D.C.I.T., CENTRAL CIRCLE - II, JALANDHAR V. M/S SPEED RECORDS, JALANDHAR

ITA 529/ASR/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7070 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 15-01-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 11-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Assessee Lawyers: J S BHASIN
• Keywords: Audit objection; Tax effect
• Section: 115JB; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CAMP BENCH AT JALANDHAR BEFORE SH. N. K. SAINI, HONBLE VICE PRESIDENT AND SH. RAVISH SOOD, JUDICIAL MEMBER ITA NO.529/ASR./2017 : ASSTT. YEAR : 2008-09 DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-II, JALANDHAR VS M/S SPEED RECORDS, EK-216, PHAGWARA GATE, JALANDHAR (APPELLANT) (RESPONDENT) PAN NO. ABAFS9088H ASSESSEE BY : SH. J. S. BHASIN, ADV. REVENUE BY : SMT. PARWI NDER KAUR, CIT DR DATE OF HEARING : 15.01.2019 DATE OF PRONOUNCEMENT : 15.01.2019 ORDER PER N. K. SAINI, VICE PRESIDENT: THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORD ER DATED 31.05.2017 OF LD. CIT(A)-I, JALANDHAR. 2. DURING THE COURSE OF HEARING, LEARNED COUNSEL FO R THE ASSESSEE, AT THE VERY OUTSET, STATED THAT THE APPEA L FILED BY THE DEPARTMENT IS NOT MAINTAINABLE IN VIEW OF CIRCULAR NO.3/2018 DATED 11.7.2018 ISSUED BY THE CBDT WHEREIN THE MONETARY L IMIT FOR TAX EFFECT FOR FILING THE APPEAL BEFORE THE ITAT HAS BE EN INCREASED TO RS.20 LAKHS. 3. THE LD. SR. DR, SUBMITTED THAT CIRCULAR NO.3/201 8 IS NOT A BLANKET BAR ON FILING OF APPEALS BEFORE ITAT AND PA RA 10 DETAILS THE EXCEPTIONS TO FILE THE APPEAL WHERE TAX EFFECT IS L ESS THAN RS.20 LACS ITA NO. 529/ASR./2017 SPEED RECOR DS 2 AND ALSO CLARIFIES THAT IN CASES WHERE TAX EFFECT I S LESS THAN RS.20 LAKHS AND IN CASES WHERE TAX EFFECT CANNOT BE QUANT IFIED AS IN THE CASE OF REGISTRATION U/S 12AA, THE MONETARY LIMIT W OULD NOT BE APPLICABLE. IT WAS FURTHER SUBMITTED THAT THE AFOR ESAID CIRCULAR NO.3/18 HAS BEEN AMENDED VIDE LETTER F.NO.279/MISC. 142/2007- ITJ(PT) DATED 20 TH JULY, 2018 AS UNDER:- (A) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVIS IONS OF AN ACT OR RULE IS UNDER CHALLENGE, OR (B) WHERE BOARDS ORDER, NOTIFICATION, INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES , OR (C) WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS B EEN ACCEPTED BY THE DEPARTMENT, OR (D) WHERE ADDITION RELATES TO UNDISCLOSED FOREIGN INCOME/UNDISCLOSED FOREIGN ASSETS INCLUDING FINANCI AL ASSETS/UNDISCLOSED FOREIGN BANK ACCOUNT. (E) WHERE ADDITION IS BASED ON INFORMATION RECEIVE D FROM EXTERNAL SOURCES IN THE NATURE OF LAW ENFORCEM ENT AGENCIES SUCH AS CBI/ED/DRI/SFIO/DIRECTORATE GENERA L OF GST INTELLIGENCE (DGGI). (F) CASES WHERE PROSECUTION HAS BEEN FILED BY THE DEPARTMENT AND IS PENDING IN THE COURT. IT WAS ALSO STATED THAT STRICTLY SPEAKING, ALL ISSU ES PERTAINING TO SECTION 153A/153C FALL WITHIN THE AMBIT OF 10(A) AS THESE ISSUES HAVE BEEN DECIDED BY THE COURTS WITHOUT APPRECIATIN G THE CLEAR AND UNAMBIGUOUS PROVISIONS OF THE ACT AND ON MOST ISSUE S THE REVENUE IS IN APPEAL AGAINST THE SAID JUDGMENTS. 4. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES. IN OUR OPINION, THE AMENDED CIRCULAR IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE RATHER IT IS COVERED BY THE ORIGIN AL CIRCULAR NO.3/18 ITA NO. 529/ASR./2017 SPEED RECOR DS 3 DATED 11.07.2018, VIDE WHICH THE CBDT HAS REVISED T HE MONETARY LIMIT TO RS.20,00,000/- FOR NOT FILING THE APPEAL BEFORE THE TRIBUNAL, THE SAID CIRCULAR READS AS UNDER: SUBJECT: REVISION OF MONETARY LIMITS FOR FILING OF APPEALS BY THE DEPARTMENT BEFORE INCOME TAX APPELLATE TRIBU NAL, HIGH COURTS AND SLPS/APPEALS BEFORE SUPREME COURT- MEASURES FOR REDUCING LITIGATION-REG. REFERENCE IS INVITED TO BOARDS CIRCULAR NO. 21 OF 2015 DATED 10.12.2015 WHEREIN MONETARY LIMITS AND OTHER CONDIT IONS FOR FILING DEPARTMENTAL APPEALS (IN INCOME-TAX MATTERS) BEFORE INCOME TAX APPELLATE TRIBUNAL, HIGH COURTS AND SLPS / APPEALS BEFORE SUPREME COURT WERE SPECIFIED. 2. IN SUPERSESSION OF THE ABOVE CIRCULAR, IT HAS BE EN DECIDED BY THE BOARD THAT DEPARTMENTAL APPEALS MAY BE FILED ON MERITS BEFORE INCOME TAX APPELLATE TRIBUNAL AND HIG H COURTS AND SLPS/ APPEALS BEFORE SUPREME COURT KEEPI NG IN VIEW THE MONETARY LIMITS AND CONDITIONS SPECIFIED B ELOW. 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/SLPS IN INCOME-TAX MATTERS MONETARY LIMIT (IN RS) 1 BEFORE APPELLATE TRIBUNAL 20,00,000/- 2 BEFORE HIGH COURT 50,00,000/- 3 BEFORE SUPREME COURT 1,00,00,000/- IT IS CLARIFIED THAT AN APPEAL SHOULD NOT BE FILED MERELY BECAUSE THE TAX EFFECT IN A CASE EXCEEDS THE MONETA RY 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 DIFFERE NCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX TH AT WOULD HAVE BEEN CHARGEABLE HAD SUCH TOTAL INCOME BEEN RED UCED BY THE AMOUNT OF INCOME IN RESPECT OF THE ISSUES AGAIN ST WHICH ITA NO. 529/ASR./2017 SPEED RECOR DS 4 APPEAL IS INTENDED TO BE FILED (HEREINAFTER REFERRE D TO AS DISPUTED ISSUES). FURTHER, TAX EFFECT SHALL BE T AX INCLUDING APPLICABLE SURCHARGE AND CESS. HOWEVER, THE TAX WIL L NOT INCLUDE ANY INTEREST THEREON, EXCEPT WHERE CHARGEAB ILITY OF INTEREST ITSELF IS IN DISPUTE. IN CASE THE CHARGEAB ILITY OF INTEREST IS THE ISSUE UNDER DISPUTE, THE AMOUNT OF INTEREST SHALL BE THE TAX EFFECT. IN CASES WHERE RETURNED LO SS IS REDUCED OR ASSESSED AS INCOME, THE TAX EFFECT WOULD INCLUDE NOTIONAL TAX ON DISPUTED ADDITIONS. IN CASE OF PENA LTY 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 EF FECT SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUES IN 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 DISPUTED ISSUES EXCEEDS THE MONETARY LIMIT SPEC IFIED IN PARA 3. NO APPEAL SHALL BE FILED IN RESPECT OF AN A SSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIED IN PARA 3. IN OTHER WORDS, HENCEFOR TH, APPEALS CAN BE FILED ONLY WITH REFERENCE TO THE TAX EFFECT IN THE RELEVANT ASSESSMENT YEAR. HOWEVER, IN CASE OF A COM POSITE ORDER OF ANY HIGH COURT OR APPELLATE AUTHORITY, WHI CH INVOLVES MORE THAN ONE ASSESSMENT YEAR AND COMMON I SSUES IN MORE THAN ONE ASSESSMENT YEAR, APPEALS SHALL BE FILED IN RESPECT OF ALL SUCH ASSESSMENT YEARS EVEN IF THE TA X 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 Y EAR(S) IN WHICH TAX EFFECT EXCEEDS THE MONETARY LIMIT PRESCRI BED. IN CASE WHERE A COMPOSITE ORDER/JUDGEMENT INVOLVES MOR E THAN ONE ASSESSEE, EACH ASSESSEE SHALL BE DEALT WITH SEP ARATELY. 6. FURTHER, WHERE INCOME IS COMPUTED UNDER THE PROV ISIONS OF SECTION 115JB OR SECTION 115JC, FOR THE PURPOSES OF DETERMINATION OF TAX EFFECT, TAX ON THE TOTAL INC OME ASSESSED SHALL BE COMPUTED AS PER THE FOLLOWING FORMULA- (A B) + (C D) WHERE, ITA NO. 529/ASR./2017 SPEED RECOR DS 5 A = THE TOTAL INCOME ASSESSED AS PER THE PROVISIONS OTHER THAN THE PROVISIONS CONTAINED IN SECTION 115JB OR S ECTION 115JC (HEREIN CALLED GENERAL PROVISIONS); B = THE TOTAL INCOME THAT WOULD HAVE BEEN CHARGEABL E HAD THE TOTAL INCOME ASSESSED AS PER THE GENERAL PROVIS IONS BEEN REDUCED BY THE AMOUNT OF THE DISPUTED ISSUES U NDER GENERAL PROVISIONS; C = THE TOTAL INCOME ASSESSED AS PER THE PROVISIONS CONTAINED IN SECTION 115JB OR SECTION 115JC; D = THE TOTAL INCOME THAT WOULD HAVE BEEN CHARGEABL E HAD THE TOTAL INCOME ASSESSED AS PER THE PROVISIONS CON TAINED IN SECTION 115JB OR SECTION 1I5JCWAS REDUCED BY THE AMOUNT OF DISPUTED ISSUES UNDER THE SAID PROVISIONS : HOWEVER, WHERE THE AMOUNT OF DISPUTED ISSUES IS CON SIDERED BOTH UNDER THE PROVISIONS CONTAINED IN SECTION 115J B OR SECTION 115JC AND UNDER GENERAL PROVISIONS, SUCH AM OUNT SHALL NOT BE REDUCED FROM TOTAL INCOME ASSESSED WHI LE DETERMINING THE AMOUNT UNDER ITEM D. 7. IN A CASE WHERE APPEAL BEFORE A TRIBUNAL OR A C OURT IS NOT FILED ONLY ON ACCOUNT OF THE TAX EFFECT BEING LESS THAN THE MONETARY LIMIT SPECIFIED ABOVE, THE PR. COMMISSIONE R OF INCOME-TAX/ COMMISSIONER OF INCOME TAX SHALL SPECIF ICALLY RECORD THAT EVEN THOUGH THE DECISION IS NOT ACCEPT ABLE, APPEAL IS NOT BEING FILED ONLY ON THE CONSIDERATION THAT THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIE D IN THIS CIRCULAR. FURTHER, IN SUCH CASES, THERE WILL BE NO PRESUMPTION THAT THE INCOME-TAX DEPARTMENT HAS ACQU IESCED IN THE DECISION ON THE DISPUTED ISSUES. THE INCOME- TAX DEPARTMENT SHALL NOT BE PRECLUDED FROM FILING AN AP PEAL AGAINST THE DISPUTED ISSUES IN THE CASE OF THE SAME ASSESSEE FOR ANY OTHER ASSESSMENT YEAR, OR IN THE CASE OF AN Y OTHER ASSESSEE FOR THE SAME OR ANY OTHER ASSESSMENT YEAR, IF THE TAX EFFECT EXCEEDS THE SPECIFIED MONETARY LIMITS. 8. IN THE PAST, A NUMBER OF INSTANCES HAVE COME TO THE NOTICE OF THE BOARD, WHEREBY AN ASSESSEE HAS CLAIMED RELIE F FROM THE TRIBUNAL OR THE COURT ONLY ON THE GROUND THAT THE D EPARTMENT HAS IMPLICITLY ACCEPTED THE DECISION OF THE TRIBUNA L OR COURT IN THE CASE OF THE ASSESSEE FOR ANY OTHER ASSESSMEN T YEAR OR ITA NO. 529/ASR./2017 SPEED RECOR DS 6 IN THE CASE OF ANY OTHER ASSESSEE FOR THE SAME OR A NY OTHER ASSESSMENT YEAR, BY NOT FILING AN APPEAL ON THE SAM E DISPUTED ISSUES. THE DEPARTMENTAL REPRESENTATIVES/COUNSELS M UST MAKE EVERY EFFORT TO BRING TO THE NOTICE OF THE TRIBUNAL OR THE COURT THAT THE APPEAL IN SUCH CASES WAS NOT FILED O R NOT ADMITTED ONLY FOR THE REASON OF THE TAX EFFECT BEIN G LESS THAN THE SPECIFIED MONETARY LIMIT AND, THEREFORE, NO INF ERENCE SHOULD BE DRAWN THAT THE DECISIONS RENDERED THEREIN WERE ACCEPTABLE TO THE DEPARTMENT. ACCORDINGLY, THEY SHO ULD IMPRESS UPON THE TRIBUNAL OR THE COURT THAT SUCH CA SES DO NOT HAVE ANY PRECEDENT VALUE AND ALSO BRING TO THE NOTI CE OF THE TRIBUNAL/ COURT THE PROVISIONS OF SUB SECTION (4) O F SECTION 268A OF THE INCOME-TAX ACT, 1961 WHICH READ AS UNDE R : (4) THE APPELLATE TRIBUNAL OR COURT, HEARING SUCH APPEAL OR REFERENCE, SHALL HAVE REGARD TO THE ORDERS, INST RUCTIONS OR DIRECTIONS ISSUED UNDER SUB-SECTION (1) AND THE CIRCUMSTANCES UNDER WHICH SUCH APPEAL OR APPLICATIO N FOR REFERENCE WAS FILED OR NOT FILED IN RESPECT OF ANY CASE. 9. AS THE EVIDENCE OF NOT FILING APPEAL DUE TO THI S CIRCULAR MAY HAVE TO BE PRODUCED IN COURTS, THE JUDICIAL FOL DERS IN THE OFFICE OF PR. CSIT/CSIT MUST BE MAINTAINED IN A SYS TEMIC MANNER FOR EASY RETRIEVAL. 10. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING ISS UES 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 PROVIS IONS OF AN ACT OR RULE IS UNDER CHALLENGE, OR (B) WHERE BOARDS ORDER, NOTIFICATION, INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA FIRES , OR (C) WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS B EEN ACCEPTED BY THE DEPARTMENT, OR (D) WHERE THE ADDITION RELATES TO UNDISCLOSED FOREI GN ASSETS/ BANK ACCOUNTS. ITA NO. 529/ASR./2017 SPEED RECOR DS 7 11. THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE S HALL NOT APPLY TO WRIT MATTERS AND DIRECT TAX MATTERS OTHER THAN INCOME TAX. FILING OF APPEALS IN OTHER DIRECT TAX M ATTERS SHALL CONTINUE TO BE GOVERNED BY RELEVANT PROVISION S OF STATUTE AND RULES. FURTHER, IN CASES WHERE THE TAX EFFECT IS NOT QUANTIFIABLE OR NOT INVOLVED, SUCH AS THE CASE OF R EGISTRATION OF TRUSTS OR INSTITUTIONS UNDER SECTION 12A/ 12AA O F THE IT ACT, 1961 ETC., FILING OF APPEAL SHALL NOT BE GOVER NED BY THE LIMITS SPECIFIED IN PARA 3 ABOVE AND DECISION TO FI LE APPEALS IN SUCH CASES MAY BE TAKEN ON MERITS OF A PARTICULA R CASE. 12. IT IS CLARIFIED THAT THE MONETARY LIMIT OF RS. 20 LAKHS FOR FILING APPEALS BEFORE THE ITAT WOULD APPLY EQUALLY TO CROSS OBJECTIONS UNDER SECTION 253(4) OF THE ACT. CROSS O BJECTIONS BELOW THIS MONETARY LIMIT, ALREADY FILED, SHOULD BE PURSUED FOR DISMISSAL AS WITHDRAWN/ NOT PRESSED. FILING OF CROSS OBJECTIONS BELOW THE MONETARY LIMIT MAY NOT BE CONS IDERED HENCEFORTH. SIMILARLY, REFERENCES TO HIGH COURTS AN D SLPS/ APPEALS BEFORE SUPREME COURT BELOW THE MONETARY LIM IT OF RS. 50 LAKHS AND RS. 1 CRORE RESPECTIVELY SHOULD BE PURSUED FOR DISMISSAL AS WITHDRAWN/ NOT PRESSED. REFERENCES BEFORE HIGH COURT AND SLPS/ APPEALS BELOW THESE LIMITS MAY NOT BE CONSIDERED HENCEFORTH. 13. THIS CIRCULAR WILL APPLY TO SLPS/ APPEALS/ CRO SS OBJECTIONS/ REFERENCES TO BE FILED HENCEFORTH IN SC/HCS/TRIBUNAL AND IT SHALL ALSO APPLY RETROSPECTI VELY TO PENDING SLPS/ APPEALS/ CROSS OBJECTIONS/REFERENCES. PENDING APPEALS BELOW THE SPECIFIED TAX LIMITS IN PARE 3 AB OVE MAY BE WITHDRAWN/ NOT PRESSED. 14. THE ABOVE MAY BE BROUGHT TO THE NOTICE OF ALL C ONCERNED. 15. THIS ISSUES UNDER SECTION 268A OF THE INCOME-TA X ACT 1961. 5. FROM CLAUSE 12 & 13 OF THE ABOVE SAID CIRCULAR I T IS CLEAR THAT THESE INSTRUCTIONS ARE APPLICABLE TO THE PENDING AP PEALS ALSO AND AS PER CLAUSE 13, THERE IS CLEAR CUT INSTRUCTION TO TH E DEPARTMENT TO WITHDRAW OR NOT TO PRESS THE APPEALS FILED BEFORE T HE ITAT WHEREIN ITA NO. 529/ASR./2017 SPEED RECOR DS 8 TAX EFFECT IS LESS THAN RS.20,00,000/-. THESE INSTR UCTIONS ARE OPERATIVE RETROSPECTIVELY TO THE PENDING APPEALS. 6. KEEPING IN VIEW THE CBDT CIRCULAR NO. 3 OF 2018 DATED 11.07.2018, WE ARE OF THE VIEW THAT THE REVENUE SHO ULD NOT HAVE FILED THE INSTANT APPEAL BEFORE THE TRIBUNAL. 7. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS D ISMISSED. (ORDER PRONOUNCED IN THE COURT ON 15/01/2019) SD/- SD/- (RAVISH SOOD) (N. K. SAINI) JUDICIAL MEMBER V ICE PRESIDENT DATED: 15/01/2019 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR