The ACIT, Bhopal V. Shri Satyendra Bahadur , HUF, Bhopal

ITA 427/IND/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0081 (ITAT-INDORE)
• Duration Of Justice: 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 16-09-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 20-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: R N GUPTA
• Keywords: Gift; Search and seizure; Question of law; Tax effect
• Section: 260A

Judgement Text

PAGE 1 OF 9 IN THE INCOME TAX APPELATE TRIBUNAL, INDORE SMC-I BENCH, INDORE BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NOS.426 TO 430/IND/2009 AYS 1999-00, 2001-02, 2000-01, 2002-03 & 2003-04 ACIT, CIRCLE-1(1), BHOPAL APPELLANT V/S. SATYENDRA BAHADUR HUF, EN-2/1, CHAR IMLI, BHOPAL (PAN AAGHS 5003 K) RESPONDENT DEPARTMENT BY SMT. APARNA KARAN, ADDL. CIT, DR ASSESSEE BY SHRI R.N. GUPTA, CA ORDER THE ABOVE APPEALS FILED BY THE REVENUE DEPARTMENT A RE AGAINST THE COMMON ORDER OF LD. CIT(A)-I, BHOPAL DATED 15.6.200 9 FOR THE ABOVE AYS ON THE FOLLOWING COMMON GROUNDS OF APPEALS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.48,500/-, RS.58,790/-, RS.2,49,250/-. RS.3,20,00 0/- & RS.4,22,000/- FOR THE AYS 1999-00 TO 2003-04 RESPECTIVELY MADE BY THE AO ON SUBSTANTIVE BASIS WHICH WAS OTHERWISE MADE BY THE AO ON PROTECTIVE BASIS. 2. I HAVE HEARD THE LD. REPRESENTATIVES OF BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. PAGE 2 OF 9 3. IT IS NOT IN DISPUTE THAT IN THESE DEPARTMENTAL APPEALS, TAX EFFECT ON GROUND OF EACH APPEAL RAISED IS BELOW RS.2 LAKHS . THE CBDT VIDE INSTRUCTION NO.1979 DATED 27 TH MARCH, 2000 DIRECTED THAT THE APPEALS WILL BE FILED BY THE DEPARTMENT ONLY IN CAS ES WHERE TAX EFFECT EXCEEDS THE REVISED MONETARY LIMIT OF RS.1 L AC IN CASE THE APPEAL IS FILED BEFORE THE APPELLATE TRIBUNAL. THES E INSTRUCTIONS WERE APPLICABLE FROM 1.4.2000. THE AFORESAID MONETA RY LIMIT FOR FILING THE DEPARTMENTAL APPEALS BY THE DEPARTMENT B EFORE THE APPELLATE TRIBUNAL WAS FURTHER REVISED VIDE INSTRUC TION NO. 2/05 DATED 24 TH OCTOBER, 2005 AND IT WAS DIRECTED THAT THE APPEALS BEFORE THE TRIBUNAL SHALL BE FILED IN THE CASES WHE RE THE TAX EFFECT EXCEEDS THE REVISED MONETARY LIMIT OF RS.2 LACS. TH ESE INSTRUCTIONS ARE APPLICABLE FROM 31 ST OCTOBER, 2005. THE CBDT VIDE F.NO.279 DATED 17.7.03 CLARIFIED THE WORD MONETARY LIMIT & TAX EFFECT IN THE INSTRUCTION TO BE READ AS REVENUE EFFECT, WHI CH DENOTES THE AMOUNT OF INTEREST, PENALTY, FINE OR OTHER SUM INVO LVED. VIDE INSTRUCTION NO.5 OF 2007 DATED 16.7.2007 CBDT CLARI FIED THAT TAX EFFECT MEANS THE TAX ONLY I.E. TAX EXCLUDING INTERE ST, IT SHOWED INTENTION OF CBDT TO DIRECT THE AUTHORITIES BELOW N OT TO PREFER DEPARTMENTAL APPEALS IN BELOW TAX EFFECT AS ABOVE. ITAT HYDERABAD BENCH IN THE CASE OF DCWT VS. NB. SYED JA FFAR ALI PAGE 3 OF 9 KHAN & OTHERS, REPORTED IN 275 ITR (AT) 113, CONSID ERING THE ABOVE INSTRUCTION HELD THAT MONETARY LIMIT WOULD AP PLY WITH REFERENCE TO EACH CASE TAKEN SINGLY AND IT IS DUTY OF REVENUE AUTHORITIES TO SCRUPULOUSLY FOLLOW THE POLICY, DECI SION TAKEN BY THE CBDT AND DEPARTMENTAL AUTHORITY SHOULD NOT PREFER A PPEAL BEFORE TRIBUNAL WHERE TAX EFFECT IS LESS THAN PRESCRIBED L IMIT. THE HONBLE M.P. HIGH COURT (INDORE BENCH) IN THE CASE OF CIT V S. BHAGWAN CLOTH STORES (2003), 181 CTR (MP) 315 VIDE ORDER DA TED 10.7.2002 HELD AS UNDER: - 2. AT THE OUTSET IT IS SEEN THAT THE AMOUNT INVOLV ED IN THIS REFERENCE IS A PETTY AMOUNT OF RS.8,400 COVERING FO UR ASSESSMENT YEARS. WE ARE AFRAID, IT WAS NOT ADVISAB LE FOR THE REVENUE TO SEEK REFERENCE IN THE CASE INVOL VING SUCH A PETTY AMOUNT. EARLIER THIS COURT, VIDE ITS O RDER DT. 24 TH FEB., 1999, IN IT REF. NOS. 69/98 AND 70/98 HAS DECLINED TO ENTERTAIN REFERENCE APPLICATION IN A CASE, WHICH INVOLVED AN AMOUNT OF RS.13,700. THE APPEAL PREFERRED AGAINST THE SAID ORDER OF THIS COU RT BY THE REVENUE BEFORE THE SUPREME COURT WAS ALSO DISMISSED. 3. CBDTS CIRCULAR IS THERE AGAINST MAKING REFERENC E OF A DISPUTE INVOLVING LESS THAN RS.50,000, WHICH IS NOW RAISED TO RS.1,00,000. 4. IN THIS VIEW OF THE MATTER, WE DECLINE TO ANSWER THE REFERENCE, LEAVING THE QUESTIONS INVOLVED IN THIS REFERENCE TO BE DECIDED IN SOME OTHER APPROPRIATE MATTER. PAGE 4 OF 9 3.1 HONBLE M.P. HIGH COURT IN THE CASE OF ACIT VS. ARADHANA OIL MILLS, 30 ITC 446 VIDE ITS ORDER DATED 30.7.2002 HELD AS U NDER: - NO EXPLANATION IS FURNISHED BY THE LEARNED COUNSEL FOR APPELLANT AS TO WHY THE DEPARTMENT HAS CHOSEN TO COME IN APPEAL BEFORE THIS COURT WHEN THE TAX EFFEC T IS ONLY RS.1,30,000, IN CONTRAVENTION OF THE INSTRUCTI ON NO.1979 DATED 27 TH MARCH, 2000 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES (CBDT), IN EXERCISE OF THE PO WER CONFERRED BY SECTION 119 OF THE INCOME-TAX ACT. THE SUPREME COURT ON MORE THAN ONE OCCASIONS HAD HELD THAT THESE INSTRUCTIONS ARE BINDING ON THE VARIOUS TAXING AUTHORITIES. 3.2 HONBLE M.P. HIGH COURT IN ITS RECENT DECISION IN THE CASE OF CIT VS. SURESH CHAND GOYAL REPORTED IN 209 CTR 410 HELD AS UNDER: - TAX LIABILITY INVOLVED BEING LESS THAN RS.2 LAKHS, APPEAL FILED BY THE REVENUE UNDER S. 260A IS NOT MAINTAINABLE IN VIEW OF CBDT CIRCULAR DT. 27 TH MARCH, 2000. 3.3 THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CI T VS. PITHWA ENGG. WORKS; 276 ITR 519 HAS OBSERVED AS UNDER: - THIS COURT CAN VERY WELL TAKE JUDICIAL NOTICE OF TH E FACT THAT BY PASSAGE OF TIME MONEY VALUE HAS GONE DOWN, THE COST OF LITIGATION EXPENSES HAS GONE UP, THE ASSESSEE ON THE FILE OF THE DEPARTMENTS HAVE INCREASED; CONSEQUENTLY, THE BURDEN ON THE PAGE 5 OF 9 DEPARTMENT HAS ALSO INCREASED TO A TREMENDOUS EXTENT. THE CORRIDORS OF THE SUPERIOR COURTS ARE CH OKED WITH HUGE PENDENCY OF CASES. IN THIS VIEW OF THE MATTER, THE BOARD HAS RIGHTLY TAKEN A DECISION NOT TO FILE REFERENCES IF THE TAX EFFECT IS LESS THAN RS.2 LAKHS. THE SAME POLICY FOR OLD MATTERS NEEDS TO BE ADOPTED BY THE DEPARTMENT. IN OUR VIEW, THE BOARDS CIRCULA R DATED MARCH 27, 2000 IS VERY MUCH APPLICABLE EVEN T O THE OLD REFERENCES WHICH ARE STILL PENDING. THE DEPARTMENT IS NOT JUSTIFIED IN PROCEEDING WITH THE O LD REFERENCES WHEREIN THE TAX IMPACT IS MINIMUM. THUS, THERE IS NO JUSTIFICATION TO PROCEED WITH DECADES OL D REFERENCES HAVING NEGLIGIBLE TAX EFFECT. 4. THE PRELIMINARY OBJECTION OF THE ASSESSEE WAS UPHELD BY THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, IN THE CASE OF ITO V. JAI KUMAR REPORTED IN 31 ITC 32. THIS BENCH IS CONS ISTENTLY TAKING THE SAME VIEW THAT WHERE THE DEPARTMENTAL APPEALS A RE FILED AGAINST THE INSTRUCTIONS OF THE CBDT IN THE CASES W HERE TAX EFFECT WAS BELOW THE PRESCRIBED LIMIT THEN THE DEPARTMENTA L APPEALS SHALL NOT BE MAINTAINABLE. SINCE IN THESE CASES, THE TAX EFFECT IS BELOW RS.2 LACS, INSTRUCTION NO. 2/05 IS APPLICABLE TO TH ESE APPEALS WHICH BEING PENDING ARE FILED IN THE YEAR 2009. NO SUBSTA NTIAL QUESTION OF LAW IS INVOLVED. THESE INSTRUCTIONS WILL APPLY T O LITIGATION UNDER OTHER DIRECT TAXES ALSO I.E. WEALTH-TAX, GIFT-TAX, ESTATE DUTY ETC. ITAT, RAJKOT BENCH IN THE CASE OF ACIT VS. RAJOO ENG INEERS LTD., PAGE 6 OF 9 100 ITD 555 HELD THAT THE CIRCULAR DATED 24.10.05 I SSUED BY THE BOARD TAKING A POLICY DECISION NOT TO FILE APPEALS IN CASES, WHICH DO NOT COME WITH NEW LIMITS PRESCRIBED BY CIRCULAR AND THAT CIRCULAR IS BINDING EVEN TO APPEALS FILED BEFORE 31 .10.05. HONBLE SUPREME COURT IN THE CASE OF UCO BANK, 237 ITR 889 HELD THAT CIRCULARS OF CBDT HAVING EFFECT OF RELAXING RIGOUR OF LAW BINDING ON I.T. AUTHORITIES. SIMILARLY, HONBLE SUPREME COURT IN THE CASE OF INDIAN OIL CORPORATION LTD., 267 ITR 272 HELD THAT CIRCULARS OF CENTRAL BOARD ARE BINDING IN NATURE, OFFICERS NOT E NTITLED TO ISSUE NOTICE & ADJUDICATE CONTRARY TO INSTRUCTION IN CIRCU LAR. 5. THE HONBLE JURISDICTIONAL HIGH COURT OF MP, BENCH A T INDORE IN THE CASE OF CIT VS. MADHU BAI LODHA REPORTED IN 10 ITJ 211 HAS HELD IN PARA 5 & 6 AS UNDER: 5. WE MAY POINT OUT THAT THE CIRCULAR ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES AS REFERRED TO ABOVE CARVES OUT ONLY ONE EXCEPTION WITH REGARD TO THE PERMISSIBILITY OF FILING OF APPEALS ETC. NOTWITHSTANDING THE EMBARGO CONTAINED IN THE CIRCULAR OF THE MONETARY LIMIT. IT IS ONLY IN CASES INVOLVING SUBSTANTIAL QUESTION OF LAW OF IMPORTANCE AS WELL AS CASES WHERE THE SAME QUESTION OF LAW WILL REPEATEDLY ARISE EITHER IN THE CASE CONCERNED OR IN SIMILAR CASES THAT THE DEPARTMENT WILL NOT BE HINDERED BY THE MONETARY LIMITS. THE QUESTION, THEREFORE ARISES AS TO WHETHER THE DEPARTMENT CAN BE LEFT AT PAGE 7 OF 9 LIBERTY TO DEFEAT THE CIRCULAR OF CBDT RESTRAINING ITS POWER TO FILE APPEAL IN CASE OF THE TAX EFFECT BEING BELOW THE MONETARY LIMIT BY CAPRICIOUSLY TAKING SUBTERFUGE UNDER THE SPECIOUS PLEA THAT THE CASE IS ONE OF THE EXCEPTED CATEGORY OF CASES. IT HAS NOT BEEN BROUGHT TO OUR NOTICE THAT THE INCOME-TAX DEPARTMENT HAS DEVISED ANY PROCEDURE TO CONSIDER WHETHER A PARTICULAR CASE FALLS WITHIN THE EXCEPTED CATEGORY THUS, PERMITTING THE REVENUE TO AGITATE THE MATTER BEFORE THE HIGHER FORUMS. IN CASE WHERE NO SUCH PROCEDURE HAS BEEN DEVISED, IT IS EXPECTED THAT WHILE FILING APPEAL IN NON-ADHERENCE OF THE CIRCULAR, THE DEPARTMENT WOULD PLACE MATERIAL BEFORE THE APPELLATE FORUM THAT THE CASE FALLS WITHIN THE EXCEPTED CATEGORY AND, THEREFORE, IS NOT COVERED BY THE RESTRAINT CONTAINED IN THE CIRCULAR. THE LEARNED SENIOR COUNSEL FOR THE APPELLANTS HAS ALSO INVITED ATTENTION TO THE DECISION OF THE PUNJAB & HARYANA COURT IN RANI PALIWAL V COMMISSIONER OF INCOME-TAX 268 ITR 220, OF DELHI HIGH COURT IN COMMISSIONER OF INCOME TAX V BLAZE ADVERTISING (DELHI) PVT. LTD 255 ITR 460 AND OF MADRAS HIGH COURT IN COMMISSIONER OF INCOME-TAX V KODANANAD TEA ESTATES CO. 275 ITR 244. WE ARE HOWEVER, OF THE VIEW THAT, AS HELD BY THIS COURT IN CIT VS SURESH CHAND GOYAL (SUPRA), WHERE TAX LIABILITY OF THE ASSESSEE IS BELOW THE MONETARY LIMIT PRESCRIBED, REVENUE CANNOT FILE AN APPEAL IN TRANSGRESSION OF THE CIRCULAR BY WHICH IT IS BOUND. HOWEVER, WE MAY ADD THAT IN A CASE WHICH FALLS WITHIN THE EXCEPTED CATEGORY, IT WOULD ALWAYS BE OPEN TO THE DEPARTMENT TO BRING IT TO THE NOTICE OF THE FORUM APPROACHED AND TO INSIST THAT THE QUESTION BEING COVERED BY THE EXCEPTIONS PAGE 8 OF 9 CONTAINED IN CLAUSE 3 OF THE CIRCULAR DATED 24.10.2005 AS MODIFIED BY THE INSTRUCTION NO. 5 OF 2007 DATED 16.7.2007, THE SAME DESERVES TO BE CONSIDERED BY THE SUPERIOR FORUM, THE CIRCULAR OF THE CBDT NOTWITHSTANDING. 6. IN VIEW OF THE ABOVE, WE ANSWER THE QUESTION RAISED IN THESE APPEALS AGAINST THE DEPARTMENT SUBJECT TO THE LIBERTY THAT IF A CASE FALLS WITHIN THE EXCEPTED CATEGORY, IT WOULD BE OPEN TO THE DEPARTMENT TO BRING THE SAID FACT TO THE NOTICE OF THE COURT OR THE TRIBUNAL SO THAT THE APPROPRIATE AUTHORITY/COURT APPLIES ITS MIND TO THE NECESSITY OF FORMULATING THE QUESTION FOR RENDERING DECISION THEREON. 6. LD. DR DID NOT DISPUTE THE ABOVE FACTS AND HAVE ALSO NOT POINTED OUT THAT THE CASES FALLS WITHIN THE EXCEPTION CATEG ORY OF THE CIRCULAR. ON THE OTHER HAND, LD. COUNSEL FOR ASSESS EE CONTENDED THAT ONLY QUESTION OF FACT IS THE ISSUE IN THE DEPA RTMENTAL APPEALS. 7. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF T HE CASE AND ALSO RELYING ON THE DECISIONS REFERRED TO ABOVE AND PART ICULARLY JURISDICTIONAL HIGH COURT OF M.P INDORE BENCH, I HOL D THAT THE APPEALS OF THE REVENUE ARE NOT MAINTAINABLE AS THE SAME ARE FILED IN VIOLATION OF CBDTS INSTRUCTIONS AND NO SUBSTANT IAL QUESTION OF LAW INVOLVED BECAUSE ONLY QUESTION OF FACT IS INVOL VED IN THE APPEALS OF THE REVENUE. IT WAS PLEADED BEFORE THE L D. CIT(A) THAT PAGE 9 OF 9 INCOME OF THE ASSESSEE HUF IN THE HANDS OF SATYENDR A BAHADUR, INDIVIDUAL WERE DELETED BY THE TRIBUNAL AND SEVERAL ORDERS OF THE TRIBUNAL WERE REFERRED INCLUDING ITA NO.50/IND/2007 & CO NO.7/IND/2007 DATED 31.7.2008 IN WHICH IT WAS HELD THAT EXISTENCE OF ASSESSEE HUF IS NOT IN DISPUTE, THEREFORE, INCOM E OF THE HUF CANNOT BE CLUBBED IN THE HANDS OF SATYENDRA BAHADUR , INDIVIDUAL. THE LD. CIT(A) FOLLOWING THE ORDERS OF THE TRIBUNAL DIRECTED THE AO TO ACCEPT THE INCOME OF THE ASSESSEE HUF ON SUBSTAN TIVE BASIS. THE ISSUE IS, THEREFORE, SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL. THEREFORE, THE CASE W OULD NOT FALL IN EXCEPTIONAL CATEGORY OF THE CIRCULAR OF THE CBDT. T HEREFORE, APPEALS OF THE REVENUE HAVE NO MERIT AND ARE LIABLE TO BE DISMISSED BEING THE TAX EFFECT BELOW RS.2 LAKHS. 8. AS A RESULT, APPEALS OF THE REVENUE ARE DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 16.9.2009. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATE: 16.9.2009 {VYAS}