ITO, Ward 1(3), Nashik V. Shri Sanjay Prabhakar Junnarkar, Nashik

ITA 791/PUN/2013

• Counselvise Citation: 79124514 RSA 2013
• Duration Of Justice: 1 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-11-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 04-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Keywords: Question of law; Tax effect
• Section: 143(3); 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.791/PN/2013 (ASSESSMENT YEAR: 2006-07) THE INCOME TAX OFFICER, WARD 1(3), NASHIK . APPELLANT VS. SHRI SANJAY PRABHAKAR JUNNARKAR H.NO.1790, OLD TAMBAT LANE, NASHIK. PAN: AAUPJ7586L . RESPONDENT APPELLANT BY : SHRI B.C. MALAKAR RESPONDENT BY : SHRI NIKHIL PATHAK DATE OF HEARING : 20-11-2014 DATE OF PRONOUNCEMENT : 26-11-2014 ORDER PER SUSHMA CHOWLA, JM: THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT(A)-I, NASHIK, DATED 14.01.2013 RELATING TO ASSESSMENT YEAR 200 6-07 PASSED UNDER SECTION 143(3) R.W.S. 263 OF THE INCOME TAX ACT. 2. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE POINTED OUT THAT THE ISSUE RAISED IN THE PRESENT APPEAL WAS OF SMALL T AX EFFECT AND THE APPEAL OF REVENUE WAS NOT MAINTAINABLE. OUR ATTENTION WA S DRAWN TO THE REVISED INSTRUCTION NO.5 OF 2014, DATED 10.07.2014 UN DER WHICH, THE LIMIT FOR FILING THE APPEAL BEFORE THE TRIBUNAL BY REVENUE HAS BEEN FIXED HAVING TAX EFFECT OF RS.4 LACS OR MORE. THE LEARNED AUTHOR IZED REPRESENTATIVE FOR THE ASSESSEE FURTHER PLACED RELIANCE O N THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF C IT VS. SMT. ITA NO.791/PN/2013 SHRI SANJAY P JUNNARKAR 2 VIJAYA V. KAVEKAR REPORTED IN (2013) 350 ITR 237 (BOM) FOR THE PROPOSITION THAT THE CIRCULARS ISSUED BY THE CBDT WERE N OT ONLY APPLICABLE TO THE NEW CASES BUT WERE ALSO APPLICABLE TO TH E PENDING APPEALS. 3. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVEN UE HOWEVER, POINTED OUT THAT INSTRUCTIONS ARE TO BE APPLIED AS PREVALENT ON THE DATE OF FILING APPEAL AND NOT SUBSEQUENT INSTRUCTIONS ISSUED IN THE MATTER. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE REVENUE IS IN APPEAL AGAINST THE RELIEF GRANTED TO THE AS SESSEE BY THE CIT(A) IN RESPECT OF ADDITION MADE BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HAD MADE THE ADDITION WHILE COMPLETING ASS ESSING PROCEEDINGS UNDER SECTION 143(3) OF THE ACT, WHICH IN TURN, DELETED BY THE CIT(A) AS UNDER:- PARTICULARS AMOUNT DEPOSIT EXPENSES FOR BUSINESS ASSOCIATES 5,58,948 PROVISION FOR VAT AND OTHER TAXES 2,00,000 EXPENSES FOR FRANCHISEE DEVELOPMENT 2,67,640 EXPENSES FOR MLM DEVELOPMENT 2,67,640 LAPTOP/IT SOLUTION EXPENSES 90,000 TOTAL 11,48,931 5. THE REVENUE HAD FILED APPEAL AGAINST SUCH DELETION OF AB OVE ADDITION BY THE CIT(A). WHEN THE MATTER WAS TAKEN UP FOR HEARING, IT WAS POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT AS PER CBDT INSTRUCTION NO.5 OF 2014, DATED 10.07.20 14, THE APPEAL FOR THE YEAR IS NOT MAINTAINABLE. 6. UNDER THE PROVISIONS OF SECTION 268(1) OF THE ACT, THE CB DT IS EMPOWERED TO ISSUE INSTRUCTIONS FIXING THE MONETARY LIMITS FOR THE REVENUE TO FILE APPEALS BEFORE THE TRIBUNAL, ALL THE HIGH COUR TS AND THE ITA NO.791/PN/2013 SHRI SANJAY P JUNNARKAR 3 SUPREME COURT. THE CBDT FROM TIME TO TIME, ISSUES INSTRU CTIONS FIXING THE MONETARY LIMITS WITH THE OBJECT OF NOT BURDENING THE COURTS AND THE TRIBUNAL WITH MATTERS WHERE THE TAX EFFECT WAS ON A LOWE R SIDE. THE CBDT VIDE INSTRUCTION NO.5 OF 2014 ISSUED ON 10.07.2014 HA D REVISED THE EARLIER INSTRUCTION NO.3 OF 2011, DATED 09.02.2011 WH EREIN, THE MONETARY LIMITS AND OTHER CONDITIONS FOR FILING THE DEPARTMEN TAL APPEALS IN INCOME TAX MATTERS BEFORE THE APPELLATE TRIBUNALS, HIGH COURTS AND SUPREME COURT WERE SPECIFIED. THE INSTRUCTIONS ISSUED ON 10.07.2014 WERE IN SUPERSESSION OF THE EARLIER INSTRUCTIONS AND THE MONETARY LIMITS HAVE BEEN ENHANCED BY THE PRESENT INSTRUCTION AND IT HAS BEEN PROVIDED THAT THE APPEALS SHALL NOT BE FILED IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER: S NO APPEALS IN INCOME-TAX MATTERS MONETARY LIMIT (IN RS) 1. BEFORE APPELLATE TRIBUNAL 4,00,000/- 2. U/S 260A BEFORE HIGH COURT 10,00,000/- 3. BEFORE SUPREME COURT 25,00,000/- 7. THE REVISED MONETARY LIMIT FOR FILING THE APPEALS BEFORE THE APPELLATE TRIBUNAL WAS FIXED AT IN EXCESS OF RS.4 LACS. FURTHE R, UNDER THE SAID INSTRUCTION, IT WAS ALSO DIRECTED THAT THE ASSESSING OFFICER SHALL CALCULATE THE TAX EFFECT SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUES. IN CASE OF EVERY ASSESSEE WHERE, T HE DISPUTED ISSUE ARISES IN MORE THAN ONE ASSESSMENT YEAR, IT WAS DIRECTED THAT APPEAL COULD BE FILED IN RESPECT OF SUCH ASSESSMENT YEAR OR YEAR S IN WHICH, THE TAX EFFECT IN RESPECT OF THE DISPUTED ISSUE EXCEEDED THE MONETARY LIMIT FIXED. IN OTHER WORDS AND HENCEFORTH, THE APPEALS CAN B E FILED ONLY WITH REFERENCE TO THE TAX EFFECT IN THE RELEVANT ASSESSMENT Y EAR. IN CASE OF COMPOSITE ORDER OF ANY HIGH COURT OR APPELLATE AUTHORITY, IT WAS FURTHER CLARIFIED THAT IF THE APPEAL IS TO BE FILED IN RESPECT OF THE Y EAR/S IN WHICH, TAX EFFECT EXCEEDS THE MONETARY LIMIT PRESCRIBED THEN, SUC H APPEALS COULD ITA NO.791/PN/2013 SHRI SANJAY P JUNNARKAR 4 ALSO BE FILED IN RESPECT OF ALL SUCH ASSESSMENT YEARS EVEN IF THE TAX EFFECT IS LESS THAN PRESCRIBED MONETARY LIMITS. 8. IN THE FACTS OF THE PRESENT CASE, THE REVENUE HAD FILED THE APPEALS ON 04.04.2013. ADMITTEDLY, IN ALL THE YEARS UNDER APPEAL, TH E TAX EFFECT IS LESS THAN RS.4 LACS AS PRESCRIBED IN INSTRUCTION NO.5 OF 2014 ISSUED BY THE CBDT. AT THE TIME OF HEARING OF THE APPEALS, THE MONE TARY LIMITS PRESCRIBED BY THE CBDT STAND REVISED BY THE SAID INSTR UCTION NO.5 OF 2014, DATED 10.07.2014 UNDER WHICH, IT HAS BEEN PROVIDED T HAT WHERE THE TAX EFFECT DOES NOT EXCEED RS.4 LACS IN ANY OF THE AS SESSMENT YEARS THEN, NO APPEALS CAN BE FILED BEFORE THE APPELLATE TRIBUNAL. THE ISSUE ARISING BEFORE US IS WHETHER THE SAID REVISED INSTRUCTIONS WHICH WERE ISSUED SUBSEQUENT TO THE FILING OF THE APPEALS BY THE REV ENUE COULD BE APPLIED TO THE PENDING APPEALS OR APPLICABLE ONLY TO THE N EW CASES TO BE FILED BY THE REVENUE AFTER THE DATE OF ISSUE OF THE INSTRUCTIONS. 9. WE FIND THAT THE SAID ISSUE HAS BEEN CONSIDERED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SMT. VIJAYA V. KAVEKAR (SUPRA). THE HONBLE HIGH COURT IN THE CASE OF CIT VS. SM T. VIJAYA V. KAVEKAR (SUPRA), HAD IN TURN FOLLOWED THE RATIO LAID DOWN BY ANOTHER DIVISION OF BOMBAY HIGH COURT IN THE CASE OF CIT VS. POLYCO TT CORPORATION REPORTED IN (2009) 318 ITR 144 (BOM) WHEREIN, IT WAS HELD AS UNDER:- 8. IN CASE OF 'COMMISSIONER OF INCOME TAX V/S POLYC OTT CORPORATION' REPORTED AT '(2009) 318 ITR 144 (BOM), A A NOTHER DIVISION BENCH OF THIS COURT CONSTRUED THE SAME INST RUCTION NO. 2 OF 2005, DATED 24TH OCTOBER, 2005. THE DIVISION BENCH OBSE RVED WHILE CONSTRUING THE PARAGRAPH NO. 5 OF THE CIRCULAR, AS THUS : '9. HAVING CONSIDERED THE CONTENTIONS, IN OUR OPINION , THE INSTRUCTIONS CANNOT BE INTERPRETED AS A STATUTE THO UGH IT IS PURSUANT ITA NO.791/PN/2013 SHRI SANJAY P JUNNARKAR 5 TO THE POWER CONFERRED UNDER SECTION 268A OF THE IT ACT. WHAT THE COURT HAS TO CONSIDER IS THE PLAIN LANGUAGE OF THE PARA AND THE OBJECT BEHIND THE SAID PROVISIONS. THE OBJECT APPEAR S TO BE NOT TO BURDEN COURTS AND TRIBUNALS IN RESPECT OF MATTERS WH ERE THE TAX EFFECT IS LESS THAN THE LIMIT PRESCRIBED. EVEN BEFORE T HIS INSTRUCTION, CBDT HAS BEEN ISSUING INSTRUCTIONS, THE LAST ONE BEI NG ON 24TH OCT., 2005 WHERE THE MONETARY LIMIT HAS BEEN FIXED. IN THOSE INSTRUCTIONS THE ONLY EXCEPTION HAD BEEN THAT IN CASES INVOLVING, SUBSTANTIAL QUESTION OF LAW OF IMPORTANCE AS WELL AS IN CASES WHER E THE SAME QUESTION OF LAW WILL REPEATEDLY ARISE, EITHER IN THE C ASE CONCERNED OR IN SIMILAR CASE, APPEAL SHOULD BE FILED WITHOUT BEING HIN DERED BY THE MONETARY LIMITS. THE PRESENT INSTRUCTIONS SEEM EVEN T O LIMIT THE ISSUES INSOFAR AS THE SAME QUESTION OF LAW OR RECURR ING ISSUE EXCEPT TO THE EXTENT PROVIDED IN PARA 5. ON A PROPER READING OF PARA 5 OF THE INSTRUCTIONS IT WOULD BE CLEAR THAT A DUTY IS CAST ON THE AO THAT EVEN IF THE DISP UTED QUESTIONS ARISE FOR MORE THAN ONE ASSESSMENT YEAR THEN AN APP EAL SHOULD BE FILED ONLY IN RESPECT OF THOSE YEARS WHERE THE MONETA RY LIMIT AS SPECIFIED IN PARA 3 OF THE INSTRUCTION. THE EXCEPTI ON, HOWEVER, IS CARVED OUT IN RESPECT OF A COMPOSITE ORDER OF THE HI GH COURT OR APPELLATE AUTHORITY. IN OTHER WORDS WHERE THE HIGH COUR T OR TRIBUNAL HAS PASSED A COMPOSITE ORDER IN RESPECT OF THE SAME ASSESSEE ON THE SAME QUESTION AND/OR ON DIFFERENT QUESTION AND FOR ONE OF THE ASSESSMENT YEARS, THE TAX EFFECT IS MORE THAN THE MO NETARY LIMIT THEN THE APPEAL SHALL ALSO BE FILED IN RESPECT OF ALL THE ASSESSMENT YEARS. THE SUBMISSION ON BEHALF OF THE ASSESSEE IS T HAT THE COMPOSITE ORDER MUST RELATE TO A COMMON ISSUE. WE BEG TO DISAGREE ON A PLAIN AND LITERAL CONSTRUCTION OF THE INSTRUCTI ON. THE EXPRESSION 'WHICH INVOLVES MORE THAN ONE YEAR' WOULD HAVE NO MEA NING IF IT WAS RESTRICTED ONLY TO THE EXPRESSION 'COMMON ISSUE S'. THE EXPRESSION, THEREFORE, OF A COMPOSITE ORDER WILL HAVE TO BE READ TO MEAN AN ORDER IN RESPECT OF THE SAME ASSESSEE FOR M ORE THAN ONE YEAR. AN (ORDER) DISPOSING OF SEVERAL APPEALS ON A COMM ON QUESTION OF LAW BY APPELLATE AUTHORITY, CANNOT BE SAID TO BE A C OMPOSITE ORDER AS THE ORDER INVOLVES APPEALS BY DIFFERENT PERSONS, WH ICH APPEALS FOR THE SAKE OF CONVENIENCE HAVE BEEN ONLY CLUBBED TO GETHER FOR THE PURPOSE OF DISPOSAL ON THAT ISSUE. IN OUR OPINION, THI S WOULD BE THE CORRECT READING OF PARA 5 OF THE INSTRUCTION.' 10. THE HONBLE BOMBAY HIGH COURT FURTHER HELD AS UNDER:- 15. THE POSITION OF LAW, THEREFORE, EMERGING FROM TH E AFORESAID JUDGEMENTS, IS THAT THE CIRCULARS OR INSTRUCTIONS IS SUED UNDER SECTION 268A OF THE INCOME TAX ACT BY THE CENTRAL BOARD OF DIRECT TAX ES, ARE APPLICABLE NOT ONLY TO NEW CASES BUT TO PENDING CASE S AS WELL. SUCH CIRCULARS HAVE BEEN ISSUED UNDER SECTION 268A OF TH E INCOME TAX ACT, WHICH IS AN EXCEPTION TO THE PROVISIONS OF SECT ION 260 OF THE ACT. THE CBDT BEING MINDFUL OF THIS POSITION HAS ISSUED THE AFORESAID INSTRUCTIONS. IN OUR OPINION, THEREFORE, THE INSTRUC TIONS WOULD BE APPLICABLE TO PENDING CASES AS WELL. WE HAVE ALREADY FOU ND THAT THE INSTRUCTION NO. 5 OF 2008 AND INSTRUCTION NO. 3 OF 2 011 ARE PARA- MATERIA. THE INSTRUCTION NO. 5 OF 2008 HAS ALREADY BEEN INTERPRETED BY THIS COURT IN CIT V/S MADHUKAR INAMDAR (SUPRA). IT IS NOT ITA NO.791/PN/2013 SHRI SANJAY P JUNNARKAR 6 DISPUTED THAT THIS JUDGEMENT HAS NOT BEEN CHALLENGED BY THE REVENUE AND THEREFORE STILL HOLDS THE FIELD. 11. FOLLOWING THE ABOVE SAID PROPOSITION LAID DOWN BY THE HO NBLE HIGH COURT IN THE CASE OF CIT VS. SMT. VIJAYA V. KAVEKAR (SUPR A), WE HOLD THAT IN VIEW OF THE REVISED INSTRUCTION ISSUED BY THE CBDT UND ER WHICH, THE MONETARY LIMIT FOR FILING THE APPEALS BEFORE THE APPELLATE AUTH ORITIES, TRIBUNALS HAS BEEN REVISED AND FIXED AT RS.4 LACS I.E. ONLY APPEALS WITH TAX EFFECT EXCEEDING RS.4 LACS WERE MAINTAINABLE. IN THE PR ESENT APPEAL FILED BY THE REVENUE, THE MONETARY LIMIT ADMITTEDLY, IS LESS T HAN RS.4 LACS. IN VIEW OF INSTRUCTION NO.5 OF 2014 WHICH ARE APPLICAB LE NOT ONLY TO THE NEW APPEALS TO BE FILED BY THE REVENUE, BUT ALSO TO T HE APPEALS PENDING BEFORE THE TRIBUNAL, WE DISMISS THE APPEAL FILED BY TH E REVENUE BECAUSE OF SMALL TAX EFFECT. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 TH DAY OF NOVEMBER, 2014. SD/- SD/- (R.K. PANDA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 26 TH NOVEMBER, 2014. GCVSR COPY OF THE ORDER IS FORWARDED TO : - 1) THE DEPARTMENT; 2) THE ASSESSEE; 3) THE CIT(A)-I, NASHIK; 4) THE CIT-I, NASHIK; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE