AS WITHDRAWN/ NOT PRESSED. FILING OF CROSS OBJECTIONS BELOW THE MONETARY LIMIT MAY NOT BE CONS IDERED HENCEFORTH. SIMILARLY, REFERENCES TO HIGH COURTS AN D SLPS/ APPEALS BEFORE SUPREME COURT BELOW THE MONETARY LIM IT OF RS. 50 LAKHS AND RS. 1 CRORE RESPECTIVELY SHOULD BE PURSUED FOR DISMISSAL AS WITHDRAWN/ NOT PRESSED. REFERENCES BEFORE HIGH COURT AND SLPS/ APPEALS BELOW THESE LIMITS MAY NOT BE CONSIDERED HENCEFORTH. 13. THIS CIRCULAR WILL APPLY TO SLPS/ APPEALS/ CRO SS OBJECTIONS/ REFERENCES TO BE FILED HENCEFORTH IN SC/HCS/TRIBUNAL AND IT SHALL ALSO APPLY RETROSPECTI VELY TO PENDING SLPS/ APPEALS/ CROSS OBJECTIONS/REFERENCES. PENDING APPEALS BELOW THE SPECIFIED TAX LIMITS IN P ARE 3 ABOVE MAY BE WITHDRAWN/ NOT PRESSED. ITA NO. 351/ASR./2017 SUBHASH GAN DHI 8 14. THE ABOVE MAY BE BROUGHT TO THE NOTICE OF ALL CONCERNED. 15. THIS ISSUES UNDER SECTION 268A OF THE INCOME-TA X ACT 1961. 5. FROM CLAUSE 12 & 13 OF THE ABOVE SAID CIRCULAR I T IS CLEAR THAT THESE INSTRUCTIONS ARE APPLICABLE TO THE PENDING AP PEALS ALSO AND AS PER CLAUSE 13, THERE IS CLEAR CUT INSTRUCTION TO TH E DEPARTMENT TO WITHDRAW OR NOT TO PRESS THE APPEALS FILED BEFORE T HE ITAT WHEREIN TAX EFFECT IS LESS THAN RS.20,00,000/-. THESE INSTR UCTIONS ARE OPERATIVE RETROSPECTIVELY TO THE PENDING APPEALS. 6. KEEPING IN VIEW THE CBDT CIRCULAR NO. 3 OF 2018 DATED 11.07.2018, WE ARE OF THE VIEW THAT THE REVENUE SHO ULD NOT HAVE FILED THE INSTANT APPEAL BEFORE THE TRIBUNAL AND AC CORDINGLY DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS D ISMISSED. (ORDER PRONOUNCED IN THE COURT ON 29/11/2018) SD/- SD/- (N. K. CHOUDHRY) (N. K. SAINI) JUDICIAL MEMBER VICE PRESIDENT DATED: 29/11/2018 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR