ITO,Ward-3(1), Kolkata, Kolkata V. M/s Dalal Street Securities Ltd., Kolkata

ITA 952/KOL/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7943 (ITAT-KOLKATA)
• Duration Of Justice: 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2004-2005
• Appeal Filed On: 18-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY
• Assessee Lawyers: SUBASH AGARWA L THIS AP
• Keywords: Audit objection; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH: K OLKATA [BEFORE SMT. DIVA SINGH, HONBLE JUDICIAL MEMBER ] I.T.A. NO.952/KOL/2012 ASSESSMENT YEARS : 2004-05 ITO, WARD-3(1), KOLKATA VS- M/S. D ALAL STREET SECURITIES LTD. 2, BARETTO LANE, 3 RD FLOOR, KOLKATA 700 069. (PAN:AABCD 3459Q) ( APPELLANT ) ( RESPONDENT ) DATE OF CONCLUDING THE HEARING : 01.08.2012 DATE OF PRONOUNCING THE ORDER : 01.08.2012 APPEARANCES : FOR THE APPELLANT : SRI SANJAY , SR.D.R. : FOR THE RESPONDENT : SHRI SUBASH AGARWA L O R D E R THIS APPEAL FILED BY THE ASSESSEE IS AGAIN ST THE ORDER DATED 16.03.2012 OF COMMISSIONER OF INCOME TAX (APPEALS)-I, KOLKATA PER TAINING TO THE ASSESSMENT YEARS 2004-05. 2. THE ABOVE APPEAL WAS FIRST FIXED ON 31 ST JULY, 2011. AT THE TIME OF HEARING, THE LD. A.R. SUBMITTED THAT THE APPEAL FILED BY THE DEPARTMENT IS BELOW TAX EFFECT OF RS.2 LAKHS. THEREFORE, THIS APPEAL OF THE DEPARTMEN T SHOULD BE REJECTED IN LIMINE . HOWEVER, THE LD. D.R. SOUGHT TIME TO VERIFY THE SUB MISSION OF THE LD. A.R. ACCORDINGLY, THE APPEAL WAS ADJOURNED TO 1 ST AUGUST, 2012 ON THE REQUEST OF THE DEPARTMENT. 3. AT THE TIME OF HEARING ON 1 ST AUGUST, 2012, THE LD. D.R. FAIRLY AGREED, AFTER LOOKING INTO THE COMPUTATION FILED BY THE ASSESSEE THAT THE TAX EFFECT IN THE ABOVE APPEAL IS BELOW RS.2 LAKHS. 2 ITA NO .952/KOL/2012 M/S.DALAL STREET SECURITIES LTD. ASSESSMENT YEAR: 2004-05 3. BE THAT AS IT MAY, IT IS OBSERVED THAT THE TAX EFFECT IN EACH OF THE APPEAL IS LESS THAN RS.2 LAKHS. HENCE, THE LD. D.R. WAS ASKED AS TO WHETHER ANY OF THE EXCEPTIONS LAID DOWN IN PARA 8 OF CBDT CIRCULAR NO. 279/MISC.-64/05-ITJ DATED 24.10.05 READ WITH INSTRUCTION NO.5 OF 2008 DATED 1 5.05.2008 ARE APPLICABLE TO CONSIDER THESE APPEALS ON MERITS. THE DEPARTMENT IN ABOVE INSTRUCTION DATED 15.05.2008 HAS SPECIFIED 3 GROUNDS IN PARA 8 STATIN G THAT THE APPEAL COULD BE FILED BEFORE THE TRIBUNAL WHERE THE TAX EFFECT IS LESS TH AN RS.2.00 LAKHS ONLY AND THE SAME ARE AS UNDER :- (A) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROV ISIONS OF AN ACT OR RULE ARE UNDER CHALLENGE. (B) WHERE BOARDS ORDER, NOTIFICATION, INSTRUCTIO N OF CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES. (C) WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS BEEN ACCEPTED BY THE DEPARTMENT. 4. LD. D.R. FAIRLY CONCEDED THAT NONE OF THE ABOVE CONDITIONS ARE APPLICABLE IN RESPECT OF THESE APPEALS. 5. THERE IS NO DISPUTE ON THE FACT THAT THE C BDT VIDE INSTRUCTION NO. 2/2005 DATED 24.10.2005, ISSUES GUIDELINES TO THE REVENUE AUTHORITIES WITH REGARD TO FILING OF APPEALS BEFORE THE TRIBUNAL, HIGH COURT AND THE SUPREME COURT. FROM THE SAID INSTRUCTIONS, IT IS EVIDENT THAT SINCE 1987, THE CB DT HAS BEEN INSTRUCTING ITS OFFICERS NOT TO FILE THE APPEAL WHERE THE TAX EFFEC T IS BELOW CERTAIN MONETARY LIMITS. VIDE INSTRUCTION NO. 1903 DATED 28.10.1992 THE MONE TARY LIMITS WAS REVISED UPWARD AND THE OFFICERS WERE DIRECTED NOT TO FILE A PPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL WHERE THE TAX EFFECT WAS BELOW R S.25,000/-. THE ABOVE MONETARY LIMIT WAS FURTHER REVISED UPWARD BY INSTRU CTION NO.1979 DATED 27.3.2000 AND THE OFFICERS WERE DIRECTED NOT TO FIL E THE APPEAL TO ITAT WHERE THE TAX EFFECT IS BELOW RS. 1,00,000/-. THEREAFTER IN P ARTIAL MODIFICATION OF THE ABOVE 3 ITA NO .952/KOL/2012 M/S.DALAL STREET SECURITIES LTD. ASSESSMENT YEAR: 2004-05 INSTRUCTION, THE BOARD VIDE INSTRUCTION NO.2/2005 D ATED 24.10.2005 HAS FURTHER RAISED THE ABOVE MONETARY LIMIT TO RS.2,00,000/- WI TH THE SAME DIRECTIONS. THUS THE C.B.D.T SINCE 1987 HAS NOT ONLY TAKEN A CONSIST ENT APPROACH OF INSTRUCTING ITS OFFICERS FOR NOT FILING THE APPEAL WHERE THE TAX EF FECT IS BELOW THE MONETARY LIMIT, BUT SUCH MONETARY LIMIT IS ALSO REVISED UPWARD FROM TIME TO TIME. THE CIRCULAR UNDER INSTRUCTION NO.1979 DATED 27-3-2000 WAS CONSI DERED BY THE BOMBAY HIGH COURT IN THE CASE OF CAMCO COLOUR CO. 254 ITR 565 A ND THEIR LORDSHIPS HELD AT PAGE 568 AS UNDER :- IT APPEARS THAT DESPITE THE ABOVE CIRCULAR, THE RE VENUE HAS CHOSEN TO FILE THE PRESENT APPEAL KNOWINGLY FULLY W ELL THAT THE CORRIDORS OF THE COURTS ARE FLOODED WITH PENDING LI TIGATIONS. THE PRESENTATION OF THIS APPEAL IS QUITE CONTRARY TO TH E INSTRUCTION ISSUED IN THE CIRCULAR, WHICH IS BINDING ON THE REV ENUE. IN THE ABOVE VIEW OF THE MATTER, CONSIDERING THE IN STRUCTIONS ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES, WE ARE SATISFIED THAT THE BOARD HAS TAKEN A POLICY DECISION NOT TO F ILE APPEAL IN A TYPE OF CASE IN HAND AND THE SAME IS BINDING ON THE REVENUE (APPELLANT HEREIN). IN THE RESULT, WE DISMISS THIS APPEAL ON THIS COUNT IN LIMINE WITH NO ORDER AS TO COSTS. 6. WE FIND THAT RECENTLY THE APEX COURT HAS C ONSIDERED THE EFFECT OF CIRCULAR ISSUED BY THE CBDT IN THE CASE OF COMMISSIONER OF C USTOMS VS. INDIAN OIL CORPORATION LTD. 267 ITR 272. THEIR LORDSHIPS EXAMI NED THE EARLIER DECISIONS OF THE APEX COURT WITH REGARD TO BINDING OF THE CIRCUL AR AND LAID DOWN THE FOLLOWING PRINCIPLES AT PAGE 277 OF THE REPORTS- THE PRINCIPALS LAID DOWN BY ALL THESE DECISIONS AR E- 1) ALTHOUGH A CIRCULAR IS NOT BINDING ON A COURT ON AN ASSESSEE, IT IS NOT OPEN TO THE REVENUE TO RAISE A CONTENTION THAT IS CONTRARY TO A BINDING CIRCULAR BY THE BOARD. WHEN A CIRCULAR REMAINS IN OPERATION, THE REVENUE IS BOUND BY IT AND CANNOT BE ALLOWED TO PLEAD THAT IT IS NOT VALID NOR THAT IT IS CONTRARY TO THE TERMS OF THE STATUTE. 4 ITA NO .952/KOL/2012 M/S.DALAL STREET SECURITIES LTD. ASSESSMENT YEAR: 2004-05 2) DESPITE THE DECISION OF THIS COURT, THE DEPARTME NT CANNOT BE PERMITTED TO TAKE A STAND CONTRARY TO THE INSTRUCTI ONS ISSUED BY THE BOARD. (3) A SHOW CAUSE NOTICE AND DEMAND CONTRARY TO EXI STING CIRCULARS OF THE BOARD ARE AB INITIO VOID. (4) IT IS NOT OPEN TO THE REVENUE TO ADVANCE AN ARG UMENT OR FILE AN APPEAL CONTRARY TO THE CIRCULARS. 7. IN VIEW OF THE ABOVE AND CONSIDERING THE C BDTS CIRCULAR F. NO. 279/MISC.-64/05-ITJ DATED 24 TH OCTOBER, 2005 READ WITH INSTRUCTION NO. 2/2005 DATED 24 TH OCTOBER, 2005 AND INSTRUCTION NO. 5/2008 DATED 15. 05.2008, I HOLD THAT THE APPEAL FILED BY THE DEPARTMENT IS CONTRARY TO T HE SAID CIRCULARS/ INSTRUCTIONS OF THE CBDT. ACCORDINGLY, THE SAME IS NOT ADMITTED AND IS BEING DISMISSED IN LIMINE. 8. IN THE RESULT, THE APPEAL FILED BY THE DEP ARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01.08. 2011. SD/- (DIVA SINGH) JUDICIAL MEMBER DATED : 01/ 08/ 2011 COPY OF THE ORDER FORWARDED TO: 1. M/S. DALAL STREET SECURITIES LTD., 2, BARETTO LANE, 3 RD FLOOR, KOLKATA 700 069. 2 ITO, WARD-3(1), KOLKATA 3. CIT(A)- ,KOLKATA 4. CIT- , KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA (TRUE COPY) BY ORDER ASSISTANT REGISTRAR, I.T.A.T., KOLKA TA. TALUKDAR/SR.P.S. 5 ITA NO .952/KOL/2012 M/S.DALAL STREET SECURITIES LTD. ASSESSMENT YEAR: 2004-05