DCIT 3(3)(2), MUMBAI V. TECHNO ELECTGRONICS LTD, MUMBAI

ITA 6302/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5533 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 25-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Audit objection; Retrospective amendment; Tax effect
• Section: 260A; 115JB; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI BEFORE SHRI SHAMIM YAHYA , AM & SHRI AMARJIT SINGH , JM ITA NO. 6302 / MUM/ 201 6 ( ASSESSMENT YEAR 2012 - 13 : ) DCIT - 3 (3) (2) , R.NO.609 , 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 . M/S. TECHNO ELECTR ONICS LTD. 17 TH FLOOR, C WING, MITTAL COURT, NARIMAN POINT MUMBAI - 400021. PAN/GIR NO. AACCT6860A APPELLANT ) .. RESPONDENT ) REVENUE BY SHRI V. JUSTIN ASSESSEE BY NONE DATE OF HEARING 19 / 07/ 201 8 DATE OF PRONOUNCEMENT 19 / 07 / 201 8 / O R D E R PER AMARJIT SINGH (J .M) : THE CAPTIONED APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 8 , MUMBAI , DATED 28 . 0 7 .201 6 , PERTAINING TO THE ASSESSMENT YEAR 2012 - 13 , WHICH IN TURN HAS ARISEN FROM THE ORDER PA SSED BY THE ASSESSING OFFICER DATED 25 . 0 3 .20 15 UNDER SECTION 143(3), OF THE I.T. ACT, OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2 . WE FOUND THAT TAX EFFECT IN THE APPEAL SO FILED BY THE REVE NUE IS BELOW RS.20 LAKHS . I N ORDER TO CUT DOWN ON FRIVOL OUS LITIGATION AND TAXPAYERS GRIEVANCE, THE CBDT, WHICH FORMULATES POLICIES FOR THE INCOME TAX DEPARTMENT, HA S ISSUED RECENT INSTRUCTION NO.3 /201 8 DATED 1 1/07/ 201 8 REVISING THE MONETARY THRESHOLD FIXING THE TAX EFFECT LIMIT OF RS. 2 0 LACS FOR THE REVENUE T O FILE APPEAL ITA NO. 6302 /MUM/201 6 A.Y.2012 - 13 2 BEFORE THE ITAT AND SINCE IN THIS APPE AL, THE TAX EFFECT IS BELOW RS.2 0 LAKHS, THE A PPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE AND LIABLE TO BE DISMISSED IN LIMINE . 3 . THE CBDT IN ITS CIRCULAR NO.3 /201 8 DATED 11 TH JULY 2018 HAVE REVISED THE MONETARY LIMIT TO RS. 20 LAKH S TO FILE THE APPEAL BEFORE THE TRIBUNAL BY THE REVENUE. ON SCRUTINY OF APPEAL FI LED BY THE REVENUE, IT IS FOUND THAT THE TOTAL TAX DEMAND IS BELOW THE PRESCRIBED LIMIT OF RS. 2 0 LAKHS. THE CBDT ALSO CLARIFIES THAT THIS INST RUCTION WILL APPLY RETROSPECTIVELY TO PENDING APPEALS AND APPEALS TO BE FILED HENCEFORTH IN HIGH COURTS/TRIBUNAL. T HE INCOME TAX ACT WAS AMENDED AND SECTION 268A HAS BEEN INTRODUCED ON THE STATUTE BOOK WITH RETROSPECTIVE EFFECT. SECTION 268A CARVES OUT AN EXCEPTION FOR FILING OF APPEALS AND REFERENCES UNDER SECTION 260A OF THE ACT. THE LEGISLATURE HAS PRESCRIBED THAT THE CBDT IS EMPOWERED TO ISSUE CIRCULARS AND INSTRUCTIONS FROM TIME TO TIME, WITH REGARD TO FILING OF APPEALS DEPENDING ON THE TAX EFFECT INVO LVED. THE RELEVANT CIRCULAR ISSUED BY CBDT READS AS UNDER: REFERENCE IS INVITED TO BOARD S CIRCULAR NO. 21 OF 2015 DATED 10.12.2015 WHE RE IN MONETARY LIMITS AND OTHER CONDITIONS F OR FILING DEPARTMENTAL APPEALS ( IN INCOME - TAX MATTERS) BEFORE INCOME TAX AP PELLATE TRIBUNAL, HIGH COURTS AND SLPS/ APPEALS BEFORE SUPREME COURT WERE SPECIFIED. 2. IN SUPERSESSION OF THE ABOVE CIRCULAR, IT HAS BEEN DECIDED BY THE BOARD THAT DEPARTMENTAL APPEALS MAY BE FILED ON MERITS BEFORE INCOME TAX APPELLATE TRIBUNAL AND HIGH COURTS AND SLPS/ APPEALS BEFORE SUPREME COURT KEEPING IN VIEW THE MONETARY LIMITS AND CONDITIONS SPECIFIED BELOW. 3. HENCEFORTH, APPEALS/ SLHS SHALL NOT BE FILED IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER; S. NO. A PPEALS/ SLPS IN INCOME - TAX MATTERS MONETARY LIMIT (RS 1. BEFORE APPELLATE 20,00,000 ITA NO. 6302 /MUM/201 6 A.Y.2012 - 13 3 TRIBUNAL 2. BEFORE HIGH COURT 50,00,000 3. BEFORE SUPREME COU RT 1,00,00,000 IT IS CLARIFIED THAT AN APPEAL SHOULD NOT BE FILED MERELY BECAUSE THE TAX EFFECT IN A C ASE 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 C HARGEABLE 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 ) . FURTHER, TAX EFFECT SHALL BE TAX INCLUDING APPLICABLE SURCHARGE AND CESS. HOWEVER, THE TAX WILL NOT INCLUDE ANY INTEREST THEREON, 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 RETU RNED 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 O FFICER 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 R ESPECT 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 MO NETARY LIMIT SPECIFIED IN PARA 3. IN OTHER WORDS, HENCEFORTH, APPEALS CAN BE FILED ONLY WITH REFERENCE 10 THE TAX EFFECT IN THE RELEVANT ASSESSMENT YEAR. HOWEVE , R IN CASE OF A COMPOSITE ORDER OF ANY HIGH COURT OR APPELLATE AUTHORITY, WHICH INVOLVES MORE TH AN 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 LESS THAN THE PRESCRIBED MONETARY LIMITS IN ANY OF THE YEAR(S), IF IT IS DECIDED TO FILE APP EAL 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. 6. FURTHER, WHERE INCOME UNDER THE PROVISIO NS OF SECTION 115JB OR SECTION 115JC FOR THE PURPOSES OF DETERMINATION OF 'TAX EFFECT', TAX ON ITA NO. 6302 /MUM/201 6 A.Y.2012 - 13 4 THE TOTAL INCOME ASSESSED SHALL BE COMPUTED AS PER THE FOLLOWING FORMULA . (A - B) + (C D) WHERE, A - THE TOTAL INCOME ASSESSED AS PER THE PROVISIONS OTHER THAN THE PROVISIONS CONTAINED IN SECTION 115JB OR SECTION 115JC (HEREIN CALLED GENERAL PROVISIONS); B = THE TOT AL INCOME THAT WOULD HAVE BEEN CHARGEABLE HAD THE TOTAL INCOME ASSESSED AS PER THE GENERAL PROVISIONS BEEN REDUCED BY THE AMOUNT OF THE DISPUTED ISSUES UNDER GENERAL PROVISIONS; C = THE TOTAL INCOME ASSESSED AS PER THE PROVISIONS CONTAINED IN SECTION 115J B OR SECTION 115JC; D = THE TOTAL INCOME THAT WOULD HAVE BEEN CHARGEABLE HAD THE TOTAL INCOME ASSESSED AS PER THE PROVISIONS CONTAINED IN SECT ION 115JB OR SECTION 115 JB WAS REDUCED 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 SECTION 115JB OR SECTION 115JC AND UNDER GENERAL PROVISI ONS, SUCH AMOUNT SHALL NOT BE REDUCED FROM TOTAL INCOME ASSESSED WHILE DETERMINING THE AMOUNT UNDER ITEM D . 7. IN A CASE WHERE APPEAL BEFORE A TRIBUNAL OR A COURT IS NOT FILED ONLY ON ACCOUNT OF THE TAX EFFECT BEING LESS THAN THE MONETARY LIMIT SPECIFIED ABOVE, THE PR. COMMISSIONER 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 SPECIF IED IN THIS CIRCULAR'. FURTHER, IN SUCH CASES, THERE WILL BE NO PRESUMPTION THAT THE INCOME - TAX DEPARTMENT HAS ACQUIESCED IN THE DECISION ON THE DISPUTED ISSUES. TH E INCOME - TAX DEPARTMENT SHALL NOT BE PRECLUDED FROM FILING AN APPEAL AGAINST THE DISPUTED IS SUES IN THE CASE OF THE SAME ASSESSEE FOR ANY OTHER ASSESSMENT YEAR, OR IN THE CASE OF ANY 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 T O THE NOTICE OF THE BOARD, WHEREBY AN ASSESSEE HAS CLAIMED RELIEF FROM THE TRIBUNAL OR THE COURT ONLY ON THE GROUND THAT THE DEPARTMENT HAS IMPLICITLY ACCEPTED THE DECISION OF THE TRIBUNAL OR COURT IN THE CASE OF THE ASSESSEE FOR ANY ITA NO. 6302 /MUM/201 6 A.Y.2012 - 13 5 OTHER ASSESSMENT YEAR OR IN THE C A SE OF ANY OTHER ASSESSEE FOR THE SAME OR ANY OTHER ASSESSMENT YEAR, BY NOT TILING AN APPEAL ON THE SAME DISPUTED ISSUES. THE DEPARTMENTAL REPRESENTATIVES/COUNSELS MUST MAKE EVERY EFFORT TO BRING TO THE NOTICE OF THE TRIBUNAL OR THE COURT THAT T HE APPEAL IN SUCH CASES WAS NOT FILED OR NOT ADMITTED ONLY FOR THE REASON OF THE TAX EFFECT BEING LESS THAN THE SPECIFIED MONETARY LIMIT AND, THEREFORE, NO INFERENCE SHOULD BE DRAWN THAT THE DECISIONS RENDERED THEREIN WERE ACCEPTABLE TO THE DEPARTMENT. ACC ORDINGLY, THEY SHOULD IMPRESS UPON THE TRIBUNAL OR THE COURT THAT SUCH CASES DO NOT HAVE ANY PRECEDENT VALUE AND ALSO BRING TO THE NOTICE OF THE TRIBUNAL/ COURT THE PROVISIONS OF SUB SECTION (4) OF SECTION 268A OF THE INCOME - TAX ACT, 1961 WHICH READ AS UND ER * (4) THE APPELLATE TRIBUNAL OR COURT, HEARING SUCH APPEAL OR REFERENCE, SHALL HAVE REGARD TO THE ORDERS, INSTRUCTIONS OR DIRECTIONS ISSUED UNDER SUB - SECTION (1) AND THE CIRCUMSTANCES UNDER WHICH SUCH APPEAL OR APPLICATION FOR REFERENCE WAS FILED OR N OT FILED IN RESPECT OF ANY CASE . ' 9. AS THE EVIDENCE OF NOT CLING APPEAL DUE TO THIS CIRCULAR MAY HAVE TO BE PRODUCED IN COURTS, THE JUDICIAL FOLDERS IN THE OFFICE OF PR. CSIT/ CSIT MUST BE MAINTAINED IN A SYSTEMIC MANNER FOR EASY RETRIEVAL. 10. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING ISSUES SHOULD BE CONTESTED ON M ERITS NOTWITHSTANDING THAT THE T AX EFFECT ENTAILED IS LESS THAN THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE OR THERE IS NO LAX EFFECT: (A) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVIS IONS OF AN ACT OR RULE IS UNDER CHALLENGE, OR (B) WHERE BOARD'S ORDER, NOTIFICATION, INSTRUCTION OR CIRCULAR HAS B EEN HELD TO BE ILLEGAL OR ULTRA VIRES, OR (C) WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS BEEN ACCEPTED BY THE DEPARTMENT, OR (D) WHERE THE ADDITION RELATES TO UNDISCLOSED FOREIGN ASSETS/ BANK ACCOUNTS. 11. THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE SHALL 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 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 SECTION 12A/12AA OF THE IT ITA NO. 6302 /MUM/201 6 A.Y.2012 - 13 6 ACT, 1961 ETC., FILING OF A PPEAL SHALL NOT BE GOVERNED BY THE LIMITS SPECIFIED IN PARA 3 ABOVE AND DECISION TO FILE APPEALS IN SUCH CASES MAY BE TAKEN ON MERITS OF A PARTICULAR CASE. 12. IT IS CLARIFIED THAT THAT MONETARY LIMIT OF RS. 2O LAKHS FOR FILING APPEALS BEFORE THE ITAT WOU LD APPLY EQUALLY TO CROSS OBJECTIONS UNDER SECTION 253(4) OF THE ACT. CROSS 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 NOT BE CONSID ERED HENCEFORTH. SIMILARLY, REFERENCES TO HIGH COURTS AND SLPS/ APPEALS BEFORE SUPREME COON BELOW THE MONETARY LIMIT OF - RS. 50 LAKHS AND RS. 1 CRORE RESPECTIVELY SHOULD BE PURSUED FOR DISMISSAL AS WITHDRAWN/ NOT PRESSED. REFERENCES BEFORE HIGH COURT AND S APPEALS BELOW THESE LIMITS MAY NOT BE CONSIDERED HENCEFORTH. 13. THIS CIRCULAR WILL APPLY IN SLPS/APPE ALS/CROSS OBJECTIONS/ REFERENCES - ; BE FILED HENCEFORTH IN SC/HCS/TRIBUNAL AND IT SHALL ALSO APPLY RETROSPECTS ; TO PENDING SLPS/ APPEALS/ CROSS O BJECTIONS/ REFERENCES. PENDING APPEALS BELOW THE SPECIFIED TAX LIMITS IN PARA 3 ABOVE MAY BE WITHDRAWN/ NOT PRESSED 4. CONSIDERING THE ABOVE CBDT CIRCULAR, WE FOUND THAT THIS APPEAL OF THE REVENUE IS NOT MAINTAINABLE AS THE TAX EFFECT IN THIS APPEAL IS BE LOW RS.20 LAKHS. ACCORDINGLY, APPEAL OF THE REVENUE IS DISMISSED. 5 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 / 07 /201 8 . SD/ - ( SHAMIM YAHYA ) SD/ - (AMARJIT SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED 19/ 07 /201 8 . VIJAY ITA NO. 6302 /MUM/201 6 A.Y.2012 - 13 7 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI . 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//