ITO, WD-22(4), KOLKATA, Kolkata V. Sri Bijoy Kumar Sahoo, Kolkata

ITA 528/KOL/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6519 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 28-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MIRAJ D. SHAH
• Assessee Lawyers: S DASGUPTA
• Keywords: Unexplained cash credit; Business income; Tax effect
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENCH KOLKATA BEFORE SHRI A. T. VARKEY, JM &DR. A.L.SAINI, AM ./ITA NOS.526 TO 529/KOL/2016 ( [ [ / ASSESSMENT YEARS: 2007-08, 2008-09, 2010-11& 2011-12) I.T.O., WD-22(4), KOLKATA 54/1, R.H.KIDWAI RD, KOLKATA 700 016. VS. SRI BIJOY KUMAR SAHOO 16/2, K.M. NASKAR ROAD, KOLKATA 700 040. ./ ./PAN/GIR NO. : AKRPS 9342 J (APPELLANT) .. (RESPONDENT) APPELLANT BY :SHRI MIRAJ D. SHAH, ADV. RESPONDENT BY :SHRI S. DASGUPTA, ADDL. CIT(DR) / DATE OF HEARING : 15/03/2018 /DATE OF PRONOUNCEMENT : 25/04/2018 / O R D E R PER BENCH: THE CAPTIONED FOUR APPEALS FILED BY THE REVENUE, PERTAINING TO ASSESSMENT YEARS 2007-08, 2008-09, 2010-11 & 2011-12, ARE DIRECTED AGAINST THE ORDERS PASSED BY THE LD. COMMISSIONER OF INCOME TAX(APPEALS)-6, KOLKATA WHICH IN TURN ARISE OUT OF AN ASSESSMENT ORDERS PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. SINCE, THESE FOUR APPEALS RELATE TO SAME ASSESSEE BUT FOR DIFFERENT ASSESSMENT YEARS, IDENTICAL ISSUES ARE INVOLVED,; THEREFORE, THESE APPEALS HAVE BEEN CLUBBED AND HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 3.OUT OF THESE FOUR APPEALS OF THE REVENUE, APPEALS NO.528 & 529/KOL/2016 RELATE TO ASSESSMENT YEAR 2010-11 & 2011-12 FALL IN THE TAX EFFECT ZONE WHERE THE REVENUE DOES NOT HAVE POWER TO APPEAL BEFORE THE ITAT AS PER CBDT, SRI BIJOY KUMAR SAHOO ITA NOS.526 TO 529/KOL/2016 A.YS: 2007-08, 2008-09, 2010-11 & 2011-12 PAGE | 2 CIRCULAR NO.21/2015, DATED 10TH DECEMBER, 2015. THE BRIEF SUMMARY OF ALL THE APPEALS ARE GIVEN BELOW: SL N O. ITA NO. A.Y TAX CESS TAX+CESS SURCHARGE TAX+CESS+ SURCHARGE 1 526/KOL/16 2007-08 10,59,250 23,303 10,82,553 1,05,925 11,88,478 2 527/KOL/16 2008-09 11,45,800 37,811 11,83,611 1,14,580 12,98,191 3 528/KOL/16 2010-11 7,47,350 22,361 7,67,711 0 7,67,711 4 529/KOL/16 2011-12 9,90,673 29,720 10,20,393 0 10,20,393 4. THE COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT IN CASE OF REVENUE`S APPEAL IN ITA NO.528/KOL/16, FOR A.Y. 2010-11, THE TOTAL TAX EFFECT IS TO THE TUNE OF RS.7,47,350/-,( EXCLUDING CESS) WHICH IS BELOW RS. 10,00,000/-, THAT IS, THE MONETARY LIMIT TO FILE THE APPEAL BEFORE INCOME TAX APPELLATE TRIBUNAL, THEREFORE THIS APPEAL IS NOT SUSTAINABLE. THE COUNSEL ALSO POINTED OUT THAT CESS IS NOT A TAX THEREFORE, IT SHOULD NOT BE INCLUDED WHILE COMPUTING MONETARY LIMIT OF RS.10,00,000/-. 5. SIMILARLY, IN CASE OF REVENUE`S APPEAL IN ITA NO.529/KOL/16, FOR A.Y. 2011- 12, THE TOTAL TAX EFFECT IS TO THE TUNE OF RS.9,90,673/-,( EXCLUDING CESS) WHICH IS BELOW RS. 10,00,000/-, THAT IS, THE MONETARY LIMIT TO FILE THE APPEAL BEFORE INCOME TAX APPELLATE TRIBUNAL, THEREFORE THIS APPEAL IS ALSO NOT SUSTAINABLE. THE COUNSEL ALSO POINTED OUT THAT CESS IS NOT A TAX THEREFORE, IT SHOULD NOT BE INCLUDED WHILE COMPUTING MONETARY LIMIT OF RS.10,00,000/-. 6. AFTER HEARING THE LD DR FOR THE REVENUE, WE NOTE THAT IN CASE OF REVENUE`S APPEALS NOS.528 & 529/KOL/2016 WHICH RELATE TO TAX EFFECT AND THEREFORE THESE APPEALS SHOULD NOT BE PRESSED IN PURSUANCE OF THE DIRECTION OF THE CBDT IN CIRCULAR NO. 21/2015. WE NOTE THATRECENTLY THE CBDT HAS ISSUED CIRCULAR NO. 21/2015, DATED 10TH DECEMBER, 2015, WHEREBY THE MONETARY LIMITS FOR FILING OF APPEALS BY THE DEPARTMENT BEFORE INCOME TAX APPELLATE TRIBUNAL, HIGH COURTS AND SLP BEFORE SUPREME COURT HAVE BEEN INCREASED AS A MEASURE FOR REDUCING LITIGATION. THE REVISED MONETARY LIMITS LAID DOWN IN PARA-3 OF THIS SRI BIJOY KUMAR SAHOO ITA NOS.526 TO 529/KOL/2016 A.YS: 2007-08, 2008-09, 2010-11 & 2011-12 PAGE | 3 CIRCULAR AND THE MANNER OF COMPUTING TAX EFFECT AS LAID DOWN IN PARA-4 OF THIS CIRCULAR 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: - SL. NO. APPEALS IN INCOME-TAX MATTERS MONETARY LIMIT (IN RS) 1. BEFORE APPELLATE TRIBUNAL 10,00,000/- 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 THE 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. 7.IN PARA-10 OF THE SAID CIRCULAR IT HAS FURTHER BEEN CLARIFIED THAT THE REVISED MONETARY LIMITS WILL APPLY RETROSPECTIVELY. THE RELEVANT PARA-10 OF THE CIRCULAR READS THUS: 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. APPEALS BEFORE THE SUPREME COURT WILL BE GOVERNED BY THE INSTRUCTIONS ON THIS SUBJECT, OPERATIVE AT THE TIME WHEN SUCH APPEAL WAS FILED. 8.IN THE PRESENT CASE, THE TAX EFFECT IN THESE APPEALS BY THE REVENUE IS LESS THAN RS.10,00,000/-. IN VIEW OF PARA-10 OF THE CIRCULAR OF CBDT, EVEN PAST APPEALS FILED BY THE DEPARTMENT IN PURSUANCE OF OLD CIRCULAR OF THE CBDT, SUCH APPEALS WILL BE GOVERNED BY THE NEW MONETARY LIMITS LAID DOWN IN THE CBDT CIRCULAR NO.21/2015,DATED 10TH DECEMBER, 2015, REFERRED TO ABOVE. SRI BIJOY KUMAR SAHOO ITA NOS.526 TO 529/KOL/2016 A.YS: 2007-08, 2008-09, 2010-11 & 2011-12 PAGE | 4 9.IT IS A SETTLED LAW THAT THE CIRCULARS ISSUED BY CBDT ARE BINDING ON THE REVENUE. THIS POSITION WAS CONFIRMED BY THE APEX COURT IN THE CASE OF COMMISSIONER OF CUSTOMS VS INDIAN OIL CORPORATION LTD. REPORTED IN 267 ITR 272 WHEREIN THEIR LORDSHIPS EXAMINED THE EARLIER DECISIONS OF THE APEX COURT WITH REGARD TO BINDING NATURE OF THE CIRCULAR AND LAID DOWN THAT WHEN A CIRCULAR ISSUED BY THE BOARD REMAINS IN OPERATION THEN THE REVENUE IS BOUND BY IT AND CANNOT BE ALLOWED TO PLEAD THAT IT IS NOT VALID OR THAT IT IS CONTRARY TO THE TERMS OF THE STATUTE. THE BOTH APPEALS UNDER CONSIDERATION HAS CERTAINLY BEEN FILED CONTRARY TO THE CIRCULAR ISSUED BY THE CBDT CIRCULAR NO.21 DATED 10.12.2015. 10.IN THE EVENT THE REVENUE FINDS AT A LATER POINT OF TIME THAT THE TAX EFFECT IN THESE APPEALS IS MORE THAN RS.10 LAKHS OR DESPITE LOW TAX EFFECT THE APPEALS OF THE REVENUE ARE MAINTAINABLE, THE REVENUE IS AT LIBERTY TO MOVE THIS TRIBUNAL FOR RECALL OF THIS ORDER. WE NOTE THAT THE CESS COMPONENT IS NOT A PART OF THE INCOME-TAX, THEREFORE, APPEALS NO.528 & 529/KOL/2016, PERTAINING TO ASSESSMENT YEARS 2010-11 & 2011-12 FALL IN THE AMBIT OF TAX EFFECT VIDE CBDT CIRCULAR NO.21/2015, DATED 10TH DECEMBER, 2015. 11. IN VIEW OF THE ABOVE, WE HOLD THAT THE BOTH THE APPEALS FILED BY THE DEPARTMENT, AGAINST THE IMPUGNED ORDER OF THE LD. CIT(A), IS CONTRARY TO THE POLICY DECISION OF THE DEPARTMENT AND AS SUCH THE APPEALS FILED BY THE DEPARTMENT ARE DISMISSED IN LIMINE . 12. IN THE RESULT, THE APPEALS BY THE REVENUE (IN ITA NO.528 & 529/KOL/2016) ARE DISMISSED IN LIMINE AS THE TAX EFFECT IS BELOW RS.10 LAKH IN EACH APPEAL. SRI BIJOY KUMAR SAHOO ITA NOS.526 TO 529/KOL/2016 A.YS: 2007-08, 2008-09, 2010-11 & 2011-12 PAGE | 5 13. NOW, WE SHALL TAKE APPEAL NOS.526 & 527/KOL/2016 ASSESSMENT YEARS 2007-08 & 2008-09. SINCE, THE ISSUES INVOLVED IN THESE TWO APPEALS ARE COMMON AND IDENTICAL; THEREFORE, THESE APPEALS HAVE BEEN HEARD ALTOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. FOR THE SAKE OF CONVENIENCE, THE GROUNDS AS WELL AS THE FACTS NARRATED IN ITA NO.526/KOL/2016, FOR ASSESSMENT YEAR 2007-08, HAVE BEEN TAKEN INTO CONSIDERATION FOR DECIDING THE ABOVE APPEALS EN MASSE . 14.THE GROUNDS OF APPEAL IN THE LEAD CASE IN ITA NO.526/KOL/2016, FOR ASSESSMENT YEAR 2007-08, ARE AS FOLLOWS: 1. THE LD. CIT(A) - 6,KOLKATA HAS ERRED IN HIS DECISION THAT THE ASSESSING OFFICER WAS PARTLY BELIEVING THE BUSINESS ACTIVITY OF THE ASSESSEE, AS THE ACCESSING OFFICER WANTED TO ESTABLISH THE FACT IN ALL RESPECT THAT NO BUSINESS COULD BE RUN BY THE MANNER, THE ASSESSEE HAS STATED IN THE RECORDS. DISCREPANCIES AND CONTRADICTIONS IN ALL RESPECTS WERE OCCURRED IN THE STATEMENT OF THE ASSESSEE REGARDING LAND USED, AS WELL AS THE STATEMENTS AND CERTIFICATE MADE BY THE SARPANCH OF THAT TIME AND HIS FATHER ALSO. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CLT(A)-6,KOLKATA WAS NOT JUSTIFIED IN HIS DECISION TO DISMISS THE ADDITION OF THE AO WITHOUT VERIFYING THE GENUINENESS OF THE BUSINESS. 3. THAT THE LD. CIT(A)-6,KOLKATA, ERRED IN DISMISSING THE ADDITION OF THE ASSESSING OFFICER WITHOUT TAKING INTO CONSIDERATION OF THE FACT THAT THE CLAIM OF THE ASSESSEE OF RUNNING A BUSINESS, BEING A CHARTERED ACCOUNTANT IN PROFESSION, IS TOTALLY UNETHICAL ACCORDING TO THE LAW & ETHICS OF THE INSTITUTE OF CHARTERED ACCOUNTS. 4. THAT THE LD. CIT (A)-6,KOLKATA, ERRED IN DISMISSING THE ADDITION OF THE ASSESSING OFFICER WITHOUT TAKING INTO CONSIDERATION OF THAT FACT THAT THE AO MADE THIS ADDITION AS UNEXPLAINED CASH CREDIT AND NOT AS BUSINESS INCOME. 5. THE APPELLANT CRAVES LEAVE TO ADD ALTER OR AMEND ANY OF THE GROUNDS OF APPEAL DURING THE COURSE OF HEARING. 15.AT THE OUTSET ITSELF, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED BEFORE US THAT THE SAID ISSUE IS FULLY COVERED BY THE JUDGMENT OF THE HONBLE ITAT, KOLKATA IN ASSESSEES OWN CASE IN ITA NO.1990/KOL/2013 WHEREIN IT WAS HELD AS UNDER: 8. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FOREGOING DISCUSSION WE FIND THAT THE ASSESSEE HAS CLAIMED THE DEDUCTION UNDER SECTION 80JJA OF THE ACT FOR ITS BIO-FERTILIZER BUSINESS. BUT THE AO HAS HELD SRI BIJOY KUMAR SAHOO ITA NOS.526 TO 529/KOL/2016 A.YS: 2007-08, 2008-09, 2010-11 & 2011-12 PAGE | 6 THAT THERE WAS NO SUCH BUSINESS ACTIVITY AND ENTIRE SALES PROCEEDS FOR RS. 37,05,680.00 WAS TREATED AS INCOME UNDER SECTION 68 OF THE ACT. HOWEVER THE LD. CIT(A) ON APPEAL ALLOWED THE RELIEF TO THE ASSESSEE. FROM THE PERUSAL OF THE ORDERS OF LOWER AUTHORITIES WE FIND THAT VARIOUS REPORTS WERE CALLED FOR BY THE AO TO CHECK WHETHER THE BUSINESS OF THE ASSESSEE WAS INTO EXISTENCE OR NOT. WE FIND THAT THE CONTRADICTORY REPORTS WERE SUBMITTED FROM THE INSPECTOR OF THE WARD OF THE ITO HAVING JURISDICTION ON THE ASSESSEE AND THE INSPECTOR FROM BHUBANESWAR INCOME TAX OFFICE. AS PER THE REPORT OF INSPECTOR OF THE ITO THERE WAS NOT BUSINESS BUT AS PER THE INSPECTOR FROM BHUBANESWAR INCOME TAX OFFICE, THE BUSINESS WAS THERE BUT IT WAS NEGLIGIBLE IN VOLUME. THE AR IN SUPPORT OF HIS CLAIM HAS SUBMITTED VARIOUS REPORTS AND CERTIFICATES ABOUT THE EXISTENCE OF THE BUSINESS WHICH ARE PLACED ON RECORD. FROM THE ABOVE FACT WE ARE INCLINED TO HOLD THAT THERE WAS BUSINESS IN THE EXISTENCE. WE ALSO FIND SUPPORT FROM THE CONSISTENT CLAIM OF DEDUCTION UNDER SECTION 80JJA OF THE ACT FROM THE LAST SEVERAL YEARS. THE QUESTION OF THE DISALLOWANCE OF DEDUCTION OR NON- EXISTENCE OF THE BUSINESS HAS NEVER BEEN RAISED IN THE EARLIER YEARS. THE ALLEGATION OF THE AO THAT THE ASSESSEE BEING CHARTERED ACCOUNTANT HAS NOT TAKEN PERMISSION FROM THE INSTITUTE OF CHARTERED ACCOUNTANT HAS NO CONNECTION IN THE INCOME TAX PROCEEDINGS. SIMILARLY THE ALLEGATION OF THE AO THAT THE ASSESSEEIS DOING THE BUSINESS IN THE LAND BELONGING TO HIS FATHER WITHOUT SHARING THE PROFIT WITH HIS OTHER BROTHER AND SISTERS HAS NO BASE. THE REASONS FOR HOLDING THAT THERE WAS NO BUSINESS WERE NOT CORRECT. IN VIEW OF ABOVE WE ARE INCLINED NOT TO INTERFERE IN THE ORDER OF LD. CIT(A). HENCE THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 16.AS THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE COORDINATE BENCH, IN ASSESSEE`S OWN CASE AND THERE IS NO CHANGE IN FACTS AND LAW AND THE REVENUE IS UNABLE TO PRODUCE ANY MATERIAL TO CONTROVERT THE AFORESAID FINDINGS AND THE LD CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE BY FOLLOWING THE DECISION OF TRIBUNAL IN ASSESSEE`S OWN CASE (SUPRA) FOR A.Y. 2009-10, WE FIND NO REASON TO INTERFERE IN THE SAID ORDER OF THE LD CIT(A) AND THE SAME IS HEREBY UPHELD. THEREFORE, THESE APPEALS, IN ITA NO.526/KOL/16 AND 527/KOL/16, OF REVENUE ARE DISMISSED. 17. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 25/04/2018. SD/ - (A. T. VARKEY) SD/ - (A. L. SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; DATE: 25/04/2018 ( RS, SPS) SRI BIJOY KUMAR SAHOO ITA NOS.526 TO 529/KOL/2016 A.YS: 2007-08, 2008-09, 2010-11 & 2011-12 PAGE | 7 / COPY OF THE ORDER FORWARDED TO : TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/D.D.O, I.T.A.T, KOLKATA BENCHES, KOLKATA . 1. / THE APPELLANT- I.T.O., WD-22(4), KOLKATA 2. / THE RESPONDENT- SRI BIJOY KUMAR SAHOO 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, KOLKATA 6. [ / GUARD FILE.