The ITO, Ward-5(4), Morbi V. Morbi Rashtriya Seva Mandal, Morbi

ITA 358/RJT/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0457 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 30-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C S ANJARIA
• Assessee Lawyers: DM RINDANI
• Keywords: Audit objection; Tax effect

Judgement Text

ITA NO. 358 /RJT/201 3 A SSESSMENT YEAR: 20 08 - 09 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (CONDUCTED THROUGH E - COURT AT AHMEDABAD) [CORAM: PRAMOD KUMAR AM AND KUL BHARAT JM ] ITA NO. 35 8 /RJT/201 3 ASST. YEAR 20 08 - 09 INCOME - TAX OFFICER, WD - 5(4) MORBI. ....... ... .. . ..... APPLICANT VS. MORBI RASHTRIYA SEVA MANDAL, VISIPARA, NEAR FOUR GODOWN, MORBI. ....... ..................RESPONDENT PAN AA ATM2918H APPEARANCES BY: C. S. ANJARIA .................. .. FOR THE A PPELLANT D. M. RINDANI ................. FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : DECEMBER 10 TH , 201 5 DATE OF PRONOUNCING THE ORDER : DECEMBER 23 RD , 2015 O R D E R PER PRAMOD KUMAR AM: 1. BY WAY OF THIS APPEAL, THE ASSESSING O FFICER HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 26 TH JULY 2013 PASSED BY THE CIT(A) FOR THE ASSESSMENT YEAR 2008 - 09 . THE SHORT GROUND RAISED IN THIS APPEAL IS THAT THE CIT(A) ERRED IN DELETING CERTAIN DISALLOWANCES AGGREGATING TO R S 11,61,370 (I.E. RS 6,58,783+ 3,50,000+ 1,52,532). THE TAX EFFECT OF THIS DEPARTMENT AL APPEAL IS THUS W E LL BELOW RS.10 LAKH S . 2. IT IS IN THIS LIGHT THAT WE NEED TO TAKE NOTE OF A RECENT DEVELOPMENT WITH RESPECT TO CBDT INSTRUCTIONS ON THE PENDING DEPARTMENTAL APPEALS BE FORE THE ITA NO. 358 /RJT/201 3 A SSESSMENT YEAR: 20 08 - 09 PAGE 2 OF 5 ITAT IN WHICH TAX EFFECT IS LESS THAN RS 10 LAKHS. T HE CENTRAL BOARD OF DIRECT TAXE HAS, VIDE CIRCULAR NO. 21/ 2015 DATED 10 TH DECEMBER 2015, INTER ALIA, ANNOUNCED THAT, SUBJECT TO CERTAIN EXCEPTIONS - WHICH ARE NOT RELEVANT IN THE PRESENT CONTEXT , HENCEFORTH, NO DEPARTMENTAL APPEALS WILL BE FILED AGAINST RELIEF GIVEN BY THE CIT(A), BEFORE THIS TRIBUNAL, UNLESS THE TAX EFFECT, EXCLUDING INTEREST, EXCEEDS RS 10,00,000. WHAT IS EVEN MORE IMPORTANT IS THAT NOT ONLY THAT SUCH A TAXPAYER FRIENDLY MEASU RE WILL BE IMPLEMENTED IN ALL FUTURE TAX LITIGATION, EVEN THE PENDING APPEALS, WHEREVER THE TAX INVOLVED IN THE APPEALS DOES NOT EXCEED RS 10,00,000, SHALL NOT BE PRESSED OR WITHDRAWN. IN EFFECT THUS, IRRESPECTIVE OF THE YEAR TO WHICH THE DEPARTMENTAL APP EAL BEFORE THE TRIBUNAL PERTAINS, AS LONG AS SUCH AN APPEAL IS PENDING BEFORE THE TRIBUNAL, THIS WILL BE A LEGAL NULLITY. THE RELEVANT EXTRACTS OF THE AFORESAID CIRCULAR ARE AS FOLLOWS: 3. HENCEFORTH, APPEALS/ SLPS SHALL NOT BE FILED IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER: S NO APPEALS IN INCOME - TAX MATTERS MONETARY LIMIT (IN RS) 1. BEFORE APPELLATE TRIBUNAL 10,00,000/ - 2. BEFORE HIGH COURT 20,00,000/ - 3. BEFORE SUPREME COURT 25,00,000/ - IT IS CLARIFIED THAT AN APPEAL SHOULD NOT BE FILED MERELY BECAUSE THE TAX EFFECT IN A CASE EXCEEDS THE MONETARY 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 DIFFERENCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HAVE BEEN CHARGEABLE HAD SUCH TOTAL INCOME 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 ). HOWEVER THE TAX WILL NOT INCLUDE ANY INTEREST THEREON, EXCEPT WHERE CHARGEABILITY OF INTEREST ITSELF IS IN DISPUTE. IN CASE THE CHARGEABILITY OF INTEREST IS THE ISSUE UNDER DISPUTE, THE AMOUNT OF INTEREST SHALL BE THE TAX EFFECT. IN CASES WHERE RETURNED LOSS IS REDUCED OR ASSESSED AS INCOME, THE TAX EFFECT WOULD INCLUDE NOTIONAL TAX ON DISPUTED ADDITIONS. IN CASE OF PENALTY ORDERS, THE TAX EFFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE ORDER TO BE APPEALED AGAINST. 5. THE ASSESSING OFFICER SHALL CALCULATE THE TAX EFFECT SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUES IN THE CASE OF EVERY ASSESSEE. LF, IN THE CASE OF AN ASSESSEE, THE DISPUTED ISSUES ARISE IN MORE THAN ONE ASSESSMENT YEAR, APPEAL, CAN BE FILED I N RESPECT OF SUCH ASSESSMENT YEAR ITA NO. 358 /RJT/201 3 A SSESSMENT YEAR: 20 08 - 09 PAGE 3 OF 5 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. IN OTHER WORDS, HENCEFORTH, APPEALS CAN BE FILED ONLY WITH REFERENCE 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, APPEAL SHALL BE FILED IN RESPECT OF ALL SUCH ASSESSMENT YEARS EVEN IF THE TAX EFFECT IS LESS THAN THE PRESCRIBED MONETARY LIMITS IN ANY OF THE YEAR(S), IF IT IS DECIDED TO FILE APPEAL IN RESPECT OF THE YEAR(S) IN WHICH TAX EFFECT EXCEEDS THE MONETARY LIMIT PRESCRIBED. IN CASE WHERE A COMPOSITE ORDER/ JUDGEMENT INVOLVES MORE THAN ONE ASSESSEE, EACH ASSESSEE SHALL BE DEALT WITH SEPARATELY. 3. SO FAR AS RETROSPECTIVE OPERATION O F THIS MEASURE IS CONCERNED, THE RELEVANT PORTION OF THE CBDT CIRCULAR IS AS FOLLOWS: 10. THIS INSTRUCTION WILL APPLY RETROSPECTIVELY TO PENDING APPEALS AND APPEALS TO BE FILED HENCEFORTH IN HIGH COURTS/ TRIBUNALS. PENDING APPEALS BELOW THE SPECIFIED TAX LIMITS IN PARA 3 ABOVE MAY BE WITHDRAWN/ NOT PRESSED........ 4. HAVING NOTED THAT THE ABOVE, IT IS ALSO IMPORTANT TO NOTE SUCH A DISMISSAL OF APPEAL SHALL NOT ACT TO THE PREJUDICE OF THE REVENUE AUTHORITIES TO RAISE THE SAME ISSUE, IN THE CASE OF THE RELE VANT ASSESSEE OR ANY OTHER ASSESSEE, AS AND WHEN THE TAX EFFECT INVOLVED IN SUCH LITIGATION CROSSES THE THRESHOLD LIMIT FOR THAT ASSESSMENT YEAR. THE RELEVANT PARAGRAPHS OF THE CBDT CIRCULAR, FOR READY REFERENCE, ARE AS FOLLOWS: 6. IN A CASE WHERE APPEAL B EFORE A TRIBUNAL OR A COURT IS NOT FILED ONLY ON ACCOUNT OF THE TAX EFFECT BEING LESS THAN THE MONETARY LIMIT SPECIFIED ABOVE, THE COMMISSIONER OF INCOME - TAX SHALL SPECIFICALLY RECORD THAT EVEN THOUGH THE DECISION IS NOT ACCEPTABLE, APPEAL IS NOT BEING FI LED ONLY ON THE CONSIDERATION THAT THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIED IN THIS INSTRUCTION . 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 FILING AN APPEAL AGAINST THE DISPUTED ISSUES IN THE CASE OF THE SAME ASSESSEE FOR ANY OTHER ASSESSMENT YEAR, OR IN THE CASE OF ANY OTHER ASSESSEE FOR THE SAME OR ANY OTHER ASSESSMENT YEAR, IF THE TAX EFFEC T EXCEEDS THE SPECIFIED MONETARY LIMITS. 7. IN THE PAST, A NUMBER OF INSTANCES HAVE COME TO THE NOTICE OF THE BOARD, WHEREBY AN ASSESSEE HAS CLAIMED RELIEF FROM THE TRIBUNAL OR THE COURT ONLY ON THE GROUND ITA NO. 358 /RJT/201 3 A SSESSMENT YEAR: 20 08 - 09 PAGE 4 OF 5 THAT THE DEPARTMENT HAS IMPLICITLY ACCEPTED THE DE CISION OF THE TRIBUNAL OR COURT IN THE CASE OF THE ASSESSEE FOR ANY OTHER ASSESSMENT YEAR OR IN THE CASE OF ANY OTHER ASSESSEE 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 APPEAL IN SUCH CASES WAS NOT FILED OR NOT ADMITTED ONLY FOR THE REASON OF THE TAX EFFECT BEING LESS THAN THE SPECIFIED MONETARY LIMIT AND, THEREFORE, NO INFERENCE SHOULD BE DRAWN THAT THE DECISIONS RENDERED THEREIN WERE ACCEPTABLE TO THE DEPARTMENT. ACCORDINGLY, THEY SHOULD IMPRESS UPON THE TRIBUNAL OR THE COURT THAT SUCH CASES DO NOT HAVE ANY PRECEDENT VALUE. AS THE EVIDENCE OF NOT FILING APPEAL DUE TO THIS INSTRUC TION MAY HAVE TO BE PRODUCED IN COURTS, THE JUDICIAL FOLDERS IN THE OFFICE OF CSIT MUST BE MAINTAINED IN A SYSTEMIC MANNER FOR EASY RETRIEVAL 5. WE MAY FURTHER NOTE THAT THE EXCEPTIONS TO THE CASES COVERED BY THE AFORESAID CIRCULAR ARE SET OUT IN PARAGRAP H 8 OF THE CIRCULAR AS FOLLOWS; 8. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING ISSUES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EFFECT ENTAILED IS LESS THAN THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE OR THERE IS NO TAX EFFECT: (A) WH ERE THE CONSTITUTIONAL VALIDITY OF THE PROVISIONS OF AN ACT OR RULE ARE UNDER CHALLENGE, OR (B) WHERE BOARD S ORDER, NOTIFICATION, INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES, OR (C) WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS BE EN ACCEPTED BY THE DEPARTMENT, OR (D) WHERE THE ADDITION RELATES TO UNDISCLOSED FOREIGN ASSETS/ BANK ACCOUNTS. 6. IN VIEW OF THE ABOVE CBDT CIRCULAR, WHICH IS BINDING ON ALL THE FIELD OFFICERS INCLUDING THE APPELLANT BEFORE US, THE APPEAL BEFORE ME IS LIABLE TO BE DISMISSED AS WITHDRAWN. ITA NO. 358 /RJT/201 3 A SSESSMENT YEAR: 20 08 - 09 PAGE 5 OF 5 7. IN ANY EVENT, EVEN ON MERITS, THE ISSUE IN APPEAL IS COVERED BY AN ORDER OF THIS TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEA R 2006 - 07 BUT THAT ASPECT OF THE MATTER, GIVEN OUR ABOVE DECISION, IS PUR ELY ACADEMIC. 8. AS THE APPEAL IS DISMISSED AS WITHDRAWN, FOR THE REASONS SET OUT ABOVE, WE SEE NO REASONS TO DEAL WITH THE LEGAL CONTENTIONS CANVASSED BEFORE US . 9. IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT TODAY ON 23 RD DAY OF DECEMBER, 2015. SD/ - SD/ - KUL BHARAT PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AH MEDABAD , THE 23 RD DAY OF DECEMBER , 2015 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT