ITO, New Delhi V. M/s. Creation Industries Pvt. Ltd., New Delhi

ITA 5769/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4733 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2002-2003
• Appeal Filed On: 16-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K TEWARI SR DR SHRI S S RANA
• Keywords: Audit objection; Tax effect
• Section: 115JB; 12AA; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SHRI. N. K. SAINI, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NO.3064/DEL/2015 ASSESSMENT YEAR:2009-10 ACIT, CENTRAL CIRCLE-52(1) NEW DELHI. VS M/S SOUND CRAFT, 13, DARYAGANJ, NEW DELHI. PAN: AACFS6679K CO NO.443/DEL/2015 (IN ITA NO.3064/DEL/2016) ASSESSMENT YEAR:2009-10 M/S SOUND CRAFT, 13, DARYAGANJ, NEW DELHI. VS ACIT, CENTRAL CIRCLE-52(1) NEW DELHI. PAN: AACFS6679K ITA NO.5754/DEL/2015 ASSESSMENT YEAR:2011-12 DCIT, CIRCLE-18(2) NEW DELHI. VS M/S NIPPOM AUDITRONIX LTCD. N-191, GREATER KAILASH-1, NEW DELHI. PAN: AAACN2163L ITA NO.5769/DEL/2015 ASSESSMENT YEAR:2002-03 INCOME-TAX OFFICER, WARD 6(4) NEW DELHI. VS M/S CREATION INDUSTRIES PVT. LTD., A-15/5, VASANT VIHAR NEW DELHI. PAN: AAACC5136E 2 ITA NO 2997/DEL/2014 ASSESSMENT YEAR:2010-11 DCIT, CENTRAL CIRCLE-11 FARIDABAD. VS SANTOSH KUMAR SONI URF JITENDER SONI, 243-L, MODEL TOWN, REWARI. PAN: AQDPS5293C ITA NO 2996/DEL/2014 ASSESSMENT YEAR:2008-09 DCIT, CENTRAL CIRCLE-11 FARIDABAD. VS SANTOSH KUMAR SONI URF JITENDER SONI, 243-L, MODEL TOWN, REWARI. PAN: AQDPS5293C ITA NO 2617/DEL/2014 ASSESSMENT YEAR:2006-07 DCIT, CENTRAL CIRCLE-11 NEW DELHI. VS SUBHASH CHAND SONI , 243-L, MODEL TOWN, REWARI. PAN: AXPPS6241M ITA NO.5321/DEL/2015 ASSESSMENT YEAR:2010-11 ACIT, CENTRAL CIRCLE-26, NEW DELHI. VS MAYFIELD PROJECTS, C BLOCK SITE OFFICE, GURGASON PAN: AAAAM3127D ( APPELLANT) (RESPONDENT) 3 REVENUE BY: SHRI S.K. TEWARI, SR. DR SHRI S.S. RANA, CIT DR, ASSESSEE BY: NONE DATE OF HEARING: 02.08.2018 DATE OF PRONOUNCEMENT: 02.08.2018 O R D E R PER BENCH : ALL THESE APPEALS ARE PREFERRED BY THE REVENUE CHAL LENGING THE ORDERS OF THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) (IN SHORT LD. CIT(A). CROSS OBJECTION NO.443/DEL/2015 IS FILED BY THE ASSESSEE M/S SOUND CRAFT ON THE GROUND THAT THE APPEAL FILED BY THE REVENUE, BEING WITHIN THE LIMIT PRESCRIBED BY CBDT CIRCULAR NO.21/2015, IS NOT MAINTAINABLE 2. WE HAVE HEARD THE LEARNED DR AND PERUSED THE MAT ERIAL ON RECORD. IT IS NOTICED THAT THAT THE TAX EFFECT INV OLVED IN THESE APPEALS IS LESS THAN RS.20,00,000/-, THEREFORE, IN VIEW OF THE CIRCULAR NO. 3/2018 ISSUED BY THE CBDT AND THE PROV ISIONS CONTAINED IN SECTION 268A OF THE INCOME TAX ACT, 19 61 (HEREINAFTER TO BE REFERRED AS THE ACT), THE DEPART MENT IS BOUND TO WITHDRAW THE APPEALS. 3. ON THE OTHER HAND, THE LD. D.R., ALTHOUGH SUPPOR TED THE ORDERS OF THE LEARNED ASSESSING OFFICER, BUT COULD NOT CONTROVERT THIS FACT THAT TAX EFFECT IN THESE APPEALS IS LESS THAN RS.20,00,000/-. 4. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PA RTIES AND THE MATERIAL AVAILABLE ON RECORD, IT IS NOTICED THA T SECTION 268A HAS BEEN INSERTED BY THE FINANCE ACT, 2008 WITH RET ROSPECTIVE EFFECT FROM 01/04/99. THE SAID SECTION 268 OF THE A CT PROVIDES 4 THAT THE BOARD MAY ISSUE INSTRUCTION OR DIRECTIONS TO THE OTHER INCOME-TAX AUTHORITIES FIXING MONETARY LIMITS FOR N OT FILING THE APPEALS BEFORE THE APPELLATE TRIBUNAL OR THE COURTS , SAID INSTRUCTIONS/DIRECTIONS ARE BINDING ON THE INCOME T AX AUTHORITIES. 5. IT IS NOTICED THAT THE CBDT HAS ISSUED CIRCULAR NO. 3 OF 2018 DATED 11.07.2018, VIDE WHICH IT HAS REVISED THE MON ETARY 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 CONDITIONS FOR FILING DEPARTMENTAL APPEALS (IN INCO ME-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 TRIBUNA L AND HIGH COURTS AND SLPS/ APPEALS BEFORE SUPREME COURT KEEPING IN VIEW THE MONETARY LIMITS AND CONDITIONS SPECIFIED BELOW. 3. HENCEFORTH, APPEALS/ SLPS SHALL NOT BE FILED IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY L IMITS 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/- 5 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 C ASES 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 TH E TAX THAT WOULD HAVE BEEN CHARGEABLE HAD SUCH TOTAL INCO ME 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). FURT HER, TAX EFFECT SHALL BE TAX INCLUDING APPLICABLE SURCHARGE AND CESS. HOWEVER, THE TAX WILL NOT INCLUDE ANY INTERES T THEREON, EXCEPT WHERE CHARGEABILITY OF INTEREST ITS ELF IS IN DISPUTE. IN CASE THE CHARGEABILITY OF INTEREST IS T HE 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 TA X ON DISPUTED ADDITIONS. IN CASE OF PENALTY ORDERS, THE TAX EFFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDU CED 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 M ORE THAN ONE ASSESSMENT YEAR, APPEAL CAN BE FILED IN RESPECT OF SUCH ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFE CT IN RESPECT OF THE DISPUTED ISSUES EXCEEDS THE MONETARY LIMIT SPECIFIED IN PARA 3. NO APPEAL SHALL BE FILED IN RE SPECT OF AN ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIED IN PARA 3. IN OTH ER WORDS, HENCEFORTH, APPEALS CAN BE FILED ONLY 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 AUTHORITY, WHICH INVOLVES MORE T HAN ONE ASSESSMENT YEAR AND COMMON ISSUES IN MORE THAN ONE ASSESSMENT YEAR, APPEALS SHALL BE FILED IN RESPECT OF ALL SUCH ASSESSMENT YEARS EVEN IF THE TAX EFFECT IS LES S 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 CA SE 6 WHERE A COMPOSITE ORDER/JUDGMENT INVOLVES MORE THAN ONE ASSESSEE, EACH ASSESSEE SHALL BE DEALT WITH SEPARAT ELY. 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 FOR MULA- (A B) + (C D) WHERE, A = THE TOTAL INCOME ASSESSED AS PER THE PROVISIONS OTHER THAN THE PROVISIONS CONTAINED IN SECTION 115J B OR SECTION 115JC (HEREIN CALLED GENERAL PROVISIONS); B = THE TOTAL INCOME THAT WOULD HAVE BEEN CHARGEABL E HAD THE TOTAL INCOME ASSESSED AS PER THE GENERAL PROVISIONS BEEN REDUCED BY THE AMOUNT OF THE DISPUT ED ISSUES UNDER 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 CONTAINED IN SECTION 115JB OR SECTION 1I5JCWAS REDU CED BY THE AMOUNT OF DISPUTED ISSUES UNDER THE SAID PROVISIONS: HOWEVER, WHERE THE AMOUNT OF DISPUTED ISSUES IS CONSIDERED BOTH UNDER THE PROVISIONS CONTAINED IN S ECTION 115JB OR SECTION 115JC AND UNDER GENERAL PROVISIONS , SUCH AMOUNT SHALL NOT BE REDUCED FROM TOTAL INCOME ASSES SED WHILE 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 L ESS THAN THE MONETARY LIMIT SPECIFIED ABOVE, THE PR. COMMISS IONER OF INCOME-TAX/ COMMISSIONER OF INCOME TAX SHALL SPECIFICALLY RECORD THAT EVEN THOUGH THE DECISION IS NOT ACCEPTABLE, APPEAL IS NOT BEING FILED ONLY ON THE CONSIDERATION THAT THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIED IN THIS CIRCULAR. FURTHER, IN SUCH CASES, THERE WILL BE NO PRESUMPTION THAT THE INCOME-TAX 7 DEPARTMENT HAS ACQUIESCED IN THE DECISION ON THE DI SPUTED ISSUES. THE INCOME-TAX DEPARTMENT SHALL NOT BE PREC LUDED FROM FILING AN APPEAL AGAINST THE DISPUTED ISSUES I N THE CASE OF THE SAME ASSESSEE FOR 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 TH E SPECIFIED MONETARY LIMITS. 8. IN THE PAST, A NUMBER OF INSTANCES HAVE COME TO THE NOTICE OF THE BOARD, WHEREBY AN ASSESSEE HAS CLAIME D RELIEF FROM THE TRIBUNAL OR THE COURT ONLY ON THE G ROUND THAT THE DEPARTMENT HAS IMPLICITLY ACCEPTED THE DEC ISION OF THE TRIBUNAL OR COURT IN THE CASE OF THE ASSESSE E FOR ANY OTHER ASSESSMENT YEAR OR IN THE CASE OF ANY OTHER A SSESSEE FOR THE SAME OR ANY OTHER ASSESSMENT YEAR, BY NOT F ILING AN APPEAL ON THE SAME DISPUTED ISSUES. THE DEPARTMENTA L 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 FO R THE REASON OF THE TAX EFFECT BEING LESS THAN THE SPECIF IED MONETARY LIMIT AND, THEREFORE, NO INFERENCE SHOULD BE DRAWN THAT THE DECISIONS RENDERED THEREIN WERE ACCE PTABLE TO THE DEPARTMENT. ACCORDINGLY, THEY SHOULD IMPRESS UPON THE TRIBUNAL OR THE COURT THAT SUCH CASES DO NOT HA VE ANY PRECEDENT VALUE AND ALSO BRING TO THE NOTICE 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 ORDER S, INSTRUCTIONS OR DIRECTIONS ISSUED UNDER SUB-SECTION (1) AND THE CIRCUMSTANCES UNDER WHICH SUCH APPEAL OR APPLICATION 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 SYSTEMIC MANNER FOR EASY RETRIEVAL. 10. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING ISS UES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE 8 TAX EFFECT ENTAILED IS LESS THAN THE MONETARY LIMIT S 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. 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 REGISTRATION OF TRUSTS OR INSTITUTIONS UNDER SECTIO N 12A/ 12AA OF THE IT ACT, 1961 ETC., FILING OF APPEAL SHA LL NOT BE GOVERNED BY THE LIMITS SPECIFIED IN PARA 3 ABOVE AN D DECISION TO FILE APPEALS IN SUCH CASES MAY BE TAKEN ON MERITS OF A PARTICULAR CASE. 12. IT IS CLARIFIED THAT THE MONETARY LIMIT OF RS. 20 LAKHS FOR FILING APPEALS BEFORE THE ITAT WOULD APPLY EQUA LLY TO CROSS OBJECTIONS UNDER SECTION 253(4) OF THE ACT. C ROSS OBJECTIONS BELOW THIS MONETARY LIMIT, ALREADY FILED , SHOULD BE PURSUED FOR DISMISSAL AS WITHDRAWN/ NOT PRESSED. FILING OF CROSS OBJECTIONS BELOW THE MONETARY LIMIT MAY NO T BE CONSIDERED HENCEFORTH. SIMILARLY, REFERENCES TO HIG H COURTS AND SLPS/ APPEALS BEFORE SUPREME COURT BELOW THE MONETARY LIMIT OF RS. 50 LAKHS AND RS. 1 CRORE RESP ECTIVELY SHOULD BE PURSUED FOR DISMISSAL AS WITHDRAWN/ NOT PRESSED. REFERENCES BEFORE HIGH COURT AND SLPS/ APP EALS 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 9 PENDING SLPS/ APPEALS/ CROSS OBJECTIONS/REFERENCES. PENDING APPEALS BELOW THE SPECIFIED TAX LIMITS IN P ARE 3 ABOVE MAY BE WITHDRAWN/ NOT PRESSED. 14. THE ABOVE MAY BE BROUGHT TO THE NOTICE OF ALL CONCERNED. 15. THIS ISSUES UNDER SECTION 268A OF THE INCOME-TA X ACT 1961. 6. FROM CLAUSE 12 & 13 OF THE ABOVE SAID CIRCULAR, IT IS CLEAR THAT THESE INSTRUCTIONS ARE APPLICABLE TO THE PENDI NG APPEALS ALSO AND AS PER CLAUSE 13, THERE IS CLEAR CUT INSTRUCTIO N TO THE DEPARTMENT TO WITHDRAW OR NOT TO PRESS THE APPEALS FILED BEFORE THE ITAT WHEREIN TAX EFFECT IS LESS THAN RS.20,00,0 00/-. THESE INSTRUCTIONS ARE OPERATIVE RETROSPECTIVELY TO THE P ENDING APPEALS. 7. KEEPING IN VIEW THE CBDT CIRCULAR NO. 3 OF 2018 DATED 11.07.2018 AND ALSO THE PROVISIONS OF SECTION 268A OF INCOME TAX ACT, 1961, WE ARE OF THE VIEW THAT THE REVENUE SHOU LD HAVE WITHDRAWN THE INSTANT APPEALS FILED BEFORE THE TRIB UNAL. 8. IN THE RESULT, ALL THE APPEALS OF THE REVENUE AR E DISMISSED. AS THE APPEAL OF THE REVENUE IN THE CASE OF M/S SOUND CRAF T IS DISMISSED, CROSS OBJECTION BECOMES INFRUCTUOUS AND IS DISMISSED AS S UCH. ORDER PRONOUNCED IN THE OPEN COURT ON 02/08/2018. SD/- SD/- [K. NARASIMHA CHARY] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2 ND AUGUST, 2018 VJ 10 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR DRAFT DICTATED ON 02.08.2018 DRAFT PLACED BEFORE AUTHOR 02.08.2018 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 02.08.2018 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 02.08.20 18 APPROVED DRAFT COMES TO THE SR.PS/PS 02.08.2018 KEPT FOR PRONOUNCEMENT ON 02.08.2018 DATE OF UPLOADING ORDER ON THE WEBSITE 03.08.2018 FILE SENT TO THE BENCH CLERK 03.08.2018 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.