DCIT, Raichur V. Sri K. Prabhakar Rao, Sindhanur

ITA 726/BANG/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51400 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-10-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 21-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G V GOPALA RAO
• Assessee Lawyers: A SHANKAR
• Keywords: Rule of consistency; Question of law; Tax effect; Set aside
• Section: 153A; 260A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SHRI N.K. SAINI, ACCOUNTANTMEMBER AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER ITA NOS.726 TO 728(BANG)/2009 (ASSESSMENT YEARS: 2002-03 TO 2004-05) DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1, RAICHUR. VS. APPELLANT SHRI K.PRABHAKAR RAO, PROP. SRI KRISHNA AUTOMOBILES, MASKI ROAD, SINDHNUR. RESPONDENT APPELLANT BY: SHRI G.V.GOPALA RAO. RESPONDENT BY : SHRI A. SHANKAR. DATE OF HEARING: 21-12-2011 DATE OF PRONOUNCEMENT: 22-12-2011 O R D E R PER GEORGE GEORGE K, JM: THESE APPEALS WERE REMITTED TO THE TRIBUNAL BY THE HONBLE HIGH COURT OF KARNATAKA BY JUDGMENT DATED 1 7-3-2011 IN ITA NO.292-294/2010 (INCOME TAX). 2. BRIEF FACTS OF THE CASE ARE AS FOLLOWS: THE ASSE SSEE IS AN INDIVIDUAL WHO IS A DEALER IN M/S.MAHINDRA & MAH INDRA TRACTORS. THERE WAS A SEARCH ACTION U/S 132 OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT'] IN THE BUSINESS ITA 726 TO 728(BANG)/2009 PAGE 2 OF 7 AND RESIDENTIAL PREMISES OF THE ASSESSEE. SUBSEQUE NT TO THE SEARCH, ASSESSMENT PROCEEDINGS WERE INITIATED U/S 1 53A OF THE ACT FOR THE ASSESSMENT YEARS 1999-00 TO 2004-05. TH E ASSESSMENTS WERE COMPLETED FOR THE ABOVE ASSESSMENT YEARS U/S 153A READ WITH SEC.143(3) ON 23-3-2006. 3. AGGRIEVED BY THE ASSESSMENT, ASSESSEE FILED BELA TED APPEALS BEFORE THE CIT(A) WITH A PETITION TO CONDON E THE DELAY OF 28 MONTHS IN FILING THE APPEALS. THE CIT(A) COND ONED THE DELAY AND DISPOSED OF THE MATTER ON MERITS WHEREIN THE NET PROFIT ESTIMATED AT 12% BY THE AO ON THE SALE OF OL D TRACTORS WAS REDUCED TO 5% BY THE CIT(A). 4. THE REVENUE HAD FILED APPEALS FOR ASSESSMENT YEA RS 2002-03 TO 2004-05 BEFORE THE TRIBUNAL AND CONTENDE D THERE WAS NO SUFFICIENT CAUSE FOR CONDONING THE DELAY AND REQUESTED THE TRIBUNAL TO SET ASIDE THE ORDER OF THE CIT(A). 5. THE TRIBUNAL, FORMULATED TWO POINTS FOR CONSIDER ATION, NAMELY: 1. THE CIT ORDER IN CONDONING THE DELAY OF 28 MONTHS IN PREFERRING THE APPEALS WITHOUT APPRECIATING THE FACT THAT THERE WAS NO SUFFICIENT CAUSE FOR SUCH A DELAY. 2. THE CIT ORDER IN RESTRICTING NET PROFIT AT 5% AS AGAINST 12% ADOPTED BY THE AO ON SALE OF OLD TRACTORS. THE TRIBUNAL, AFTER HEARING THE PARTIES ALLOWED THE APPEAL IN REGARD TO POINT NO.1 WITHOUT CONSIDERING THE POINT NO.2 ON MERITS. ITA 726 TO 728(BANG)/2009 PAGE 3 OF 7 6. THE ASSESSEE, BEING AGGRIEVED FILED APPEAL BEFOR E THE HONBLE HIGH COURT OF KARNATAKA U/S 260A OF THE ACT RAISING THE FOLLOWING SUBSTANTIAL QUESTION OF LAW: WHETHER THE TRIBUNAL IS JUSTIFIED IN SETTING ASIDE THE FINDINGS OF THE COMMISSIONER OF INCOME-TAX APPEALS IN CONDONING THE DELAY OF 28 MONTHS IN FILING THE APPEAL BY THE ASSESSEE AGAINST THE ORDER OF THE ASSESSMENT? THE HONBLE HIGH COURT NOTICED THAT THOUGH THE ASSE SSMENTS WERE COMPLETED FOR ASSESSMENT YEARS 1999-00 TO 2004 -05 (SIX YEARS), THE REVENUE HAD FILED APPEALS BEFORE THE TR IBUNAL ONLY IN RESPECT OF ASSESSMENT YEARS 2002-03 TO 2004-05(THRE E YEARS., THE MATTER WAS RESTORED THE MATTER BACK TO THE TRIB UNAL BY HONBLE HIGH COURT FOR ITS CONSIDERATION BY OBSERVI NG THUS: 13. HAVING HEARD THE COUNSELS FOR THE ASSESSEE AND THE REVENUE, WE ARE OF THE OPINION THAT, THE EFFECT OF NON FILING OF THE APPEAL BY THE REVENUE FOR THREE ASSESSMENT YEARS SHOULD HAVE BEEN CONSIDERED BY THE TRIBUNAL BEFORE SETTING ASIDE THE ORDER OF THE COMMISSIONER OF INCOME TAX APPEALS. SINCE TRIBUNAL HAS NOT TOUCHED THIS ASPECT TO THE MATTER, THEREFORE, WE ARE OF THE OPINION THAT ORDER OF THE TRIBUNAL HAS TO BE SET ASIDE WITHOUT ANSWERING THE SUBSTANTIAL QUESTIONS OF LAW AND REMAND THE MATTER TO RECONSIDER AFRESH. 7. PURSUANT TO THE HONBLE HIGH COURTS REMISSION O F THE MATTER, THE APPEALS WERE TAKEN UP FOR HEARING. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECOR D. WE CONCEDE AND REGRET, WE HAVE NOT NOTICED IN OUR ORDE R DATED 29- 3-2010 (IN WHICH ONE OF US WAS A PARTY) THAT THE RE VENUE HAS NOT PREFERRED APPEALS FOR ASSESSMENT YEARS 1999-00 TO 2001- 02. THE FACTS AND CLAIMS FOR ASSESSMENT YEARS 1999- 00 TO ITA 726 TO 728(BANG)/2009 PAGE 4 OF 7 2001-02 WERE SIMILAR TO THE FACTS AND CLAIMS FOR TH E ASSESSMENT YEARS CONCERNED. IT IS AN ADMITTED FACT THAT THE A SSESSMENTS WERE COMPLETED U/S 153A READ WITH SEC.143(3) OF THE ACT FOR ASSESSMENT YEARS 1999-00 TO 2004-05. AGAINST THE O RDERS OF ASSESSMENTS FOR ASSESSMENT YEARS 1999-00 TO 2004-05 , APPEALS WERE PREFERRED BEFORE THE FIRST APPELLATE A UTHORITY BELATEDLY WITH A PETITION TO CONDONE THE DELAY IN F ILING THE APPEAL. THE APPEALS FOR AYS 1999-00 TO 2004-05 WER E FILED TOGETHER BEFORE THE FIRST APPELLATE AUTHORITY SHOWI NG THE SAME CAUSE FOR CONDONING THE DELAY. THE CIT(A) HAD CONDO NED THE DELAY FOR ALL THE AYS (SIX AYS) AND HAD PASSED A CO MPOSITE ORDER CONSIDERING THE ISSUE ON MERIT. WHEN SAME CAU SE WAS CONSIDERED BY THE CIT(A) FOR CONDONING DELAY FOR 6 AYS, THE REVENUE WAS NOT CORRECT IN PREFERRING APPEAL BEFORE TRIBUNAL IN RESPECT OF AYS 2002-03 TO 2004-05, WHILE ACCEPTING THE ORDER OF THE CIT(A) IN RESPECT OF AYS 1999-00 TO 2001-02. L EARNED DEPARTMENTAL REPRESENTATIVE HAD SUBMITTED THAT APPE ALS WERE NOT PREFERRED FOR ASSESSMENT YEARS 1999-00 TO 2001- 02 FOR THE REASON THAT MONETARY LIMIT WAS BELOW THE SPECIFIED LIMIT MENTIONED IN THE BOARDS CIRCULAR NO.5/2008 DATED M AY 15, 2008. 7.1 IN ORDER TO CONSIDER THE ISSUE IN ITS RIGHT PE RSPECTIVE, IT IS NECESSARY TO REFER TO THE CIRCULAR OF THE CEN TRAL BOARD OF DIRECT TAXES DATED MAY 15, 2008, PARAGRAPH 5 OF WHICH READS AS UNDER : ITA 726 TO 728(BANG)/2009 PAGE 5 OF 7 5. THE ASSESSING OFFICER SHALL CALCULATE THE TAX EFFECT SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESP ECT OF THE DISPUTED ISSUE IN THE CASE OF EVERY ASSESSEE . IF, IN THE CASE OF AN ASSESSEE, THE DISPUTED ISSUES ARI SE IN MORE THAN ONE ASSESSMENT YEAR, APPEAL SHALL BE FILE D IN RESPECT OF SUCH ASSESSMENT YEAR OR YEARS IN WHICH T HE TAX EFFECT IN RESPECT OF THE DISPUTED ISSUE EXCEEDS THE MONETARY LIMIT SPECIFIED IN PARAGRAPH 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 PARAGRAPH 3 . IN OTHER WORDS, HENCEFORTH, APPEALS WILL BE FILED ONLY WITH REFEREN CE 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 YEAR, APPEAL SHALL BE FILED IN RESPECT OF ALL 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 Y EAR(S) IN WHICH TAX EFFECT EXCEEDS THE MONETARY LIMIT PRESCRIBED, FROM THE ABOVE, IT IS CLEAR THAT WHEN THE APPEAL HA S BEEN PREFERRED FOR ONE ASSESSMENT YEAR, ON SIMILAR SET O F FACTS IRRESPECTIVE WHETHER MONETARY LIMIT IS BELOW THE SP ECIFIED LIMIT IN RESPECT OF CERTAIN OTHER ASSESSMENT YEARS, THE R EVENUE IS ENTITLED TO FILE APPEAL IN RESPECT OF ALL THE ASSES SMENT YEARS CONCERNED. 7.2 THIS VIEW HAS ALSO BEEN ACCEPTED BY THE HONBLE HIGH COURT OF KERALA IN THE CASE OF CIT VS. BIJU VARGHESE (2010) 323 ITR 36(KER) WHEREIN IT WAS HELD : ..ACCORDING TO CIRCULAR NO.5 OF 2008 IN RESPECT O F COMPOSITE ORDER UNDER APPEAL, IF THE TAX INVOLVED A T LEAST IN ONE OF THE ASSESSMENT YEARS IS ABOVE THE LIMIT, THEN THE DEPARTMENT IS ENTITLED TO MAINTAIN THE APPEAL FOR ALL THE YEARS. THE ORDER UNDER APPEAL W AS A COMPOSITE ORDER ISSUED BY THE TRIBUNAL DISPOSING OF THE APPEALS FOR ALL THE ASSESSMENT YEARS 1988-89 TO 1993-94 AND IN THE CASE OF EVERY ASSESSMENT AT LEAS T IN ONE YEAR THE TAX INVOLVED WAS ABOVE ` .4 LAKHS AND, ITA 726 TO 728(BANG)/2009 PAGE 6 OF 7 THEREFORE THE APPEALS WERE MAINTAINABLE. 7.3 IN THE PRESENT CASE, WE NOTICE THAT CIT(A) HAS PASSED A COMPOSITE ORDER IN RESPECT OF AYS 1999-00 TO 2004- 05. THE DEPARTMENT HAS ACCEPTED THE CLAIM OF THE AS SESSEE ON SIMILAR SET OF FACTS FOR ASSESSMENT YEARS 1999-00 T O 2001-02 AND HAS NOT PREFERRED APPEALS BEFORE THE TRIBUNAL. THE PRINCIPLE OF CONSISTENCY IS REQUIRED TO BE MAINTAIN ED BY THE DEPARTMENT. THE PUNJAB & HARYANA HIGH COURT, IN TH E CASE OF CIT VS. LEADER VALVES LTD. (2007)(295 ITR 273)(P&H) HAD HELD AS UNDER: THAT KEEPING IN VIEW THE PRINCIPLE OF CONSISTENCY, THE REVENUE COULD NOT BE PERMITTED TO RAISE AN ISSUE IN ISOLATION ONLY FOR ONE YEAR IN THE CASE OF ONE ASSESSEE, WHILE ACCEPTING THE FINDINGS ON THE SAME ISSUE IN THE CASE OF OTHER ASSESSEES AND FOR OTHER YEARS IN THE CASE OF THE ASSESSEE. IN THE LIGHT OF THE ABOVE REASONING, WE HOLD THAT S INCE THE REVENUE HAS NOT PREFERRED APPEALS IN RESPECT OF ASS ESSMENT YEARS 1999-00 TO 2001-02, WHEREIN FACTS ARE SIMILAR AND IDENTICAL TO THAT OF ASSESSMENT YEARS WE ARE CONCER NED THE REVENUE IS NOT JUSTIFIED IN PREFERRING THESE APPEAL S. HENCE, WE UPHOLD THE ORDER OF CIT(A). THEREFORE, THE APPEALS PREFERRED BY THE REVENUE ARE DISMISSED. ITA 726 TO 728(BANG)/2009 PAGE 7 OF 7 8. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND DECEMBER, 2011 SD/- SD/- (N.K. SAINI) ACCOUNTANT MEMBER (GEORGE GEORGE K) JUDICIAL MEMBER PLACE: BANGALORE DATE : 22 ND DECEMBER, 2011 EKS COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) CONCERNED 4. CIT 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE