Assistant Commissioner of Income-tax, V. M/s. Ekvira Coats, Nashik

ITA 370/PUN/2014

• Counselvise Citation: 37024514 RSA 2014
• Duration Of Justice: 1 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 27-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law; Tax effect
• Section: 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.370/PN/2014 ASSESSMENT YEAR: 2005-06 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE -1, NASHIK . APPELLANT VS. M/S. EKVIRA COATS, W-109A, MIDC, AMBAD, NASHIK - 422010 . RESPONDENT PAN: AABFE0874B APPELLANT BY : SHRI RAJESH DAMOR RESPONDENT BY : SHRI BHADRESH DOSHI DATE OF HEARING : 31-03-2015 DATE OF PRONOUNCEMENT : 31-03-2015 ORDER PER SUSHMA CHOWLA, JM: THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF CIT(A)-I, NASHIK, DATED 26.12.2013 RELATING TO ASSESSMENT YEAR 2005-0 6 AGAINST PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 . 2. AT THE OUTSET OF HEARING, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE APPEAL FILED BY THE R EVENUE IS NOT MAINTAINABLE AS THE TAX EFFECT IN THE APPEAL WAS LESS THAN RS.4 LAK HS. 3. ON THE PERUSAL OF THE RECORD, WE FIND THAT THE P RESENT APPEAL IS FILED BY THE REVENUE AND THE TOTAL TAX EFFECT IN THE PRESENT APP EAL IS BELOW RS.4 LAKHS. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE FAIRLY ADMITTED THAT THE TAX EFFECT IN THE PRESENT APPEAL WAS LESS THAN RS.4 LAK HS. 4. WE FIND THAT THE ISSUE IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SMT. ITA NO.370/PN/2014 M/S. EKVIRA COATS 2 VIJAYA V. KAVEKAR REPORTED IN (2013) 350 ITR 237 (B OM) THAT THE PROPOSITION REGARDING THE CIRCULARS ISSUED BY THE CBDT ARE NOT ONLY APPLICABLE TO THE NEW CASES BUT WOULD ALSO APPLICABLE TO THE PENDING APPE ALS. 5. UNDER THE PROVISIONS OF SECTION 268(1) OF THE AC T, THE CBDT IS EMPOWERED TO ISSUE INSTRUCTIONS FIXING THE MONETARY LIMITS FO R THE REVENUE TO FILE APPEALS BEFORE THE TRIBUNAL, ALL THE HIGH COURTS AND THE SU PREME COURT. THE CBDT FROM TIME TO TIME, ISSUES INSTRUCTIONS FIXING THE MONETA RY LIMITS WITH THE OBJECT OF NOT BURDENING THE COURTS AND THE TRIBUNAL WITH MATTERS WHERE THE TAX EFFECT WAS ON A LOWER SIDE. THE CBDT VIDE INSTRUCTION NO.5 OF 2014 ISSUED ON 10.07.2014 HAD REVISED THE EARLIER INSTRUCTION NO.3 OF 2011, DATED 09.02.2011 WHEREIN, THE MONETARY LIMITS AND OTHER CONDITIONS FOR FILING THE DEPARTMENTAL APPEALS IN INCOME TAX MATTERS BEFORE THE APPELLATE TRIBUNALS, HIGH COURTS AND SUPREME COURT WERE SPECIFIED. THE INSTRUCTIONS ISSUED ON 1 0.07.2014 WERE IN SUPERSESSION OF THE EARLIER INSTRUCTIONS AND THE MO NETARY LIMITS HAVE BEEN ENHANCED BY THE PRESENT INSTRUCTION AND IT HAS BEEN PROVIDED THAT THE APPEALS SHALL NOT BE FILED IN CASES WHERE THE TAX EFFECT DO ES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER:- S NO APPEALS IN INCOME-TAX MATTERS MONETARY LIMIT ( IN RS) 1. BEFORE APPELLATE TRIBUNAL 4,00,000/- 2. U/S 260A BEFORE HIGH COURT 10,00,000/- 3. BEFORE SUPREME COURT 25,00,000/- 6. THE REVISED MONETARY LIMIT FOR FILING THE APPEAL S BEFORE THE APPELLATE TRIBUNAL WAS FIXED AT IN EXCESS OF RS.4 LACS. FURT HER, UNDER THE SAID INSTRUCTION, IT WAS ALSO DIRECTED THAT THE ASSESSING OFFICER SHA LL CALCULATE THE TAX EFFECT SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUES. IN CASE OF EVERY ASSESSEE WHERE, THE DISPUTED ISSUE ARISES IN MORE THAN ONE ASSESSMENT YEAR, IT WAS DIRECTED THAT APPEAL COULD BE FILED IN RESPECT OF SUCH ASSESSMENT YEAR OR YEARS IN WHICH, THE TAX EFFECT I N RESPECT OF THE DISPUTED ISSUE EXCEEDED THE MONETARY LIMIT FIXED. IN OTHER WORDS AND HENCEFORTH, THE APPEALS ITA NO.370/PN/2014 M/S. EKVIRA COATS 3 CAN BE FILED ONLY WITH REFERENCE TO THE TAX EFFECT IN THE RELEVANT ASSESSMENT YEAR. IN CASE OF COMPOSITE ORDER OF ANY HIGH COURT OR APP ELLATE AUTHORITY, IT WAS FURTHER CLARIFIED THAT IF THE APPEAL IS TO BE FILED IN RESP ECT OF THE YEAR/S IN WHICH, TAX EFFECT EXCEEDS THE MONETARY LIMIT PRESCRIBED THEN, SUCH AP PEALS COULD ALSO BE FILED IN RESPECT OF ALL SUCH ASSESSMENT YEARS EVEN IF THE TA X EFFECT IS LESS THAN PRESCRIBED MONETARY LIMITS. 7. IN THE FACTS OF THE PRESENT CASE, THE REVENUE HA D FILED THE APPEAL ON 27.02.2014. ADMITTEDLY, IN THE YEAR UNDER APPEAL, THE TAX EFFECT IS LESS THAN RS.4 LACS AS PRESCRIBED IN INSTRUCTION NO.5 OF 2014 ISSU ED BY THE CBDT. AT THE TIME OF HEARING OF THE APPEAL, THE MONETARY LIMITS PRESCRIB ED BY THE CBDT STAND REVISED BY THE SAID INSTRUCTION NO.5 OF 2014, DATED 10.07.2 014 UNDER WHICH, IT HAS BEEN PROVIDED THAT WHERE THE TAX EFFECT DOES NOT EXCEED RS.4 LACS IN ANY OF THE ASSESSMENT YEAR THEN, NO APPEAL CAN BE FILED BEFORE THE APPELLATE TRIBUNAL. THE ISSUE ARISING BEFORE US IS WHETHER THE SAID REVISED INSTRUCTIONS WHICH WERE ISSUED SUBSEQUENT TO THE FILING OF THE APPEAL BY THE REVEN UE COULD BE APPLIED TO THE PENDING APPEAL OR APPLICABLE ONLY TO THE NEW CASES TO BE FILED BY THE REVENUE AFTER THE DATE OF ISSUE OF THE INSTRUCTIONS. 8. WE FIND THAT THE SAID ISSUE HAS BEEN CONSIDERED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SMT. VIJAYA V. KA VEKAR (SUPRA). THE HONBLE HIGH COURT IN THE CASE OF CIT VS. SMT. VIJAYA V. KA VEKAR (SUPRA), HAD IN TURN FOLLOWED THE RATIO LAID DOWN BY ANOTHER DIVISION OF BOMBAY HIGH COURT IN THE CASE OF CIT VS. POLYCOTT CORPORATION REPORTED IN (2 009) 318 ITR 144 (BOM) WHEREIN, IT WAS HELD AS UNDER:- 8. IN CASE OF 'COMMISSIONER OF INCOME TAX V/S POLY COTT CORPORATION' REPORTED AT '(2009) 318 ITR 144 (BOM), A ANOTHER DI VISION BENCH OF THIS COURT CONSTRUED THE SAME INSTRUCTION NO. 2 OF 2005, DATED 24TH OCTOBER, 2005. THE DIVISION BENCH OBSERVED WHILE CONSTRUING THE PARAGRAPH NO. 5 OF THE CIRCULAR, AS THUS : '9. HAVING CONSIDERED THE CONTENTIONS, IN OUR OPINI ON, THE INSTRUCTIONS CANNOT BE INTERPRETED AS A STATUTE THO UGH IT IS PURSUANT TO THE POWER CONFERRED UNDER SECTION 268A OF THE IT ACT. WHAT THE COURT HAS TO CONSIDER IS THE PLAIN LANGUAGE OF THE PARA AND THE ITA NO.370/PN/2014 M/S. EKVIRA COATS 4 OBJECT BEHIND THE SAID PROVISIONS. THE OBJECT APPEA RS TO BE NOT TO BURDEN COURTS AND TRIBUNALS IN RESPECT OF MATTERS W HERE THE TAX EFFECT IS LESS THAN THE LIMIT PRESCRIBED. EVEN BEFO RE THIS INSTRUCTION, CBDT HAS BEEN ISSUING INSTRUCTIONS, THE LAST ONE BE ING ON 24TH OCT., 2005 WHERE THE MONETARY LIMIT HAS BEEN FIXED. IN THOSE INSTRUCTIONS THE ONLY EXCEPTION HAD BEEN THAT IN CA SES INVOLVING, SUBSTANTIAL QUESTION OF LAW OF IMPORTANCE AS WELL A S IN CASES WHERE THE SAME QUESTION OF LAW WILL REPEATEDLY ARISE, EIT HER IN THE CASE CONCERNED OR IN SIMILAR CASE, APPEAL SHOULD BE FILE D WITHOUT BEING HINDERED BY THE MONETARY LIMITS. THE PRESENT INSTRU CTIONS SEEM EVEN TO LIMIT THE ISSUES INSOFAR AS THE SAME QUESTI ON OF LAW OR RECURRING ISSUE EXCEPT TO THE EXTENT PROVIDED IN PA RA 5. ON A PROPER READING OF PARA 5 OF THE INSTRUCTIONS I T WOULD BE CLEAR THAT A DUTY IS CAST ON THE AO THAT EVEN IF THE DISP UTED QUESTIONS ARISE FOR MORE THAN ONE ASSESSMENT YEAR THEN AN APP EAL SHOULD BE FILED ONLY IN RESPECT OF THOSE YEARS WHERE THE MONE TARY LIMIT AS SPECIFIED IN PARA 3 OF THE INSTRUCTION. THE EXCEPT ION, HOWEVER, IS CARVED OUT IN RESPECT OF A COMPOSITE ORDER OF THE H IGH COURT OR APPELLATE AUTHORITY. IN OTHER WORDS WHERE THE HIGH COURT OR TRIBUNAL HAS PASSED A COMPOSITE ORDER IN RESPECT OF THE SAME ASSESSEE ON THE SAME QUESTION AND/OR ON DIFFERENT QUESTION AND FOR ONE OF THE ASSESSMENT YEARS, THE TAX EFFECT IS MORE THAN THE M ONETARY LIMIT THEN THE APPEAL SHALL ALSO BE FILED IN RESPECT OF A LL THE ASSESSMENT YEARS. THE SUBMISSION ON BEHALF OF THE ASSESSEE IS THAT THE COMPOSITE ORDER MUST RELATE TO A COMMON ISSUE. WE B EG TO DISAGREE ON A PLAIN AND LITERAL CONSTRUCTION OF THE INSTRUCTION. THE EXPRESSION 'WHICH INVOLVES MORE THAN ONE YEAR' WOUL D HAVE NO MEANING IF IT WAS RESTRICTED ONLY TO THE EXPRESSION 'COMMON ISSUES'. THE EXPRESSION, THEREFORE, OF A COMPOSITE ORDER WILL HAVE TO BE READ TO MEAN AN ORDER IN RESPECT OF THE SAME ASSESSEE FOR MORE THAN ONE YEAR. AN (ORDER) DISPOSING OF SEVERAL APPEALS ON A COMMON QUESTION OF LAW BY APPELLATE AUTHORITY, CANN OT BE SAID TO BE A COMPOSITE ORDER AS THE ORDER INVOLVES APPEALS BY DIFFERENT PERSONS, WHICH APPEALS FOR THE SAKE OF CONVENIENCE HAVE BEEN ONLY CLUBBED TOGETHER FOR THE PURPOSE OF DISPOSAL O N THAT ISSUE. IN OUR OPINION, THIS WOULD BE THE CORRECT READING OF P ARA 5 OF THE INSTRUCTION.' 9. THE HONBLE BOMBAY HIGH COURT FURTHER HELD AS UN DER:- 15. THE POSITION OF LAW, THEREFORE, EMERGING FROM THE AFORESAID JUDGEMENTS, IS THAT THE CIRCULARS OR INSTRUCTIONS I SSUED UNDER SECTION 268A OF THE INCOME TAX ACT BY THE CENTRAL BOARD OF DIREC T TAXES, ARE APPLICABLE NOT ONLY TO NEW CASES BUT TO PENDING CASES AS WELL. SUCH CIRCULARS HAVE BEEN ISSUED UNDER SECTION 268A OF THE INCOME TAX AC T, WHICH IS AN EXCEPTION TO THE PROVISIONS OF SECTION 260 OF THE A CT. THE CBDT BEING MINDFUL OF THIS POSITION HAS ISSUED THE AFORESAID I NSTRUCTIONS. IN OUR OPINION, THEREFORE, THE INSTRUCTIONS WOULD BE APPLI CABLE TO PENDING CASES AS WELL. WE HAVE ALREADY FOUND THAT THE INSTRUCTION NO. 5 OF 2008 AND INSTRUCTION NO. 3 OF 2011 ARE PARA-MATERIA. THE INS TRUCTION NO. 5 OF 2008 HAS ALREADY BEEN INTERPRETED BY THIS COURT IN CIT V /S MADHUKAR INAMDAR (SUPRA). IT IS NOT DISPUTED THAT THIS JUDGEMENT HAS NOT BEEN CHALLENGED BY THE REVENUE AND THEREFORE STILL HOLDS THE FIELD. 10. FOLLOWING THE ABOVE SAID PROPOSITION LAID DOWN BY THE HONBLE HIGH COURT IN THE CASE OF CIT VS. SMT. VIJAYA V. KAVEKAR (SUPR A), WE HOLD THAT IN VIEW OF THE ITA NO.370/PN/2014 M/S. EKVIRA COATS 5 REVISED INSTRUCTION ISSUED BY THE CBDT UNDER WHICH, THE MONETARY LIMIT FOR FILING THE APPEALS BEFORE THE APPELLATE AUTHORITIES, TRIBU NALS HAS BEEN REVISED AND FIXED AT RS.4 LACS I.E. ONLY APPEALS WITH TAX EFFEC T EXCEEDING RS.4 LACS WERE MAINTAINABLE. IN THE PRESENT APPEAL FILED BY THE R EVENUE, THE MONETARY LIMIT ADMITTEDLY, IS LESS THAN RS.4 LACS. IN VIEW OF INS TRUCTION NO.5 OF 2014 WHICH ARE APPLICABLE NOT ONLY TO THE NEW APPEALS TO BE FILED BY THE REVENUE, BUT ALSO TO THE APPEALS PENDING BEFORE THE TRIBUNAL, WE DISMISS THE APPEAL FILED BY THE REVENUE BECAUSE OF SMALL TAX EFFECT. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE OF H EARING ITSELF I.E. ON 31 ST DAY OF MARCH, 2015 AT THE CONCLUSION OF HEARING. SD/- SD/- (R.K. PANDA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 31 ST MARCH, 2015 GCVSR COPY OF THE ORDER IS FORWARDED TO: - 1) THE DEPARTMENT; 2) THE ASSESSEE; 3) THE CIT(A)-I, NASHIK; 4) THE CIT-I, NASHIK; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE