The ITO, Ward-2(1), JAMNAGAR V. Ajaysinh C. Chudasama, JAMNAGAR

ITA 406/RJT/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0460 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 1 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: 1999-2000
• Appeal Filed On: 31-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YOGESH PANDEY
• Assessee Lawyers: CHETAN AGARWAL RESPONDEN
• Keywords: Audit objection; Tax effect

Judgement Text

ITA NO. 4 06 /RJT/201 3 A SSESSMENT YEAR: 1999 - 2000 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. 4 06 AND 407 /RJT/201 3 ASST. YEAR 1999 - 2000 AND 2000 - 01 INCOME - TAX OFFICER, WD - 2 ( 1 ) JAMNAGAR . ....... ... .. . ..... APP ELLANT VS. AJAYSINH C. CHUDASAMA, ATRI CHHAYA, OPP. RAM MANDIR, JAYANT SOCIETY, JAMNAGAR ....... ..................RESPONDENT PAN ABCPC 7960Q APPEARANCES BY: YOGESH PANDEY .................... FOR THE A PP ELLANT CHETAN AGARWAL ................. FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : DECEMBER 1 1 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 T HESE APPEALS , THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF TWO SEPARATE ORDERS - BOTH DATED 27 TH AUGUST 2013 PASSED BY THE CIT(A) FOR THE ASSESSMENT YEARS 1999 - 2000 AND 2000 - 01. THE SHORT GROUND RAISED IN THIS APPEAL IS THAT THE CIT(A) ERRED IN DELET ING THE PENALTY OF RS 1,36,410 IN RESPECT OF ASSESSMENT YEAR 1999 - 2000 AND OF RS 4,11,760 FOR THE ASSESSMENT YEAR 2000 - 01. THE TAX EFFECT OF THESE DEPARTMENTAL APPEALS IS THUS WELL BELOW RS 10 LAKHS. 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 BEFORE THE ITA NO. 4 06 /RJT/201 3 A SSESSMENT YEAR: 1999 - 2000 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, A NNOUNCED 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 MEASURE 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 P RESSED OR WITHDRAWN. IN EFFECT THUS, IRRESPECTIVE OF THE YEAR TO WHICH THE DEPARTMENTAL APPEAL 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 CIRC ULAR 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 10,00,0 00/ - 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 TH E 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 A SSESSEE, THE DISPUTED ISSUES ARISE IN MORE THAN ONE ASSESSMENT YEAR, APPEAL, CAN BE FILED IN RESPECT OF SUCH ASSESSMENT YEAR ITA NO. 4 06 /RJT/201 3 A SSESSMENT YEAR: 1999 - 2000 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 ASSE SSEE, EACH ASSESSEE SHALL BE DEALT WITH SEPARATELY. 3. SO FAR AS RETROSPECTIVE OPERATION OF 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 T O THE PREJUDICE OF THE REVENUE AUTHORITIES TO RAISE THE SAME ISSUE, IN THE CASE OF THE RELEVANT 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 PARAGR APHS OF THE CBDT CIRCULAR, FOR READY REFERENCE, ARE AS FOLLOWS: 6. IN A CASE WHERE APPEAL BEFORE 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 S PECIFICALLY RECORD THAT EVEN THOUGH THE DECISION IS NOT ACCEPTABLE, APPEAL IS NOT BEING FILED 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 PRESUMPTIO N 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 EFFECT 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. 4 06 /RJT/201 3 A SSESSMENT YEAR: 1999 - 2000 PAGE 4 OF 5 THAT THE DEPARTMENT HAS IMPLICITLY ACCEPTED THE DECISION 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 Y EAR, 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 O F 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 CASE S DO NOT HAVE ANY PRECEDENT VALUE. AS THE EVIDENCE OF NOT FILING APPEAL DUE TO THIS INSTRUCTION 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 PARAGRAPH 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) WHERE 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 BEEN 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 B INDING ON ALL THE FIELD OFFICERS INCLUDING THE APPELLANT BEFORE US, THE APPEALS BEFORE US ARE LIABLE TO BE DISMISSED AS WITHDRAWN. 7. THIS DISMISSAL IS, HOWEVER, SUBJECT TO THE CONDITION THAT IN THE EVENT OF THE APPELLANT BEING ABLE TO SHOW US THAT THE APPEAL BEFORE US IS NOT COVERED BY ITA NO. 4 06 /RJT/201 3 A SSESSMENT YEAR: 1999 - 2000 PAGE 5 OF 5 THE AFORESAID CIRCULAR, OR IS COVERED BY THE EXCEPTIONS SET OUT IN THE SAID CIRCULAR, THE APPELLANT WILL HAVE THE LIBERTY TO MOVE AN APPROPRIATE PETITION TO THIS TRIBUNAL FOR RECALLING THIS ORDER. 8. AS THE APPEAL IS D ISMISSED AS WITHDRAWN, FOR THE REASONS SET OUT ABOVE, WE SEE NO REASONS TO DEAL WITH THE LEGAL CONTENTIONS CANVASSED BEFORE US . THAT ASPECT OF THE MATTER, GIVEN OUR ABOVE DECISION, IS PURELY ACADEMIC. 9. IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT TODAY ON THE 23 RD DAY OF DECEMBER, 2015. SD/ - SD/ - KUL BHARAT PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD , 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 REGIST RAR INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT