ACIT CENT CIR 24& 26, MUMBAI V. DINESH LAKHMICHAND ROHIRA, MUMBAI

ITA 6027/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8470 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 06-11-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 30-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARTHASARTHY
• Assessee Lawyers: DINESH LAKHIMICHAND ROHIRA
• Keywords: Audit objection; Tax effect
• Section: 260A; 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D BENCH BEFORE SHRI B.R.MITTAL(JUDICIAL MEMBER) AND SHRI P.M.JAGTAP (ACCOUNTANT MEMBER) ITA NO.6027/MUM/2011 ASSESSMENT YEAR: 2007-08 ACIT, CENT. CIRCLE-21, R.NO.404, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI. DINESH LAKHMICHAND ROHIRA, 2301, DHEERAJ HEIGHT GAURAV, OFF. OSHIWARA LINK ROAD, ANDHERI(W), MUMBAI-58. PA NO.ACWPR 1876 K (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI PARTHASARTHY RESPONDENT BY: SHRI DINESH LAKHIMICHAND ROHIRA DATE OF HEARING: 6.11.2012 DATE OF PRONOUNCEMENT: 6.11.2012 ORDER PER B.R.MITTAL, JM: THE DEPARTMENT HAS FILED THIS APPEAL FOR ASSESSMENT YEAR 2007-08 AGAINST ORDER DATED 16.6.2011 OF LD CIT(A)-39, MUMBAI ON FOLLOWI NG GROUND: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN DIRECTING THE AO TO DELETE THE ADDITION OF RS.8,89,523 ON ACCOUNT OF A TRADE ADVANCE RECEIVED FROM MR TARUN RUGHANI. 2. AT THE OUTSET, IT IS OBSERVED THAT TAX EFFECT IN THIS APPEAL IS BELOW THE PRESCRIBED MONETARY LIMITS OF RS.3 LAKHS AND AS SUCH FILING OF APPEAL BY THE DEPARTMENT TO ITAT IS CONTRARY TO THE INSTRUCTION NO.3 OF 2011 DT. 9.2.20 11 ISSUED BY CBDT UNLESS IT FALLS IN THE EXCEPTION MENTIONED IN PARA 8 THEREOF. LD D.R. HAS NOT DISPUTED THE ABOVE FACTS AND CONCEDED THAT THE APPEAL DOES NOT FALL IN THE EXCEP TION AS MENTIONED IN PARA 8 OF THE ABOVE INSTRUCTION. 4. WE HAVE CONSIDERED CBDT INSTRUCTION NO.3 OF 2011 ISSUED ON 9.2.2011. THE RELEVANT CIRCULAR ISSUED BY CBDT READS AS UNDER: ITA NO.6027/MUM/2011 ASSESSMENT YEAR: 2007-08 2 INSTRUCTION NO.3/2011(F:NO.279/MISC.142/2007-ITJ) DT.9.2.2011 REFERENCE IS INVITED TO BOARDS INSTRUCTION NO. 5/2008 DATED 15-5-2008 WHEREIN MONETARY LIMITS AND OTHER CONDITIONS FOR FILING DEPARTMENTAL APPEAL S (IN INCOME-TAX MATTERS) BEFORE APPELLATE TRIBUNAL, HIGH COURTS AND SUPREME COURT WERE SPECIF IED. 2. IN SUPERSESSION OF THE ABOVE INSTRUCTION, IT HAS BEEN DECIDED BY THE BOARD THAT DEPARTMENTAL APPEALS MAY BE FILED ON MERITS BEFORE APPELLATE TRI BUNAL, HIGH COURTS AND SUPREME COURT KEEPING IN VIEW THE MONETARY LIMITS AND CONDITIONS SPECIFIED BELOW. 3. HENCEFORTH APPEALS SHALL NOT BE FILED IN CASES W HERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER: S. NO. APPEALS IN INCOME-TAX MATTERS MONETARY LIMIT (IN RS.) 1. APPEAL BEFORE APPELLATE TRIBUNAL 3,00,000 2. APPEAL U/S 260A BEFORE HIGH COURT 10,00,000 3. APPEAL 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 APP EAL 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 THAT WOULD HAVE BEEN CHARGEABL E HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF THE ISSUES AGAIN ST WHICH APPEAL IS INTENDED TO BE FILED (HEREINAFTER REFERRED TO AS DISPUTED ISSUES). HOW EVER THE TAX WILL NOT INCLUDE ANY INTEREST THEREON, EXCEPT WHERE CHARGEABILITY OF INTEREST ITS ELF 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. 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 Y EAR, 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 MONE TARY LIMIT SPECIFIED IN PARA 3. IN OTHER WORDS, HENCEFORTH, APPEALS CAN BE FILED ONLY WITH REFERENC E 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 I SSUES IN MORE THAN ONE ASSESSMENT YEAR, APPEAL SHALL BE FILED IN RESPECT OF ALL SUCH ASSESS MENT YEARS EVEN IF THE TAX EFFECT IS LESS THAN TH E PRESCRIBED MONETARY LIMITS IN ANY OF THE YEAR(S), I F 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/JUDGMENT INVOLVES MORE THAN ONE ASSESSEE, EAC H ASSESSEE SHALL BE DEALT WITH SEPARATELY. 6. IN A CASE WHERE APPEAL BEFORE A TRIBUNAL OR A CO URT IS NOT FILED ONLY ON ACCOUNT OF THE TAX EFFECT BEING LESS THAN THE MONETARY LIMIT SPECIFIED ABOVE, THE COMMISSIONER OF INCOME-TAX SHALL ITA NO.6027/MUM/2011 ASSESSMENT YEAR: 2007-08 3 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 TH AN THE MONETARY LIMIT SPECIFIED IN THIS INSTRUCTION. FURTHER, IN SUCH CASES, THERE WILL BE NO PRESUMPTION THAT THE INCOME-TAX DEPARTMENT HAS ACQUIESCED IN THE DECISION ON THE DI SPUTED ISSUES. THE INCOME-TAX DEPARTMENT SHALL NOT BE PRECLUDED FROM FILING AN APPEAL AGAINS T THE DISPUTED ISSUES IN THE CASE OF THE SAME ASSESSEE FOR ANY OTHER ASSESSMENT YEAR, OR IN THE C ASE OF ANY OTHER ASSESSEE FOR THE SAME OR ANY OTHER ASSESSMENT YEAR, IF THE TAX EFFECT EXCEEDS TH E SPECIFIED MONETARY LIMITS. 7. IN THE PAST, A NUMBER OF INSTANCES HAVE COME TO THE NOTICE OF THE BOARD, WHEREBY AN ASSESSEE HAS CLAIMED RELIEF FROM THE TRIBUNAL OR THE COURT O NLY ON THE GROUND THAT THE DEPARTMENT HAS IMPLICITLY ACCEPTED THE DECISION OF THE TRIBUNAL OR COURT IN THE CASE OF THE ASSESSEE FOR ANY OTHER ASSESSMENT YEAR OR IN THE CASE OF ANY OTHER ASSESSE E FOR THE SAME OR ANY OTHER ASSESSMENT YEAR, BY NOT FILING AN APPEAL ON THE SAME DISPUTED ISSUES . THE DEPARTMENTAL REPRESENTATIVES/COUNSELS MUST MAKE EVERY EFFORT TO BRING TO THE NOTICE OF TH E TRIBUNAL OR THE COURT THAT THE APPEAL IN SUCH CASES WAS NOT FILED OR NOT ADMITTED ONLY FOR THE RE ASON OF THE TAX EFFECT BEING LESS THAN THE SPECIFIED MONETARY LIMIT AND, THEREFORE, NO INFEREN CE SHOULD BE DRAWN THAT THE DECISIONS RENDERED THEREIN WERE ACCEPTABLE TO THE DEPARTMENT. ACCORDINGLY, THEY SHOULD IMPRESS UPON THE TRIBUNAL OR THE COURT THAT SUCH CASES DO NOT HAVE A NY PRECEDENT VALUE. AS THE EVIDENCE OF NOT FILING APPEAL DUE TO THIS INSTRUCTION MAY HAVE TO B E PRODUCED IN COURTS, THE JUDICIAL FOLDERS IN THE OFFICE OF CSIT MUST BE MAINTAINED IN A SYSTEMIC MAN NER FOR EASY RETRIEVAL. 8. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING ISSU ES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EFFECT ENTAILED IS LES S 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 ARE 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. 9. THE PROPOSAL FOR FILING SPECIAL LEAVE PETITION U NDER ARTICLE 136 OF THE CONSTITUTION BEFORE THE SUPREME COURT SHOULD, IN ALL CASES, BE SENT TO THE DIRECTORATE OF INCOME-TAX (LEGAL & RESEARCH), NEW DELHI AND THE DECISION TO FILE SPECIAL LEAVE PE TITION SHALL BE IN CONSULTATION WITH THE MINISTRY OF LAW AND JUSTICE. 10. 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 MATTERS SHALL CONTINUE TO BE GOVERNED BY RELEVANT PROVISIONS OF STATUTE AND RULE S. FURTHER, FILING OF APPEAL IN CASES OF INCOME- TAX, WHERE THE TAX EFFECT IS NOT QUANTIFIABLE OR NO T INVOLVED, SUCH AS THE CASE OF REGISTRATION OF TRUSTS OR INSTITUTIONS UNDER SECTION 12A OF THE IT ACT, 1961, SHALL NOT BE GOVERNED BY THE LIMITS SPECIFIED IN PARA 3 ABOVE AND DECISION TO FILE APPE AL IN SUCH CASES MAY BE TAKEN ON MERITS OF A PARTICULAR CASE. 11. THIS INSTRUCTION WILL APPLY TO APPEALS FILED ON OR AFTER 9TH FEBRUARY 2011 . HOWEVER, THE CASES WHERE APPEALS HAVE BEEN FILED BEFORE 9TH FEBRUARY 2011 WILL BE GOVERNED BY THE INSTRUCTIONS ON THIS SUBJECT, OPERATIVE AT THE TIME WHEN SUCH APPEAL WAS FILED. 12. THIS ISSUES UNDER SECTION 268A(1) OF THE INCOME -TAX ACT, 1961. ITA NO.6027/MUM/2011 ASSESSMENT YEAR: 2007-08 4 5. SINCE THE APPEAL HAS BEEN FILED BY DEPARTMENT ON 30.8.2011, THE ABOVE INSTRUCTIONS OF CBDT ARE APPLICABLE AND THE APPEAL FILED BY DEPARTMENT IS LIABLE TO BE DISMISSED AS THE TAX EFFECT IN THE APPEAL IS BELOW RS.3 LAKHS. 6. IN THE RESULT, APPEAL FILED BY REVENUE IS DISMIS SED. PRONOUNCED IN THE OPEN COURT ON 6 TH NOVEMBER, 2012 SD/- (P.M.JAGTAP) ACCOUNTANT MEMBER SD/- (B.R. MITTAL) JUDICIAL MEMBER MUMBAI, DATED 6 TH NOVEMBER, 2012 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),39, MUMBAI 4. COMMISSIONER OF INCOME TAX,C-II, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH D MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI