ITO WD 1(1), KALYAN V. ALPESH BHAGWANJI GADA, THANE

ITA 5387/MUM/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3557 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 08-12-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 05-08-2013
• Court: TRIBUNAL
• Department Lawyers: A RAMCHANDRAN LD
• Assessee Lawyers: UJJ
• Keywords: Audit objection; Tax effect
• Section: 143(3); 153A

Judgement Text

ITA NO . 5387/MUM/2013 - A - JM T.E.L.T RS. 10 LACS ALPESH BHAGWANJI GADA 1 IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, MUMBAI BEFORE : SHRI MAHAVIR SINGH , JUDICIAL MEMBER, AND SHRI RAMIT KOCHAR , ACCOUNTANT MEMBER ITA NO. 5387 / MUM/2013 A.Y . 200 5 - 06 I.T.O WARD 1(1), KALYAN VS. SHRI ALPESH BHAGWANJI GADA PAN: AAWPG 2164 M ( APPELLANT ) ( RESPONDENT ) FOR THE APPELLANT/ DEPARTMENT: SHRI A.RAMCHANDRAN, LD. SR.DR FOR THE RESPONDENT/ ASSESSEE : S/ SHRI DARSHAN GANDHI & UJJWAL GANGWAL, LD.ARS DATE OF HEARING: 28 - 06 - 2016 DATE OF PRONOUNCEMENT: 28 - 0 6 - 2016 ORDER SHRI MAHAVIR SINGH, JUDICIAL MEMBER: TH IS APPEAL BY THE REVENUE IS ARISING OUT OF ORDER OF CIT(A) IN NO. THN/CIT(A) - I/ITO (CENTRAL)/THN/17/12 - 13 DATED 07 - 05 - 2013. ASSESSMENT WAS FRAMED BY ITO (CENTRAL), THANE FOR THE ASSESSMENT YEAR 2005 - 06 U/S 153A R.W.S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 30 - 12 - 2009. THE PENALTY UNDER DISPUTE WAS LEVIED BY ITO (CENTRAL), THANE U/S. 271(1) ( C) OF THE ACT VIDE HIS ORDER DATED 29 - 06 - 2010. 2. AT THE OUTSET, IT IS SEEN THAT THE TAX EFFECT IN THIS APPEAL OF REVENUE ON THE DISPUTED PENALTY LEVIED BY AO AND DELETED BY CIT(A) IS RS.6,22,410/ - , WHICH IS LESS THAN RS. 10 LACS. 3. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS SEEN FROM THE PERUSAL OF THE RECORDS THAT THE TOTAL TAX EFFECT ON THE ADDITIONS DISPUTED BEFORE US IS ADMITTEDLY BELOW THE TAX EFFECT LIMIT PRESCRIBED BY CBDT VIDE CIRCULAR NO. ITA NO . 5387/MUM/2013 - A - JM T.E.L.T RS. 10 LACS ALPESH BHAGWANJI GADA 2 21 / 2015 DATED 10.12.2015 FOR PREFERRING APPEALS BEFORE TRIBUN AL BY THE REVENUE. IT WILL BE PERTINENT TO REPRODUCE THE RELEVANT PORTION OF THE SAID CIRCULAR NO. 21 / 2015 DATED 10.12.2015: - 3. HENCEFORTH, APPEALS / SLPS SHALL NOT BE FILED IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HERE UNDER: - S.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 TH EREON, 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 E FFECT 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. 5. THE ASSESSING OFFICER SHALL CALCULATE THE TAX EFFECT 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 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 WOR DS, HENCEFORTH, APPEALS CAN BE FILED ONLY WITH REFERENCE TO THE TAX EFFECT IN THE RELEVANT ASSESSMENT YEAR. HOWEVER, IN CASE OF A COMPOSITE ORDER OF ANY HIGH COURT OR APPELLATE AUTHORITY, WHICH INVOLVES MORE THAN ONE ASSESSMENT YEAR AND COMMON ISSUES IN MORE THAN ONE ASSESSMENT YEAR, APPEAL SHALL BE FILED IN RESPECT OF ALL SUCH ASSESSMENT YEARS EVEN IF THE TAX 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 YEAR(S) IN WHICH TAX EFFECT EXCEEDS THE MONETARY LIMIT PRESCRIBED. IN CASE WHERE A COMPOSITE ORDER / JUDGEMENT INVOLVES MORE THAN ONE ASSESSEE, EACH ASSESSEE SHALL BE DEALT WITH SEPARATELY. 8. ADVERSE JUDGEMENTS RELATING TO THE FOLLOWING ISSUES SHOULD BE CONTESTED ON MERIT S 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 PROVISIONS OF AN ACT OR RULE ARE UNDER CHALLENGE, OR (B) WHERE BOARDS ORDER, NOTIFIC ATION, INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES, OR (C) WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS BEEN ACCEPTED BY THE DEPARTMENT, OR ITA NO . 5387/MUM/2013 - A - JM T.E.L.T RS. 10 LACS ALPESH BHAGWANJI GADA 3 (D) WHERE THE ADDITION RELATES TO UNDISCLOSED FOREIGN ASSETS / BANK ACCOUNTS. 10. THIS INSTRUCTIO N 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. 3.1 ON PERUSAL OF THE CIRCULAR NO. 21 / 2015 DATED 10.12.2015 AND THE MATERIALS AVAILABLE ON RECORD, WE COULD NOT SEE WHETHER THE IMPUGNED CASE FALLS UNDER ANY OF THE EXCEPTIONS CONTEMPLATED IN THE SAID CIRCULAR , AS LD. SR DR COULD NOT POINT OUT ANY EXCEPTION AS PROVIDED IN THE CIRCULAR . WE ALSO FIND THAT THE CIRCULAR MAKES IT VERY CLEAR THAT THE REVISED MONETARY LIMITS SHALL APPLY RETROSPECTIVELY TO PENDING APPEALS AL SO. WE FIND THAT THE CIRCULAR IS BINDING ON THE TAX AUTHORITIES. THIS POSITION HAS BEEN CONFIRMED BY THE HONBLE APEX COURT IN THE CASE OF COMMISSIONER OF CUSTOMS VS INDIAN OIL CORPORATION LTD REPORTED IN 267 ITR 272 (SC) WHEREIN THEIR LORDSHIPS EXAMINED T HE EARLIER DECISIONS OF THE APEX COURT WITH REGARD TO BINDING NATURE OF THE CIRCULARS 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. HENCE WE HOLD THAT THE APPEAL(S) OF THE REVENUE DESERVE TO BE DISMISSED IN TERMS OF LOW TAX EFFECT VIDE CIRCULAR NO.21 / 2015 DATED 10.12.2015. ACCORDINGLY, THIS BEING A LOW TAX EFFECT CASE, WE DISMISS THE APPEAL OF THE REVENUE IN LIMINE, AS UNADMITTED, WITHOUT GOING INTO THE MERITS OF THE CASE. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED INLIMINE. ORDER PRONOUNCED IN THE OPEN COURT ON 28. 06.2016 SD/ - RAMIT KOCHAR ACCOUNTANT MEMBER SD/ - MAHAVIR SINGH JUDICIAL MEMBER DATE 28 / 06/2016 ITA NO . 5387/MUM/2013 - A - JM T.E.L.T RS. 10 LACS ALPESH BHAGWANJI GADA 4 1 . THE APPELLANT: I T O WARD 1 ( 1 ), 1 ST FLOOR, MOHAN PLAZA, WAYALE NAGAR, KHADAKPADA. 2 THE RESPONDENT - SHRI ALPESH BHAGWANJI GADA PROP: M/S. APPU TEXTILE MILLS 10A PLOT NO.501 GOPAL NAGAR, KALYAN RD, BHIWANDI, DIST: THANE. 3 / THE CIT, 4.THE CIT (A) 5 . DR, MUMBAI BENCH 6 . GUARD FILE . TRUE COPY, BY ORDER, ASSTT REGISTRAR **PRADIP/SPS COPY OF THE ORDER FORWARDED TO: