The ITO, Ward-15(4), Ahmedabad V. Shri Rameshbhai b.Chauhan, Ahmedabad

ITA 968/AHD/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5765 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-06-2010
• Assessment Year: 2007-2008
• Appeal Filed On: 31-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K KHANDELWAL
• Assessee Lawyers: I T A NO AHD ASS; SHAILESH V DAVE SELF
• Keywords: Gift; Question of law; Tax effect; Set aside
• Section: 260A; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : A BENCH : A HMEDABAD (BEFORE HON'BLE SHRI G.D. AGRAWAL, V.P. (AZ) & HON BLE SHRI T.K. SHARMA, J.M.) I.T.A. NO. 963/AHD./2010 ASSESSMENT YEAR : 2007-2008 INCOME TAX OFFICER, WARD-15(4), VS.- SHRI SHAILESH VASUDEV DAVE, AHMEDABAD AHMEDABAD (PAN : AAOPD 153 8 J) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K. KHANDELWAL, D.R. RESPONDENT BY : SHRI SHAILESH V. DAVE ( SELF) & I.T.A. NO. 964/AHD./2010 ASSESSMENT YEAR : 2007-2008 INCOME TAX OFFICER, WARD-15(4), VS.- SHRI NAVINCHANDRA K. TRIVEDI, AHMEDABAD AHMEDABAD (PAN : ABIPT 150 7 C) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K. KHANDELWAL, D.R. RESPONDENT BY : SHRI J.M. TRIVEDI & I.T.A. NO. 965/AHD./2010 ASSESSMENT YEAR : 2007-2008 INCOME TAX OFFICER, WARD-15(4), VS.- SHRI SURESH KALIDAS BHAVSAR, AHMEDABAD AHMEDABAD (PAN : AFSPB 173 8 B) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K. KHANDELWAL, D.R. RESPONDENT BY : SHRI D.K. PARIKH & I.T.A. NO. 966/AHD./2010 ASSESSMENT YEAR : 2007-2008 INCOME TAX OFFICER, WARD-15(4), VS.- SHRI TARUNKUMAR L. RAWAL, AHMEDABAD AHMEDABAD (PAN : ABTPR 795 6 G) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K. KHANDELWAL, D.R. RESPONDENT BY : N O N E & I.T.A. NO. 967/AHD./2010 ASSESSMENT YEAR : 2008-2009 INCOME TAX OFFICER, WARD-15(4), VS.- SHRI NARAYAN GIRDHARILAL VATANI, AHMEDABAD AHMEDABAD (PAN : ABAPV 083 1 H) (APPELLANT) (RESPONDENT) 2 ITA NO. 963-968/AHD/2010 APPELLANT BY : SHRI A.K. KHANDELWAL, D.R. RESPONDENT BY : N O N E (WRITTEN SUBM ISSION FILED) & I.T.A. NO. 968/AHD./2010 ASSESSMENT YEAR : 2007-2008 INCOME TAX OFFICER, WARD-15(4), VS.- SHRI RAMESHBHAI B. CHAUHAN, AHMEDABAD AHMEDABAD (PAN : ABKPC 895 8 J) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K. KHANDELWAL, D.R. RESPONDENT BY : N O N E O R D E R PER BENCH : THESE SIX APPEALS FILED BY THE REVENUE PERTAINING TO DIFFERENT ASSESSEES, WHO WERE EMPLOYEES OF STATE BANK OF INDIA, ARE AGAINST THE R ESPECTIVE ORDERS OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-XXI, AHMEDABAD FOR THE ASSESSME NT YEAR 2007-08 IN RESPECT OF FIVE ASSESSEES AND ONLY ASSESSMENT YEAR 2008-09 IN THE C ASE OF SHRI NARAYAN GIRDHARILAL VATANI ONLY. SINCE ALL THESE APPEALS INVOLVED COMMON ISSUES EXCE PT THE AMOUNT OF ADDITIONS, THEREFORE, THESE WERE HEARD TOGETHER, AND THESE ARE DECIDED BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. VARIOUS COMMON GROUNDS EXCEPT VARIANCE IN ADDITI ONS RAISED BY THE ASSESSEES IN THEIR APPEALS ARE AS UNDER :- (1) THE LEARNED CIT(A.) HAS ERRED IN LAW AND ON FAC TS IN DELETING THE ADDITION OF RS.4,49,298/- (IN ITA NO. 963/AHD/2010) , RS.3,84,216/- (IN ITA NO. 964/AHD/2010), RS.5,00,000/- (IN ITA NO. 96 5/AHD/2010), RS.4,22,132/- (IN ITA NO. 966/AHD/2010), RS.5,00,00 0/- (IN ITA NO. 967/AHD/2010) & RS.5,00,000/- (IN ITA NO. 968/AHD/2 010) U/S. 10(10C) OF THE I.T. ACT RELYING ON THE VARIOUS DECI SIONS OF ITATS OF AHMEDABAD AND MUMBAI. (2) THE DECISION QUOTED BY THE LD. CIT(A.) DOES NOT FALL INTO THE FOUR CORNERS OF THIS CASE AS IT PERTAINS TO OERS SCHEME OF RBI AND NOT STATE BANK OF PATIALA OR STATE BANK OF INDIA. (3) THE LD. CIT(A.) HAS DELETED THE ADDITION BASED ON THE DECISION OF MUMBAI, ITAT. MOREOVER, THE LD. CIT(A.) HAS ALSO IG NORED THE CIRCULAR NO. F. NO. 200/34/2009-ITA.I DATED 06.10.2009 OF CB DT ACCORDING TO WHICH EMPLOYEES OF STATE BANK OF PATIALA AND STATE BANK OF INDIA ARE NOT ELIGIBLE FOR DEDUCTION U/S. 10(10C) OF THE INCOME T AX ACT, 1961. 3 ITA NO. 963-968/AHD/2010 3. BRIEFLY STATED THE FACTS ARE THAT ALL THESE ASSE SSEES WHO OPTED VOLUNTARY RETIREMENT FROM THE SERVICE UNDER EXIT OPTION SCHEME FRAMED BY THE BANK, RECEIVED EX-GRATIA PAYMENT. THIS EX- GRATIA PAYMENT WAS CLAIMED AS EXEMPT UNDER SECTION 10(10C) OF THE INCOME TAX ACT, 1961. THE SAID EXEMPTION WAS NOT ALLOWED BY THE ASSESSING OFF ICER ON THE GROUND THAT CONDITION FRAMED BY BANK UNDER EXIT OPTION SCHEME DOES NOT FULFILL THE GUIDELINES LAID DOWN IN RULE 2BA OF THE INCOME TAX RULE, 1962. ON APPEAL IN THE IMPUGNED OR DER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ALLOWED THE SAME RELYING ON VARIOUS DE CISIONS OF ITAT, AHMEDABAD AND MUMBAI. THE YEAR-WISE EX-GRATIA PAYMENT RECEIVED, WHICH WAS CLAIMED UNDER SECTION 10(10C) AND DISALLOWED BY THE ASSESSING OFFICER AND TAX EFFECT THEREON IS AS UNDER :- NAME OF THE ASSESSEE AMOUNT OF EX-GRATIA CLAIMED U/S. 10(10C) TAX EFFECT SHRI SHAILESH V. DAVE RS.4,49,298/- RS.1,55,831/- SHRI NAVINCHANDRA K. TRIVEDI RS.3,84,216/- RS.1,10,738/- SHRI SURESH KALIDAS BHABSAR RS.5,00,000/- RS.1,84,073/- SHRI TARUNKUMAR L. RAWAL RS.4,22,132/- RS.1,41,733/- SHRI NARAYAN GIRDHARILAL VATANI RS.5,00,000/- RS.1,80,338/- SHRI RAMESHBHAI B. CHAUHAN RS.5,00,000/- RS.1,78,243/- AGGRIEVED BY THE ORDER OF LEARNED COMMISSIONER OF I NCOME TAX(APPEALS), THE REVENUE IS IN APPEALS BEFORE THE TRIBUNAL. 4. SINCE ALL THE FILED BY THE REVENUE ARE IDENTICAL EXCEPT AMOUNT OF ADDITIONS INVOLVED, THEREFORE, FOR THE SAKE OF CONVENIENCE, WE FIRST TA KE UP THE ITA NO. 963/AHD/2010 IN THE CASE OF SHRI SHAILESH VASUDEV DAVE. 5. AT THE TIME OF HEARING BEFORE US, IN THE CASE OF SHRI SHAILESH VASUDEV DAVE, THE ASSESSEE HIMSELF APPEARED AND POINTED OUT THAT TAX EFFECT IN HIS CASE IS LESS THAN RS.2 LAKHS, THEREFORE, THE APPEALS FILED BY THE REVENUE BE DISMISSED AS NOT MA INTAINABLE WHERE TAX EFFECT IS LESS THAN LIMIT PRESCRIBED AS PER CBDT INSTRUCTIONS NO 1979 DATED 2 7.3.2000, NO.1985 DATED 29.6.2000, NO.6 4 ITA NO. 963-968/AHD/2010 OF 2003 DATED 17.7.2003, NO.19 OF 2003 DATED 23.12. 2003, NO.5/2004 DATED 27.5.2004, NO.2/2005 DATED 24.10.2005 AND NO.5/2007 DATED 16.7 .2007. HE, THEREFORE, SUBMITTED THAT THE APPEAL OF THE REVENUE BE DISMISSED ON THE GROUND O F CONTRAVENTION OF BOARD'S INSTRUCTIONS NO 1979 DATED 27.3.2000, NO.1985 DATED 29.6.2000, NO.6 OF 2003 DATED 17.7.2003, NO.19 OF 2003 DATED 23.12.2003, NO.5/2004 DATED 27.5.2004, NO.2/2 005 DATED 24.10.2005 AND NO.5/2007 DATED 16.7.2007. 6. WITHOUT PREJUDICE TO THE AFORESAID CONTENTION, H E POINTED OUT THAT IN RESPECT OF EMPLOYEES OF STATE BANK OF INDIA ALSO, THE DEDUCTION UNDER SE CTION 10(10C) IS ADMISSIBLE AS HELD BY THE ITAT, SMC BENCH, AHMEDABAD IN ITA NO. 3276/AHD/20 09 IN THE CASE OF ITO VS.- SHRI KANAIYALAL VADILAL BHAVSAR, AHMEDABAD FOR THE ASSES SMENT YEAR 2007-08 VIDE ORDER DATED 29.01.2010. THEREFORE, EVEN ON MERIT ALSO, IT MAY B E HELD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 10(10C), WHICH IS RIGHTLY A LLOWED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). THEREFORE, THE VIEW TAKEN BY T HE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BE UPHELD. 7. ON THE OTHER HAND, SHRI A.K. KHANDELWAL, D.R. AP PEARING ON BEHALF OF THE REVENUE SUBMITTED THAT AS PER BOARDS INSTRUCTIONS NO. 1979 DATED 27.3.2000, NO.1985 DATED 29.6.2000, NO.6 OF 2003 DATED 17.7.2003, NO.19 OF 2003 DATED 2 3.12.2003, NO.5/2004 DATED 27.5.2004, NO.2/2005 DATED 24.10.2005 AND NO.5/2007 DATED 16.7 .2007, EMPLOYEES OF STATE BANK OF INDIA AND STATE BANK OF PATIALA AND OTHER ASSOCIATE BANKS ARE NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 10(10C) OF THE INCOME TAX ACT, 1961. THE LD. D.R. D REW OUR ATTENTION TO GROUND NO. 3 (SUPRA) AND CONTENDED THAT WHILE PASSING THE IMPUGNED ORDER , THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IGNORED THE BOARDS INSTRUCTION AS STA TED ABOVE, ACCORDING TO WHICH, EMPLOYEES OF STATE BANK OF PATIALA AND STATE BANK OF INDIA ARE N OT ELIGIBLE FOR DEDUCTION UNDER SECTION 10(10C) OF THE INCOME TAX ACT, 1961. THEREFORE, THE IMPUGNED ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN RESPECT OF ALL THE ASSESS EES BE SET ASIDE AND IT MAY BE HELD THAT DEDUCTION CLAIMED UNDER SECTION 10(10C) IS RIGHTLY DISALLOWED BY THE ASSESSING OFFICER. WITH REGARD TO THE PLEA OF ASSESSEE TO DISMISS THE APPEA LS ON ACCOUNT OF LOW TAX EFFECT, THE LD. D.R. POINTED OUT THAT ALL THESE APPEALS BE ADMITTED BECA USE LD. LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS NOT FOLLOWED THE CBDT CIRCULAR. 5 ITA NO. 963-968/AHD/2010 8. IN RESPECT OF OTHER APPEALS, EITHER NONE WAS PRE SENT ON BEHALF OF THE ASSESSEE OR LD. COUNSEL PRESENT CONTENDED THAT THE APPEALS OF THE R EVENUE BE DISMISSED BECAUSE THESE ARE FILED IN CONTRAVENTION OF CBDT CIRCULAR (SUPRA). 9. AFTER HEARING BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT CONTROVERSY INV OLVED IN THE GROUNDS OF APPEAL IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEES BY THE DECISION OF COORDINATE BENCH IN THE CASE OF SHRI KANAIYALAL VADILAL BHAVSAR (SUPRA). BUT WITHOUT GOI NG INTO THE MERIT, IT CAN BE SEEN THAT THE TAX EFFECT IN THE DEPARTMENTS APPEAL IS LESS THAN RS.2 LAKHS. THIS BENCH, VIDE ITS ORDER DATED 10.6.2008 IN I.T.A.NOS.335, 338 TO 341/LUC/08 IN TH E CASE OF DY. CIT VS SHRI BRAHMANAND BHASIN, HAS HELD THAT WHERE TAX EFFECT IN DEPARTMENTS A PPEAL IS LESS THAN RS.2 LAKHS, DEPARTMENT COULD NOT HAVE FILED THE APPEAL AS PER I NSTRUCTIONS OF THE GOVERNMENT. IN THIS REGARD, WE REFER TO FOLLOWING PORTION FROM THAT JUD GMENT: 10. IT IS UNDISPUTED FACT THAT IN ALL THESE APP EALS THE TAX EFFECT INVOLVED IN RESPECT OF DISPUTE IN EACH YEAR IS LESS THAN RS.2 L AKHS. THEREFORE, AS PER MONETARY LIMIT, THIS IS COVERED BY THE LATEST INSTRUCTIONS I SSUED BY THE C.B.D.T. AS MENTIONED ABOVE AND ALSO BOARD'S INSTRUCTIONS NO 1979 DATED 2 7.3.2000, NO.1985 DATED 29.6.2000, NO.6 OF 2003 DATED 17.7.2003, NO.19 OF 2 003 DATED 23.12.2003, NO.5/2004 DATED 27.5.2004, NO.2/2005 DATED 24.10.20 05 AND NO.5/2007 DATED 16.7.2007 WHEREIN MONETARY LIMIT FOR FILING DEPARTM ENTAL APPEAL IN INCOME-TAX MATTER AND OTHER CONDITIONS WERE SPECIFIED FOR FILI NG APPEAL BEFORE THE TRIBUNAL, HIGH COURTS AND SUPREME COURT. ALL THESE INSTRUCTI ONS WERE SUPERCEDED AND FRESH MONETARY LIMITS WERE FIXED FOR THIS PURPOSE. THESE LIMITS CONTAINED IN INSTRUCTION NO 5/2008 DATED 15.5.2008. IN THIS REGARD, THE REL EVANT PART OF INSTRUCTIONS CONTAINED IN PARAS 3, 4 & 5 ARE REPRODUCED BELOW:- '3. APPEALS WILL HENCEFORTH BE FILED ONLY IN CASES WHERE THE TAX EFFECT EXCEEDS MONETARY LIMITS GIVEN HEREUNDER:- SL. NO. APPEALS IN INCOME-TAX MATTERS MONETARY LIMIT (IN RS.) 1. APPEAL BEFORE APPELLATE TRIBUNAL 2,00,000/- 2. APPEAL U/S. 260A BEFORE HIGH COURT 4,00,000/- 3. APPEAL BEFORE SUPREME COURT 10,00,000/- 6 ITA NO. 963-968/AHD/2010 4. FOR THIS PURPOSE, 'TAX EFFECT' MEANS THE DIFFERE NCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HA VE BEEN CHARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF THE ISSUE AGAINST WHICH APPEAL IS INTENDED TO BE FI LED (HEREAFTER REFERRED TO AS 'DISPUTED ISSUES'). HOWEVER, THE TAX WILL NO T INCLUDE ANY INTEREST THEREON. SIMILARLY, IN LOSS CASES NOTIONAL TAX EFF ECT SHOULD BE TAKEN INTO ACCOUNT. IN THE CASES OF PENALTY ORDERS, THE TAX E FFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE ORDER TO BE AP PEALED AGAINST. 5. THE ASSESSING OFFICER SHALL CALCULATE THE TAX EF FECT SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUES I N THE CASE OF EVERY ASSESSEE. IF, IN THE CASE OF AN ASSESSEE, THE DISP UTED ISSUES ARISE IN MORE THAN ONE ASSESSMENT YEAR, APPEAL SHALL 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 MONETARY LIMIT SPECIFIED IN PARA 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 INVOLV ES MORE THAN ONE YEAR, APPEAL SHALL BE FILED IN RESPECT OF ALL ASSES SMENT YEARS EVEN IF THE 'TAX EFFECT' IS LESS THAN THE PRESCRIBED MONETARY L IMITS IN ANY OF THE YEAR(S), IF IT IS DECIDED TO FILE APPEAL IN RESPECT OF THE YEAR(S) IN WHICH 'TAX EFFECT' EXCEEDS THE MONETARY LIMIT PRESCRIBED.' 11. EARLIER THE HON'BLE ALLAHABAD HIGH COURT IN JU GAL KISHORE ARORA VS. DY C.I.T., [2004] 269 I.T.R. 133 (ALL.) HELD THAT INST RUCTIONS OF C.B.D.T. ARE INTERNAL MATTERS OF THE DEPARTMENT AND ASSESSEE CANNOT OBJEC T TO THE FILING OF APPEAL DESPITE SUCH INSTRUCTIONS. IN THIS REGARD, WE REPR ODUCE FROM THE JUDGEMENT AS UNDER:- 'AS REGARDS THE CONTENTION THAT THE APPEAL SHOULD N OT HAVE BEEN ENTERTAINED IN VIEW OF THE DIRECTION OF THE CENTRAL BOARD OF DIRECT TAXES DATED MARCH 27, 2000, WE ARE OF THE OPINION THAT TH E INSTRUCTIONS OF THE CENTRAL BOARD OF DIRECT TAXES REGARDING FILING OF A PPEALS ARE ONLY INTERNAL MATTERS OF THE DEPARTMENT, AND THE ASSESSE E CANNOT OBJECT TO FILING OF AN APPEAL DESPITE SUCH AN INSTRUCTION.' 7 ITA NO. 963-968/AHD/2010 12. HOWEVER, OTHER HIGH COURTS HAVE TAKEN A DIFFER ENT VIEW AND THEY HAVE HELD THAT INSTRUCTIONS OF C.B.D.T. ARE BINDING ON THE OF FICERS AND THAT MONETARY LIMITS FIXED BY THE C.B.D.T. FOR FILING APPEAL SHOULD HAV E BEEN FOLLOWED. ON THAT BASIS, APPEALS FILED BY THE REVENUE WERE DISMISSED. IN TH IS REGARD, WE CONSIDER IT PROPER TO REPRODUCE RELEVANT PART FROM THE FOLLOWING JUDGM ENTS. 13. IN THE CASE OF JOINT C.I.T. VS. PEERLESS DEVEL OPERS LTD., [2006] 287 I.T.R. (AT) 153 (SB), THE SPECIAL BENCH OF I.T.A.T., CALCUTTA O BSERVED AS UNDER:- 'THAT SINCE 1987 THE CENTRAL BOARD OF DIRECT TAXES HAD NOT ONLY BEEN TAKING A CONSISTENT APPROACH OF INSTRUCTING ITS OFF ICERS NOT TO FILE THE APPEAL WHERE THE TAX EFFECT IS BELOW THE MONETARY L IMIT, BUT SUCH MONETARY LIMIT IS ALSO REVISED UPWARDS FROM TIME TO TIME. THE MONETARY LIMIT FOR THE YEAR UNDER CONSIDERATION WAS ONE LAKH OF RUPEES. THE INSTRUCTIONS OF THE BOARD PRESCRIBING MONETARY LIMI T FOR FILING APPEAL BEFORE VARIOUS FORUMS ARE BINDING ON THE INCOME-TAX AUTHORITIES. 14. IN THE CASE OF C.I.T. VS. CAMCO COLOUR CO., [ 2002] 254 I.T.R. 565, THE HON'BLE BOMBAY HIGH COURT OBSERVED AS UNDER:- 'CIRCULAR F. NO. 279/126/98-ITJ, DATED MARCH 27, 20 00, REFLECTED THE POLICY DECISION TAKEN BY THE CENTRAL BOARD OF DIREC T TAXES NOT TO RAISE QUESTIONS OF LAW WHERE THE EFFECT IS LESS THAN THE AMOUNT PRESCRIBED IN THE INSTRUCTIONS ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES WITH A VIEW TO REDUCE LITIGATIONS BEFORE THE HIGH COURTS AND THE S UPREME COURT. THE CIRCULAR IS BINDING ON THE REVENUE. AN APPEAL OR RE FERENCE CONTRARY TO THE INSTRUCTIONS ISSUED IN THE CIRCULAR WILL NOT BE CONSIDERED BY THE COURTS.' 15. IN THE CASE OF C.I.T. VS. PITHWA ENGG. WORKS, [2005 ] 276 I.T.R. 519, THE HON'BLE BOMBAY HIGH COURT OBSERVED AS UNDER:- 'THE CENTRAL BOARD OF DIRECT TAXES BY ITS CIRCULAR DATED MARCH 27, 2000, HAS TAKEN A POLICY DECISION NOT TO FILE REFER ENCES IF THE TAX EFFECT IS LESS THAN RS.2 LAKHS. THE CIRCULAR IS APPLICABLE EV EN TO THE OLD REFERENCES WHICH ARE STILL UNDECIDED. THE DEPARTMEN T CANNOT CONTEND THAT THE CIRCULAR IS BINDING ONLY WITH RESPECT TO T HE NEW CASES AND NOT WITH RESPECT TO THE OLD REFERRED CASES EVEN IF THE TAX IS LESS THAN RS.2 LAKHS. THE SAME POLICY FOR OLD MATTERS NEEDS TO BE ADOPTED BY THE DEPARTMENT.' 8 ITA NO. 963-968/AHD/2010 16. IN THE CASE OF C.I.T. VS. DIGVIJAY SINGH, [2007] 29 2 I.T.R. 314, THE HON'BLE M.P. HIGH COURT OBSERVED AS UNDER:- 'COUNSEL FOR THE RESPONDENT RAISED A PRELIMINARY OB JECTION ABOUT THE MAINTAINABILITY OF THE APPEALS. ACCORDING TO HIM TH E TOTAL TAX EFFECT IN EVERY APPEAL IS AROUND RS. 2,000. HE INVITED THE AT TENTION OF HIS COURT TO NOTIFICATION ISSUED UNDER SECTION 10 OF THE WEALTH- TAX ACT, WHICH PROVIDES THAT APPEAL COULD BE PREFERRED TO THE HIGH COURT IN CASES WHERE A DEBT OF WEALTH-TAX DOES NOT EXCEED RS. 25,0 00. HE INVITED THE ATTENTION OF THIS COURT TO THE JUDGMENT OF THE BOMB AY HIGH COURT IN THE CASE OF CIT V. ZOEB Y. TOPIWALA [2006] 284 ITR 379 ; [2005] 199 CTR 656 WHEREIN THE BOMBAY HIGH COURT HAS HELD THAT TH E DIRECTIONS ISSUED BY THE BOARD DATED MARCH 27, 2000, DIRECTING THE DE PARTMENT NOT TO RAISE QUESTIONS OF LAW WHERE THE TAX EFFECT IS LE SS THAN RS. 2 LAKHS IS BINDING ON THE REVENUE. THE APPEAL WHICH WAS FILED HAVING TAX EFFECT LESS THAN RS. 7,000 WAS DISMISSED AS NOT MAINTAINAB LE BY THE BOMBAY HIGH COURT BY HOLDING THAT THE DIRECTIONS ISSUED BY THE BOARD ARE BINDING ON THE DEPARTMENT. THE NEXT CASE RELIED UPO N BY HIM IS IN THE CASE OF CIT VS.- CAMCO COLOURCO. [2002] 254 ITR 56 5 ; [2002] 173 CTR 255 IN WHICH THE BOMBAY HIGH COURT HAS REPRODUC ED THE CIRCULAR ISSUED BY THE MINISTRY OF FINANCE DATED MARCH 27, 2000, IN WHICH IT IS DIRECTED THAT APPEAL S UNDER SECTION 260A OF THE INCOME-TAX ACT WITH TAX EFFECT LESS THAN RS. 2 LAKHS SHOULD NOT BE PREFERRED. IN PARAGRAPH 5 OF THE SAID CIRCULAR IT I S MENTIONED THAT THE SAID CIRCULAR IS APPLICABLE TO WEALTH-TAX, GIFT-TAX , ESTATE DUTY, ETC. IN THAT CASE ALSO THE APPEAL WAS DISMISSED BY THE BOMB AY HIGH COURT BY HOLDING THE SAME AS NOT MAINTAINABLE. A NUMBER OF O THER JUDGMENTS WERE RELIED UPON BY COUNSEL FOR THE APPELLANT FOR S UPPORTING HIS ARGUMENTS ON THE SAID QUESTION, INCLUDING CIT V. KE LVINATOR OF INDIA LTD. [2002] 256 ITR 1, WHICH IS A FULL BENCH JUDGME NT OF THE DELHI HIGH COURT, UCO BANK V. CIT [1999] 237 ITR 889 (SC) ; [1999] 4 SCC 599 AND CIT V. PITH WA ENGINEERING WORKS [2005] 276 ITR 519 (BOM). IN ALL THESE CASES APPEALS WERE DISMISSED ON THE GROUND THAT THE TAX EFFECT INVOLVE D IN THE APPEALS IS VERY LOW. IN THE PRESENT CASE ALSO THE TAX EFFECT I S LESS THAN RS.5,000 PER YEAR HENCE THE APPEALS ARE NOT MAINTAINABLE. HOWEVE R, TO COMPLETE THE JUDGMENT WE PROCEED TO DECIDE OTHER GROUNDS.' 17. IN THE CASE OF C.I.T. VS. ZOEB Y. TOPIWALA, [2006] 284 I.T.R. 379, THE HON'BLE BOMBAY HIGH COURT OBSERVED AS UNDER:- 'THE INSTRUCTION OF THE CENTRAL BOARD OF DIRECT TAX ES DATED MARCH 27, 2000, REFLECTS THE POLICY DECISION TAKEN BY THE BOA RD NOT TO RAISE 9 ITA NO. 963-968/AHD/2010 QUESTIONS OF LAW WHERE THE TAX EFFECT IS LESS THAN THE AMOUNT PRESCRIBED IN THE INSTRUCTIONS WITH A VIEW TO REDUCE LITIGATIO N BEFORE THE HIGH COURTS AND THE SUPREME COURT. THE CIRCULAR IS BINDI NG ON THE REVENUE.' 18. THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF C.I.T. VS. RAJASTHAN PATRIKA LTD. [2002] 258 I.T.R. 300, HELD THAT THOUG H NO APPEAL SHOULD HAVE BEEN FILED WHERE TAX EFFECT IS LESS THAN LIMIT PRESCRIBE D, BUT THE HIGH COURT OUGHT NOT TO DISMISS THE APPEAL OR REJECT REFERENCE. THE REL EVANT PORTION OF HEAD NOTES ARE AS UNDER:- 'HELD - ALSO, THAT IF, IN SPITE OF ADMINISTRATIVE INSTRUCTIONS IN A CIRCULAR OF THE CENTRAL BOARD OF DIRECT TAXES TO THE EFFECT THA T NO APPEAL SHOULD BE FILED WHEN THE TAX EFFECT IS NOT MORE THAN RS.50,00 0, THE DEPARTMENT PREFERS TO FILE AN APPEAL OR TAKE A REFERENCE TO TH E HIGH COURT, ON SUCH ADMINISTRATIVE INSTRUCTIONS THE HIGH COURT OUGHT NO T TO DISMISS THE APPEAL OR REJECT THE REFERENCE. THERE IS NO INFIRMI TY IN DISPOSING OF THE APPEAL OR REFERENCE ON THE MERITS.' 19. BUT NOW IN THE LATEST JUDGMENT, THE HON'BLE AL LAHABAD HIGH COURT HAS HELD THAT WHERE TAX LIABILITY IS LESS THAN RS.5 LAKHS, S UCH MATTER NEED NOT BE CARRIED IN APPEAL BEFORE THE HON'BLE ALLAHABAD HIGH COURT. IN THIS REGARD, WE REFER PARAS 2, 3, 4 & 5 FROM THAT JUDGMENT AS UNDER:- '2. THE APPEAL RAISES THE FOLLOWING SUBSTANTIAL QUE STION OF LAW:- 'WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED I.T.A.T. WAS JUSTIFIED IN DELETING THE ADDI TION OF RS.90,000/- CLAIMED AS GIFTS RECEIVED FROM 8 PARTIES EVEN THOUG H THE ASSESSEE FAILED TO PROVE GENUINENESS OF THE AFORESAID GIFTS ?' 3. THE RESPONDENT HEREIN IS STATED TO BE A COLONIZE R IN ASSESSMENT YEAR 1986- 87, HE RETURNED THE INCOME OF RS.29,890. HE FURTHE R SHOWED THE CASH CREDIT OF THE AGGREGATE AMOUNT OF RS.90,000 BEING SHOWN AS GIFTS. THEY WERE THE AMOUNTS SUPPOSED TO BE DONATED BY SOME EIGHT PERSON S. THE ASSESSING OFFICER, THEREFORE, MADE AN ADDITION OF RS.90,000 A ND CONSEQUENT TAX LIABILITY INCREASED WOULD BE RS.53,312. THE APPEAL PREFERRED BY THE ASSESSEE WAS DISMISSED BY THE COMMISSIONER OF INCOME TAX (APPEAL S). HOWEVER, THE TRIBUNAL ENTERTAINED THE APPEAL PREFERRED BY THE AS SESSEE. THE APPELLATE COMMISSIONER TOOK THE VIEW THAT THE DONORS HAD NOT SHOWN THESE AMOUNT IN THEIR BALANCE SHEET WHICH WAS AT LEAST SEEN IN THE CASE OF ONE OF THE DONORS AND THE PERSONS CONCERNED WERE NOT PRODUCED BEFORE THE ASSESSING OFFICER AND, THEREFORE, HE HAD CONFIRMED THE ADDITION. AS AGAINST THAT, THE TRIBUNAL 10 ITA NO. 963-968/AHD/2010 HAD NOTED THAT THE MEMORANDUM FOR GIFT WERE FILED I N EACH OF THESE CASES AND GIFT TAX ASSESSMENT WAS MADE IN THE SAME WARD WHERE THE ASSESSEE WAS BEING ASSESSED. THE TRIBUNAL, THEREFORE, OBSERVED THAT T HERE WAS NO DIFFICULTY FOR THE INCOME-TAX OFFICER TO KNOW FROM THE RECORD WHET HER THESE PERSONS WERE EXISTING OR NOT. BESIDES THAT AFFIDAVITS WERE ALSO FILED. IN THE CIRCUMSTANCES, THE TRIBUNAL INTERFERED WITH THE ADDITION MADE BY T HE ASSESSING OFFICER AND SET ASIDE HIS ORDER AS WELL THAT OF THE COMMISSIONE R OF INCOME TAX (APPEALS). 4. IT IS A CASE WHERE PERHAPS TWO VIEWS WERE POSSIB LE AND IT IS NOTED ABOVE THAT THE TAX LIABILITY IS RS.53,312. THE CENTRAL B OARD OF DIRECT TAXES HAS COME OUT WITH A CIRCULAR THAT WHERE THE TAX LIABILI TY IS LESS THAN RS.5,00,000 SUCH MATTERS SHOULD NOT BE CARRIED IN APPEAL. 5. IN VIEW OF THE ABOVE, WE DO NOT THINK THAT THIS COURT SHOULD INTERFERE. OTHERWISE ALSO, WE DO NOT FIND THAT THIS IS A CASE INVOLVING SUBSTANTIAL QUESTION OF LAW WHICH OUGHT TO BE ENTERTAINED.' 20. SINCE IN THE LATEST DECISION, THE HON'BLE ALLAHABAD HIGH COURT HAS HELD THAT APPEAL INVOLVING TAX EFFECT OF LESS THAN PRESC RIBED MONETARY LIMIT AS PER INSTRUCTIONS ISSUED BY THE C.B.D.T. NEED NOT BE PUR SUED, THIS JUDGMENT OF THE HON'BLE ALLAHABD HIGH COURT BEING LATEST IN TIME WO ULD BE BINDING ON THE TRIBUNAL AND THEREFORE WE HOLD THAT THE APPEALS IN THE CASES INVOLVING TAX EFFECT LESS THAN PRESCRIBED LIMIT FOR FILING APPEAL BEFORE THE TRIBUNAL SHOULD NOT HAVE BEEN FILED BY THE DEPARTMENT. 21. IT IS UNDISPUTED FACT THAT CIRCULAR ISSUED BY THE C.B.D.T. ARE BINDING ON SUBORDINATE AUTHORITIES. IN THIS REGARD, WE REFER TO THE DECISIONS OF THE HON'BLE SUPREME COURT OF INDIA IN ELLERMAN LINES LTD. VS. C .I.T. [1971] 82 I.T.R. 913 (S.C); UCO BANK VS. C.I.T. [1999] 237 I.T.R. 889 (S .C); C.I.T. VS. KELVINATOR OF INDIA LTD. [ 2002] 256 I.T.R. 1 (FULL BENCH DELHI ); C.I.T. VS. SOUNDARARAJA FINANCE LTD. [2006] 283 I.T.R. 559 (MAD.); BHARAT C ONSTRUCTION CO. VS. C.I.T. [2002] 258 I.T.R. 140 (RAJ.); C.I.T. VS. BLAZE ADVE RTISING (DELHI) PVT. LTD., [2002] 255 I.T.R. 46 (DELHI) AND HARSHENDU UPENDRE KAKA VS. I.T.O. AND OTHERS [2001] 249 I.T.R. 612 (BOM.). 22. AS A RESULT, WE DISMISS ALL THE APPEALS FILED BY THE REVENUE BEING AGAINST LATEST EXECUTIVE INSTRUCTIONS OF 2008 ISSUED BY THE C.B.D.T. AND BELOW MANDATORY MONETARY LIMIT PRESCRIBED THEREIN FOR FILING APPEAL S. HOWEVER, IT IS NOT TO BE CONSTRUED AS A DECISION ON MERITS OR ON LEGAL CONTE NTIONS INVOLVED IN THESE APPEALS. 11 ITA NO. 963-968/AHD/2010 10. SINCE IN THE PRESENT CASE ALSO TAX EFFECT IN DEPARTMENTS APPEAL IS LESS THAN RS.2 LAKHS, DEPARTMENT OUGHT NOT HAVE FILED THE APPEALS. AS TH E APPEALS SO FILED ARE AGAINST THE EXECUTIVE INSTRUCTIONS WHICH ARE BINDING ON THE DEPARTMENT. E VEN ON MERIT, WE ARE OF THE OPINION THAT IN THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INC OME TAX(APPEALS) HAS GIVEN COGENT REASON FOR DELETING THE ADDITIONS MADE BY THE A.O. THEREFORE, WE DISMISS THE APPEALS IN LIMINE. 11. BEFORE PARTING WITH, WITH REGARD TO THE PLEA OF THE LD. D.R. THAT IN THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IGNORED THE CBDT INSTRUCTIONS, WE ARE OF THE VIEW THAT PRIMA FACIE, IT APPEARS THAT CBDT INSTRUC TIONS WERE CONSIDERED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). EVEN OTHERWISE , NONE WAS PRESENT BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WHEN HE HEARD A LL THESE APPEALS. IN VIEW OF THIS, IN OUR OPINION, TRIBUNAL HAS NO OPTION BUT TO DISMISS ALL THE APPEALS OF THE REVENUE ON THE GROUND OF LOW TAX EFFECT FOLLOWING CBDT INSTRUCTIONS (SUPRA) ON THE ISSUE. 12. IN THE RESULT, ALL THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 25.06.201 0 SD/- SD/- (G.D. AGRAWAL) (T.K. SHARMA ) VICE-PRESIDENT (AZ) JUDICIAL MEMBER DATED : 25 / 06 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD LAHA/SR.P.S.