ACIT, New Delhi V. M/s. Ortel Communication Ltd., New Delhi

ITA 5296/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0430 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 31-01-2011
• Assessment Year: 1997-1998
• Appeal Filed On: 26-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PEEYUSH SONKAR
• Keywords: Tax effect
• Section: 68

Judgement Text

I.T.A. NO. 5296 /DEL/2010 1/3 IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI, BENCH E NEW DELHI, BENCH E NEW DELHI, BENCH E NEW DELHI, BENCH E BEFORE SHRI C. L. SETHI, JUDICIAL MEMBER AND SHRI K. D. RANJAN, ACCOUTANT MEMBER ITA NO. 5296 /DEL/2010 (ASSESSMENT YEAR 1997-98) ACIT, CIRCLE 13(1), VS. M/S. ORTEL COMMUNICATION L TD., NEW DELHI B-7/122A, SAFDARJUNG ENCLAVE, NEW DELHI-110 029 (APPELLANTS) (RESPONDENTS) PAN / GIR NO. AAACO1004B APPELLANT BY: SHRI PEEYUSH SONKAR, SR. DR RESPONDENT BY: NONE ORDER ORDER ORDER ORDER PER K. D. RANJAN, AM: PER K. D. RANJAN, AM: PER K. D. RANJAN, AM: PER K. D. RANJAN, AM: 1. THIS APPEAL BY THE REVENUE FOR THE ASSESSMENT YE AR 1997-98 ARISES OUT OF THE ORDER OF LD. CIT(A) XVIII, NEW DE LHI. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE REPRODUCED AS UNDE R: 1) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DELETING ADDITION OF ` 5 LACS MADE BY THE A.O. U/S 68 OF THE ACT ON ACCOUNT OF SHARE APPLICATION M ONEY. 2) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN IGNORING THE FACT THAT THE ASSESSEE FILED TO PRODUCE DIRECTORS/AUTHORIZED REPRESENTATIVE OF THE ALLEGED APPLICANTS EVEN AFTER SPECIFICALLY BEING ASKED TO D O SO BY THE A.O. ON MANY OCCASIONS AND, THUS FAILED TO DISCHARG E ITS ONUS TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF T HE SHARE APPLICANTS AND THE GENUINENESS OF TRANSACTION. 3) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN RELYING UPON THE SUPREME COURT DECI SION GIVEN IN THE CASE OF CIT VS LOVELY EXPORTS P. LTD. 229 IT R 268 (S.C.). IN THE CASE OF LOVELY EXPORTS P. LTD., THE A.O. DID NOT ASK THE ASSESSEE TO PRODUCE ANY OF THE INVESTOR SHAREHOLDER S FOR CROSS EXAMINATION. HOWEVER, IN THE INSTANT CASE, THE ASS ESSEE WAS SPECIFICALLY ASKED AND GIVEN SEVERAL OPPORTUNITIES TO PRODUCE THE DIRECTORS AUTHORIZED REPRESENTATIVE OF THE INVE STING COMPANIES FOR PROVING THEIR GENUINENESS, IDENTITY A ND I.T.A. NO. 5296 /DEL/2010 2/3 CREDITWORTHINESS, BUT YET NONE COULD BE PRODUCED BE FORE THE A.O. BY THE TAX PAYER. THUS, THE FACTS OF THIS CAS E ARE DISTINGUISHABLE FORM THE SUPREME COURT DECISION CIT ED ABOVE WHICH THE LD. CIT(A) OVERLOOKED. 2. THE ONLY ISSUE FOR CONSIDERATION RELATES TO DELE TING ADDITION OF ` 5 LACS MADE BY THE A.O. U/S 68 OF THE ACT ON ACCO UNT OF SHARE APPLICATION MONEY. NONE APPEARED ON BEHALF OF THE ASSESSEE. HAVING REGARD TO THE GROUND OF APPEAL RAISED, THE I SSUE IS DECIDED AFTER HEARING THE LD. SR. DR. 3. WE FIND THAT IN THIS CASE, THE ADDITION WHICH HA S BEEN AGITATED IN THE GROUNDS OF APPEAL IS OF ` 5 LACS AND TAX THE REON WILL BE LESS THAN ` 2 LACS INCLUDING EDUCATION CESS. THEREFORE, APPEAL FILED BY THE ASSESSEE IS NOT MAINTAINABLE. ACCORDING TO THE C.B.D.T. INSTRUCTIONS NO. 5/2008 DATED 15.05.2008, THE DEPAR TMENT SHOULD NOT HAVE FILED THE APPEAL BEFORE THE TRIBUNAL. HON BLE BOMBAY HIGH COURT IN THE CASE OF PITHWA ENGG. WORKS (276 ITR 51 9), HAVE OBSERVED AS UNDER: ONE FAILS TO UNDERSTAND HOW THE REVENUE CAN CONTEND THAT SO FAR AS NEW CASES ARE CONCERNED, THE CIRCULAR ISSUED BY THE BOARD IS BINDING ON THEM AND IN COMPLIANCE WITH THE SAID INSTRUCTIONS, THEY DO NOT FILE REFERENCES IF THE TAX EFFECT IS LESS THAN RS.2 LAKH S. BUT THE SAME APPROACH IS NOT ADOPTED WITH RESPECT TO TH E OLD REFERRED CASES EVEN IF THE TAX EFFECT IS LESS T HAN RS.2 LAKHS. IN OUR VIEW, THERE IS NO LOGIC BEHIND T HIS APPROACH. 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 ASSESSEES ON THE FILE OF THE DEPARTMENTS HAVE INCREASED; CONSEQUENTLY, THE BURDEN ON THE DEPARTMENT ALSO INCREASED TO A TREMENDOUS EXTENT. THE CORRIDORS OF THE SUPERIOR COURTS ARE CHOKED WIT H 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 LAK HS. THE SAME POLICY FOR OLD MATTERS NEEDS TO BE ADOPTED BY THE DEPARTMENT. IN OUR VIEW, THE BOARDS CIRCULAR I.T.A. NO. 5296 /DEL/2010 3/3 DATED MARCH 27, 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 JUSTIFICATION TO PROCEED WITH DECADES O LD REFERENCES HAVING NEGLIGIBLE TAX EFFECT. 5. IN VIEW OF THE ABOVE DISCUSSION, THE APPEAL FILE D BY THE REVENUE IS DISMISSED BEING UNADMITTED ON ACCOUNT OF LOW TAX EFFECT. 6. PRONOUNCED IN THE OPEN COURT ON 18 TH FEB., 2011. SD./- SD./- (C. L. SETHI) (K. D. RANJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:18 TH FEB., 2011 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI