ITO, Ward - 5(4), Kolkata, Kolkata V. M/s. Hemp Trading Co. (P) Ltd., Kolkata

ITA 513/KOL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59595 (ITAT-KOLKATA)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 29-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEBASIS ROY
• Assessee Lawyers: N O N E
• Keywords: Audit objection; Tax effect
• Section: 12; 271(1)(c); 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE , /AND , . !' . , #$ ) [BEFORE SRI MAHAVIR SINGH, JM & SHRI C. D. RAO, AM] % % % % / I.T.A NO. 513/KOL/2011 &' () &' () &' () &' ()/ // / ASSESSMENT YEAR : 2002-03 INCOME-TAX OFFICE, WD-5(4), KOLKATA VS. M/S. HEMP TRADING CO. (P) LTD. (PAN:AABCH 2786 C) (+, /APPELLANT ) (-.+,/ RESPONDENT ) FOR THE APPELLANT: SHRI DEBASIS ROY FOR THE RESPONDENT: N O N E DATE OF HEARING: 10.02.2012 DATE OF PRONOUNCEMENT: 10.02.2012 #/ / ORDER PER BENCH THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-VI, KOLKATA IN APPEAL NO.1155/CIT(A)-VI/KOL/09-10/WD.5(4) DATED 20.01.201 1. ASSESSMENT WAS FRAMED BY ITO, WD-5(4), KOLKATA U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2002-03 VIDE HIS ORDER DA TED 10.11.2004. PENALTY IN DISPUTED WAS LEVIED BY ITO, WD-5(4), KOLKATA U/S. 271(1)(C) OF T HE ACT VIDE HIS ORDER DATED 13.09.2006. 2 . AT THE TIME OF HEARING, WE FIND THAT THAT TAX EFF ECT IN THIS APPEAL OF REVENUE IS BELOW THE PRESCRIBED MONETARY LIMITS FOR FILING OF APPEAL BEFORE ITAT AND OTHER SUPERIOR COURTS. IT SEEMS THAT THE REVENUES APPEAL , THE AMOUNT OF PENALTY IN DISPUTE INVOLVED IS RS.18,975 /- U/S. 271(1)(C) OF THE ACT. THE ONLY ISSUE NOW REMA INS BEFORE US IS THAT THE APPEAL OF THE REVENUE IS BELOW THE P RESCRIBED LIMIT OF TAX EFFECT IN VIEW OF THE BOARDS INSTRUCTION ISSUED FROM TIME TO TIME REVISING THE MONETARY LIMITS FOR FILING OF APPEALS BY THE DEPARTMENT BEFORE ITAT AND OTHER SUPERIOR COURTS. THE APPEAL RELATES TO ASSESSMENT YEAR 2002-03 AND FILED BEFORE THE TRIBUNAL ON 29 .0 3 .2011. 2 SINCE THIS APPEAL FILED ON 29.03.2011, THE SAME WIL L BE COVERED BY INSTRUCTION NO. 3/2011 ISSUED ON 09.02.2011 I.E. THE REVISED MONETARY LIMIT FOR FILING OF APPEA L BEFORE ITAT, WHEREBY THE CBDT HAS FIXED THE LIMIT O F RS. 3 LACS. HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS DELHI RACE CLUB IN ITA NO. 128/2008 DATED 03.03.2011 HAS HELD AS UNDER: THE TAX EFFECT INVOLVED IN THE PRESENT APPEAL IS R S. 4,65,860/-. AS PER THE RECENT GUIDELINES OF THE CBDT APPEAL IN THOSE CASES WHERE THE TAX EFFECT IS LESS THAN 10 LACS, ARE NOT TO BE ENTERTAINED. THIS COURT IN THE CASE OF COMMISSIONER OF INCOME TA X-ILL V. M/S. P. S. JAIN AND CO. BEING ITA NO. 179/1991 DECIDED ON 2 ND AUGUST, 2010 HAS TAKEN A VIEW THAT SUCH CIRCULAR WOULD ALSO APPLY TO PENDING CASES. IN VIEW OF THE DECISION OF HONBLE DELHI HIGH COURT , THE REVISED MONETARY LIMIT OF RS. 3 LACS AS PER INSTRUCTION NO. 3/2011 WILL APPLY TO PENDING APPEALS. THE RELEVANT CIRCULAR ISSUED BY CBDT READS AS UNDER : INSTRUCTION NO. 3 33 3/ // /2011 2011 2011 2011[ [[ [ F.NO. 279 279 279 279/ // / MISC. 142 142142 142/ // /2007 2007 2007 2007- -- - ITJI,DATED 9 99 9- -- -2 22 2- -- -2011 2011 2011 2011 REFERENCE IS INVITED TO BOARDS INSTRUCTION NO. 5/2008 DATED 15-5-2008 WHEREIN MONETARY LIMITS AND OTHER CONDITIONS FOR FI LING DEPARTMENTAL APPEALS (IN INCOME-TAX MATTERS) BEFORE APPELLATE TRIBUNAL, HIGH COURTS AND SUPREME COURT WERE SPECIFIED. 2 . IN SUPERSESSION OF THE ABOVE INSTRUCTION, IT HAS BE EN DECIDED BY THE BOARD THAT DEPARTMENTAL APPEALS MAY BE FILED ON MERITS BE FORE APPELLATE TRIBUNAL, HIGH COURTS AND SUPREME COURT KEEPING IN VIEW THE M ONETARY LIMITS AND CONDITIONS SPECIFIED BELOW. 3 . HENCEFORTH APPEALS SHALL NOT BE FILED IN CASES WHER E THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER. S. NO. APPEALS IN INCOME-TAX MATTERS MONETARY LIM IT (IN RS.) 1. APPEAL BEFORE APPELLATE TRIBUNAL 3,00 , 000 2. APPEAL U/S. 260 A BEFORE HIGH COURT 10,00,000 3. APPEAL 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. 3 4. FOR THIS PURPOSE, TAX EFFECT MEANS THE DIFFERENCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HAVE B EEN CHARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME I N RESPECT OF THE ISSUES AGAINST WHICH APPEAL IS INTENDED TO BE FILED (HEREI NAFTER REFERRED TO AS DISPUTED ISSUES ) . HOWEVER THE TAX WILL NOT INCLUDE ANY INTEREST THERE ON, EXCEPT WHERE CHARGEABILITY OF INTEREST ITSELF IS IN DISPUTE. IN CASE THE CHARGEABILILY OF INTEREST IS THE ISSUE UNDER DISPUT E, 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 O N 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 EFFEC T SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUES I N THE CASE OF EVERY ASSESSEE. IF IN THE CASE OF AN ASSESSEE, THE DISPUTED ISSUES ARISE IN MORE THAN ONE ASSESSMENT YEAR, APPEAL, CAN BE FILED IN RESPECT OF SUCH ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IN RESPECT OF THE DIS PUTED 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 ON LY WITH REFERENCE TO THE TAX EFFECT IN THE RELEVANT ASSESSM ENT YEAR. HOWEVER, IN CASE OF A COMPOSITE ORDER OF ANY HIGH COURT OR APPELLATE AU THORITY, WHICH INVOLVES MORE THAN ONE ASSESSMENT YEAR AND COMMON ISSUES IN MORE THAN ONE ASSESSMENT YEAR, APPEAL SHALL BE FILED IN RESPECT O F ALL SUCH ASSESSMENT YEARS EVEN IF THE TAX EFFECT IS LESS THAN THE PRESCRIBE D MONETARY LIMITS IN ANY OF THE YEAR (S), IF IT IS DECIDED TO FILE APPEAL IN RESPEC T OF THE YEAR(S) IN WHICH TAX EFFECT EXCEEDS THE MONETARY LIMIT PRESCRIBED. IN C ASE WHERE A COMPOSITE ORDER/JUDGMENT INVOLVES MORE THAN ONE ASSESSEE, EAC H ASSESSEE SHALL BE DEALT WITH SEPARATELY. 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 MONET ARY LIMIT SPECIFIED ABOVE, THE COMMISSIONER OF INCOME-TAX SHALL SPECIFICALLY RECOR D THAT EVEN THOUGH THE DECISION IS NOT ACCEPTABLE, APPEAL IS NOT BEING FIL ED ONLY ON THE CONSIDERATION THAT THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIED IN THIS INSTRUCTION. FURTHER, IN SUCH CASES, THERE WILL HE NO PRESUMPTIO N THAT THE INCOME-TAX DEPARTMENT HAS ACQUIESCED IN THE DECISION ON THE DI SPUTED ISSUES. THE INCOME- TAX DEPARTMENT SHALL NOT BE PRECLUDED FROM FILING A N APPEAL AGAINST THE DISPUTED ISSUES IN THE CASE OF THE SAME ASSESSEE FO R ANY OTHER ASSESSMENT YEAR, OR IN THE CASE OF ANY OTHER ASSESSEE FOR THE SAME O R ANY OTHER ASSESSMENT YEAR, IF THE TAX EFFECT EXCEEDS THE SPECIFIED MONETARY LI MITS. 7 . IN THE PAST, A NUMBER OF INSTANCES HAVE COME TO THE NOTICE OF THE BOARD, WHEREBY AN ASSESSEE HAS CLAIMED RELIEF FROM THE TRI BUNAL OR THE COURT ONLY ON THE GROUND THAT THE DEPARTMENT HAS IMPLICITLY ACCEP TED THE DECISION OF THE 4 TRIBUNAL OR COURT IN THE CASE OF THE ASSESSEE FOR A NY OTHER ASSESSMENT YEAR OR IN THE CASE OF ANY OTHER ASSESSEE FOR THE SAME OR A NY OTHER ASSESSMENT YEAR, BY NOT FILING AN APPEAL ON THE SAME DISPUTED ISSUES, T HE 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 BEIN G LESS THAN THE SPECI LED 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 CA SES DO NOT HAVE ANY PRECEDENT VALUE. AS THE EVIDENCE OF NOT FILING APPE AL DUE TO THIS INSTRUCTION MAY HAVE TO BE PRODUCED IN COURTS, THE JUDICIAL FOLDERS IN THE OFFICE OF CIT MUST BE MAINTAINED IN A SYSTEMIC MANNER FOR EASY RETRIEVAL. 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 PROVISI ONS OF AN ACT OR RULE ARE UNDER CHALLENGE, OR B. WHERE BOARDS ORDER, NOTIFICATION, INSTRUCTION O R 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. 9 . THE PROPOSAL FOR FILING SPECIAL LEAVE PETITION UNDE R ARTICLE 136 OF THE CONSTITUTION BEFORE THE SUPREME COURT SHOULD, IN AL L CASES, BE SENT TO THE DIRECTORATE OF INCOME-TAX (LEGAL & RESEARCH), NEW D ELHI AND THE DECISION TO FILE SPECIAL LEAVE PETITION SHALL BE IN CONSULTATIO N WITH THE MINISTRY OF LAW AND JUSTICE. 10. THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE SHALL NOT APPLY TO WRIT MATTERS AND DIRECT TAX MATTERS OTHER THAN INCOME-TA X, FILING OF APPEALS IN OTHER DIRECT TAX MATTERS SHALL CONTINUE TO BE GOVERNED BY RELEVANT PROVISIONS OF STATUTE AND RULES. FURTHER, FILING OF APPEAL IN CAS ES OF INCOME- TAX, WHERE THE TAX EFFECT IS NOT QUANTIFIABLE OR NOT INVOLVED, SUC H AS THE CASE OF REGISTRATION OF TRUSTS OR INSTITUTIONS UNDER SECTION 12 A OF THE IT ACT, 196] , SHALL NOT BE GOVERNED BY THE LIMITS SPECIFIED IN PARA 3 ABOVE AND DECISION TO FILE APPEAL IN SUCH CASES MAY BE TAKEN ON MERITS OF A PARTICULAR C ASE. 11 . THIS INSTRUCTION WILL APPLY TO APPEALS FILED ON OR AFTER FEBRUARY, 09 , 2011 . HOWEVER, THE CASES WHERE APPEALS HAVE BEEN FILED BE FORE FEBRUARY 09 , 20 11 WILL BE GOVERNED BY THE INSTRUCTIONS OR THIS SUBJEC T, OPERATIVE AT THE TIME WHEN SUCH APPEAL WAS FILED. 12 . THIS ISSUES UNDER SECTION 268(1) OF THE INCOME TAX ACT, 1961. 3 . ON QUERY FROM THE BENCH. THE LD. DR COULD NOT POIN T OUT ANY OF THE EXCEPTIONS AS PROVIDED IN THE CIRCULAR AS UNDER: 5 ( A) THAT THIS IS A LOSS CASE HAVING TAX EFFECT MORE THAN THE PRESCRIBED LIMIT, WHICH SHOULD BE TAKEN INTO ACCOUNT.. ( B) THAT THIS IS A COMPOSITE ORDER FOR MANY ASSESSME NT YEARS WHERE TAX EFFECT WILL BE MORE THAN THE PRESCRIBED LIMIT AS PER PARA 5 OF ABOVE INSTRUCTIONS, ( C) THAT THERE IS OTHER YEAR PENDING AS DISPUTED ON THE SINGULAR ISSUE, ( D) THAT IN THE CASE OF REVENUE WHERE CONSTITUTIONAL VALIDITY OF THE PROVISIONS OF THE ACT OR IT RULES 1962 ARE UNDER CHALLENGE, ( E) THAT BOARDS ORDER, NOTIFICATION, INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES, ( F) THAT REVENUE AUDIT OBJECTION IN THE CASE HAS BEE N ACCEPTED BY THE DEPARTMENT AND THE SAME IS UNDER CHALLENGE. THE LD. DR COULD NOT POINT OUT ANY OF THE EXCEPTION S AS PROVIDED ABOVE. ACCORDINGLY, THIS BEING A TAX EFFECT CASE, WE DISMISS THE APPEAL OF THE REVENUE IN LIMINE WITHOUT GOING INTO MERITS AND AS UNADMITTED. 4. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- . .. . !' !'!' !' . .. . , , , , #$ #$ #$ #$ , C.D.RAO, ACCOUNTANT MEMBER , , , , MAHAVIR SINGH, JUDICIALMEMBER ( (( ( '$ '$ '$ '$ ) )) ) DATE: 10.02.2012. R.G.(P.S.) #/ > - ?#(@- COPY OF THE ORDER FORWARDED TO: 1 . M/S. HEMP TRADING CO.(P)LTD. 12A, N.S.ROAD, KOLKATA -700001. 2 I.T.O., WARD-5(4), KOLKATA. 3 . THE C.I.T. 4. CIT(A) - VI , KOLKATA 5 . THE CIT(DR), KOLKATA BENCHES, KOLKATA . -/ TRUE COPY, #/&A/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES