ACIT, Muzaffarnagar V. M/s Magnet Trading & Chit Fund (P) Ltd., Muzaffarnagar

ITA 459/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9970 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 29-03-2011
• Assessment Year: misc
• Appeal Filed On: 27-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUSHA KHURANA SENIOR
• Keywords: Tax effect; Set aside
• Section: 207; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.459/DEL./2011 (ASSESSMENT YEAR : 1985-86) ACIT, CIRCLE 2, VS. M/S. MAGNET TRADING & CHIT FUN D (P) LTD., MUZAFFARNAGAR. GARHI GORWAN, MUZAFFARNAGAR. (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : MS. ANUSHA KHURANA, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF CIT (APPEALS), MUZAFFARNAGAR DATED 16.10.2010. THE GROUNDS OF APP EAL TAKEN BY THE ASSESSEE ARE AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) HAS ERRED IN LAW BY DELETING THE ADDITION OF RS.3,22,000/- MADE BY THE ASSESSING OFFICER UNDER S ECTION 68 OF I.T. ACT, 1961 AS UNEXPLAINED SHARE APPLICATION MONEY CREDITED IN THE BOOKS OF ACCOUNT IGNORING THE DECIS ION OF HON'BLE APEX COURT IN THE CASE SUMATI DAYAL VS CIT (214 ITR-801) AND HON'BLE HIGH COURT OF CHHATISGARH IN T HE CASE OF KUSHAL PRASAD MANHAR VS CIT, {(2010)236-CIT-192}, I N SPITE OF THE FACT THAT THE GENUINENESS OF TRANSACTIONS RE MAINED TOTALLY UNPROVED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT(A) HAS ERRED IN LAW BY DELETING THE ADDITION OF RS.3,22,000/- MADE BY THE ASSESSING OFFICER WITHOUT ITA NO.459/DEL./2011 2 APPRECIATING FULL FACT OF THE CASE AND BY IGNORING THE JUDICIAL PRONOUNCEMENT REPORTED IN THE FOLLOWING CASES:- (I) SHREE LEKHA BANARJEE VS. CIT, 49 ITR 112(SC) (II) RAM LAL AGARWAL VS CIT, 280 ITR 547(ALLD) (III) ITO VS. RAI CHAND KOTHARI (HUF) 39TTJ(TRIBUNAL) (IV) SHAMKER INDS. VS. CIT, 114 ITR 689 (CAL) (V) PRAKASH TEXTILES AGENCY VS. CIT, 121 ITR 89. (VI) C. KANT & CO. VS CIT, 126 ITR 63 (CAL) THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF AO BE RESTORED. 2. NONE ATTENDED ON BEHALF OF THE ASSESSEE. LEARNE D DR WAS HEARD. 3. AFTER HEARING THE LEARNED DR AND GOING THROUGH T HE RECORD, WE FIND THAT THE TOTAL ADDITION DELETED WHICH IS CONTESTED IN TH E APPEAL IS RS.3,22,000/- AND ON THIS AMOUNT, THE TAX EFFECT IS BELOW RS.2 LACS. IN THE INSTANT CASE, SINCE THE TAX EFFECT INVOLVED IN THE APPEAL OF THE REVENUE I S UNDISPUTEDLY LESS THAN RS.2 LAKHS, THE INSTANT APPEAL FILED BY THE REVENUE BEFORE THE TRIBUNAL IS AGAINST THE INSTRUCTIONS OF CBDT (INSTRUCTION NO. 2 OF 2005 DATED 24 TH OCTOBER 2005). THE INSTANT APPEAL FILED BY THE REV ENUE IN VIOLATION OF DEPARTMENTAL INSTRUCTION IS NOT MAINTAINABLE BEFORE THE TRIBUNAL. 4. IN OUR ABOVE VIEW, WE FIND SUPPORT FROM THE RECE NT DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMISSION ER OF INCOME TAX VS. PITHWA ENGG. WORKS, [2005] 197 CTR (BOM) 655 : [200 5] 276 ITR 519 (BOM) WHEREIN THEIR LORDSHIPS FOLLOWING THEIR ORDER IN THE CASE OF CIT VS. CAMCO COLOUR CO. [2002] 173 CTR (BOM) 255 : [2002] 254 ITR 565 (BOM) ITA NO.459/DEL./2011 3 HELD THAT INSTRUCTION DT. 27 TH MARCH, 2000 REFLECT THE POLICY DECISION TAKEN BY THE BOARD NOT TO RAISE QUESTIONS OF LAW WHERE THE T AX EFFECT IS LESS THAN THE AMOUNT PRESCRIBED WITH A VIEW TO REDUCE LITIGATIONS BEFORE THE HIGH COURTS AND THE SUPREME COURT. THE SAID CIRCULAR IS BINDIN G ON THE REVENUE. ONE FAILS TO UNDERSTAND HOW THE REVENUE CAN CONTEND THA T SO FAR AS NEW CASES ARE CONCERNED, THE CIRCULAR ISSUED BY THE BOARD IS BIND ING ON THEM AND IN COMPLIANCE WITH THE SAID INSTRUCTIONS, THEY DO NOT FILE REFERENCES IF THE TAX EFFECT IS LESS THAN RS.2 LAKHS, BUT THE SAME APPROA CH IS NOT ADOPTED WITH RESPECT TO THE OLD REFERRED CASES EVEN IF THE TAX E FFECT IS LEAS THAN RS.2 LAKHS. THERE IS NO LOGIC BEHIND THIS APPROACH. BOARDS CI RCULAR DT. 27 TH MARCH, 2000 IS VERY MUCH APPLICABLE EVEN TO THE OLD REFERENCES WHICH ARE STILL UNDECIDED. THE DEPARTMENT IS NOT JUSTIFIED IN PROCEEDING WITH THE OLD REFERENCES WHEREIN THE TAX IMPACT IS MINIMAL. THUS, THERE IS NO JUSTI FICATION TO PROCEED WITH DECADES OLD REFERENCES HAVING NEGLIGIBLE TAX EFFECT . 5. FOR SIMILAR PROPOSITION, WE ALSO FIND SUPPORT FR OM THE DECISION OF HIGH COURT OF DELHI IN THE CASE OF COMMISSIONER OF INCOM E TAX VS. PRADEEP KUMAR GUPTA, [2007] 207 CTR (DEL) 115 WHEREIN THEIR LORDSHIPS HELD THAT TAX EFFECT BEING LESS THAN RS. 2 LAKH, THE APPEAL F ILED BY THE REVENUE AGAINST THE CBDT INSTRUCTION WAS NOT MAINTAINABLE. 6. IN THIS VIEW OF THE MATTER AND RESPECTFULLY FOLL OWING THE DECISIONS (SUPRA), IT IS HELD THAT SINCE THE TAX EFFECT INVOL VED IN THE INSTANT APPEAL OF THE ITA NO.459/DEL./2011 4 REVENUE IS LESS THAN RS.2 LAC, THE SAME IS AGAINST THE INSTRUCTIONS ISSUED BY THE CBDT AND, HENCE, NOT MAINTAINABLE BEFORE THE TR IBUNAL. ACCORDINGLY, THE APPEAL FILED BY THE REVENUE IS LIABLE TO BE DISMISS ED ON THIS GROUND ALONE AND THE SAME IS DISMISSED ACCORDINGLY. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 29 TH DAY OF MARCH, 2011 AFTER THE CONCLUSION OF THE HEARING. SD/- SD/- (RAJPAL YADAV) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 29 TH DAY OF MARCH, 2011 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A), MUZAFFARNAGAR. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.