ITO, WD-5(3), KOLKATA, Kolkata V. M/s Edward Supply Pvt. Ltd., Kolkata

ITSSA 64/KOL/2015

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 1402 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-12-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 01-04-2015
• Court: TRIBUNAL
• Department Lawyers: UDAY SARK AR JCITLD
• Keywords: Audit objection; Tax effect
• Section: 244A

Judgement Text

IT (SS) NOS. 64 & 65/KOL/2015-B-AM T.E.L.T RS. 10 LACS M/S. EDWARD SUPPLY PVT. LTD- 1 IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, K OLKATA BEFORE : SHRI MAHAVIR SINGH, JUDICIAL MEMBER, AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER IT (SS) NOS. 64 & 66/KOL/2015 A.YS. 2004-05 & 2006-07 I.T.O WARD 5(3), KOLKATA VS. M/S. EDWARD SUPPLY PVT. LTD PAN: AAACE 55 78J (APPELLANT) (RESPONDENT) FOR THE APPELLANT/DEPARTMENT: SHRI UDAY SARK AR, JCIT/LD. SR.DR FOR THE RESPONDENT/ASSESSEE: SHRI SIDDHARTH JHAJHARIA, FCA, LD.AR DATE OF HEARING: 29-12 -2015 DATE OF PRONOUNCEMENT: 29 -12 -2015 ORDER SHRI M.BALAGANESH, AM : THESE APPEALS OF THE REVENUE ARISE OUT OF THE ORDER S OF THE LEARNED CIT(A), KOLKATA IN APPEAL NOS. 473 & 474/CC-3(2)/CIT(A)-21/ 14-15 DATED 08-01-2015 AGAINST THE ORDERS OF ASSESSMENT FRAMED U/S 251/143(3)/153A OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR THE ASST YEARS 2004-05 & 2006-07. 2. AT THE OUTSET, IT IS SEEN THAT THE TAX EFFECT O N THE DISPUTED ADDITIONS BEFORE US IS LESS THAN RS. 10 LACS. 3. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IALS AVAILABLE ON RECORD. IT IS SEEN FROM THE PERUSAL OF THE RECORDS THAT THE QUANT UM INVOLVED IN RESPECT OF INTEREST U/S. 244A OF THE ACT IN BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION ARE RS.1,22,326/- AND RS.9,56,932/-. THE SAME ARE THE AMOUNTS OF TAX EFFECT INVOLVED. THE TOTAL TAX EFFECT ON THE ADDITIONS DISPUTED BEFORE U S IS ADMITTEDLY BELOW THE TAX EFFECT IT (SS) NOS. 64 & 65/KOL/2015-B-AM T.E.L.T RS. 10 LACS M/S. EDWARD SUPPLY PVT. LTD- 2 LIMIT PRESCRIBED BY CBDT VIDE CIRCULAR NO. 21 / 2015 DATED 10.12.2015 FOR PREFERRING APPEALS BEFORE TRIBUNAL BY THE REVENUE. IT WILL BE PERTINENT TO REPRODUCE THE RELEVANT PORTION OF THE SAID CIRCULAR NO. 21 / 2015 DATED 10.12.2015 :- 3. HENCEFORTH, APPEALS / SLPS 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 10,00,000/- 2 BEFORE HIGH COURT 20,00,000/- 3 BEFORE SUPREME COURT 25,00,000/- IT IS CLARIFIED THAT AN APPEAL SHOULD NOT BE FILED MERELY BECAUSE THE TAX EFFECT IN A CASE EXCEEDS THE MONETARY LIMITS PRESCRIBED AB OVE. FILING OF APPEAL IN SUCH CASES IS TO BE DECIDED ON MERITS OF THE CASE. 4. FOR THIS PURPOSE, TAX EFFECT MEANS THE DIFFERE NCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HAVE B EEN CHARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME I N RESPECT OF THE ISSUES AGAINST WHICH APPEAL IS INTENDED TO BE FILED (HEREI NAFTER REFERRED TO AS DISPUTED ISSUES). HOWEVER, THE TAX WILL NOT INC LUDE ANY INTEREST THEREON, EXCEPT WHERE CHARGEABILITY OF INTEREST ITSELF IS IN DISPUTE. IN CASE THE CHARGEABILITY OF INTEREST IS THE ISSUE UNDER DISPUT E, THE AMOUNT OF INTEREST SHALL BE THE TAX EFFECT. IN CASES WHERE RETURNED LOSS IS REDUCED OR ASSESSED AS INCOME, THE TAX EFFECT WOULD INCLUDE NOTIONAL TAX O N DISPUTED ADDITIONS. IN CASE OF PENALTY ORDERS, THE TAX EFFECT WILL MEAN Q UANTUM OF PENALTY DELETED OR REDUCED IN THE ORDER TO BE APPEALED 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 DISPUTED ISSUES ARISE IN MORE THAN ONE ASSESSMENT YEAR , APPEAL, CAN BE FILED IN RESPECT O F SUCH ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IN RESPECT OF THE DIS PUTED ISSUES EXCEEDS THE MONETARY LIMIT SPECIFIED IN PARA 3. NO APPEAL SHA LL 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, A PPEALS CAN BE FILED ONLY WITH REFERENCE TO THE TAX EFFECT IN THE RELEVANT ASSESSM ENT YEAR. HOWEVER, IN CASE OF A COMPOSITE ORDER OF ANY HIGH COURT OR APPELLATE AUTHORITY, WHICH INVOLVES MORE THAN ONE ASSESSMENT YEAR AND COMMON ISSUES IN MORE THAN ONE ASSESSMENT YEAR, APPEAL SHALL BE FILED IN RESPECT O F ALL SUCH ASSESSMENT YEARS IT (SS) NOS. 64 & 65/KOL/2015-B-AM T.E.L.T RS. 10 LACS M/S. EDWARD SUPPLY PVT. LTD- 3 EVEN IF THE TAX EFFECT IS LESS THAN THE PRESCRIBE D MONETARY LIMITS 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. IN CASE WHERE A COMPOSITE ORDER / JUDGEMENT INVOLVES MORE THAN ONE ASSESSEE, EACH ASSESSEE SHALL BE DEALT WITH SEPARATELY. 8. ADVERSE JUDGEMENTS RELATING TO THE FOLLOWING ISS UES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EFFECT ENTAILED IS LESS THAN THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE OR THERE IS NO TAX EFFECT: (A) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVISIONS OF AN ACT OR RULE ARE UNDER CHALLENGE, OR (B) WHERE BOARDS ORDER, NOTIFICATION, INSTRUCTION OR C IRCULAR HAS BEEN 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 A SSETS / BANK ACCOUNTS. 10. THIS INSTRUCTION WILL APPLY RETROSPECTIVELY TO PENDING APPEALS AND APPEALS TO BE FILED HENCEFORTH IN HIGH COURTS/ TRIBUNALS. PENDING APPEALS BELOW THE SPECIFIED TAX LIMITS IN PARA 3 ABOVE MAY BE WITHDRA WN / NOT PRESSED. APPEALS BEFORE THE SUPREME COURT WILL BE GOVERNED BY THE IN STRUCTIONS ON THIS SUBJECT, OPERATIVE AT THE TIME WHEN SUCH APPEAL WAS FILED. 3.1 WE FIND THAT INTENTION BEHIND THE CIRCULAR NO.21/2015 DATED 10-12-2015 NEEDS TO BE UNDERSTOOD IN THE FOLLOWING PERSPECTIVE:- BY PASSAGE OF TIME, THE MONEY VALUE HAS GONE DOWN, THE COST OF LITIGATION EXPENSES HAS GONE UP, NUMBER OF ASSESSES ON THE FI LES OF THE DEPARTMENT HAVE BEEN INCREASED AND CONSEQUENTLY, THE BURDEN ON THE DEPARTMENT IS ALSO INCREASED TO A TREMENDOUS EXTENT. THE CORRIDORS OF THE SUPERIOR COURTS ARE CHOKED WITH HUGE PENDENCY OF CASES. IN THIS VIEW OF THE MATTER, THE CBDT HAS RIGHTLY TAKEN A DECISION TO REVISE THE MONETAR Y LIMITS IN TUNE WITH THE PRESENT VALUE OF MONEY AND WITH A VIEW TO REDUCE TH E LITIGATION AND OFFERING RELIEF TO SMALL TAX PAYERS. THIS IS ALSO IN VIEW O F THE FACT THAT TIME AND ENERGY OF THE DEPARTMENT COULD BE USED MORE PRODUC TIVELY AND EFFICIENTLY TO IT (SS) NOS. 64 & 65/KOL/2015-B-AM T.E.L.T RS. 10 LACS M/S. EDWARD SUPPLY PVT. LTD- 4 CATCH HOLD OF BIG FISHES, WHO IN TURN WOULD CONTRIB UTE MORE TO THE DEVELOPMENT OF THE COUNTRY. 3.2. ON PERUSAL OF THE CIRCULAR NO. 21 / 2015 DATED 10.12.2015 AND THE MATERIALS AVAILABLE ON RECORD, WE COULD NOT SEE WHETHER THE I MPUGNED CASE FALLS UNDER ANY OF THE EXCEPTIONS CONTEMPLATED IN THE SAID CIRCULAR. WE A LSO FIND THAT THE CIRCULAR MAKES IT VERY CLEAR THAT THE REVISED MONETARY LIMITS SHALL A PPLY RETROSPECTIVELY TO PENDING APPEALS ALSO. WE FIND THAT THE CIRCULAR IS BINDING ON THE T AX AUTHORITIES. THIS POSITION HAS BEEN CONFIRMED BY THE HONBLE APEX COURT IN THE CASE OF COMMISSIONER OF C USTOMS VS INDIAN OIL CORPORATION LTD REPORTED IN 267 ITR 272 (SC) WHEREIN THEIR LORDSHIPS EXAMINED THE EARLIER DECISIONS OF THE APEX COURT WI TH REGARD TO BINDING NATURE OF THE CIRCULARS AND LAID DOWN THAT WHEN A CIRCULAR ISSUED BY THE BOARD REMAINS IN OPERATION THEN THE REVENUE IS BOUND BY IT AND CANNOT BE ALLOW ED TO PLEAD THAT IT IS NOT VALID OR THAT IT IS CONTRARY TO THE TERMS OF THE STATUTE. HENCE WE HOLD THAT THE APPEAL(S) OF THE REVENUE DESERVE TO BE DISMISSED IN TERMS OF LOW TAX EFFECT VIDE CIRCULAR NO.21 / 2015 DATED 10.12.2015. ACCORDINGLY, THIS BEING A LOW TAX EFFECT CASE, WE D ISMISS THE APPEALS OF THE REVENUE IN LIMINE , AS UNADMITTED, WITHOUT GOING IN TO THE MERITS OF THE CASE. 4. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DISMISSED INLIMINE. ORDER PRONOUNCED IN THE OPEN COURT ON 29.12.2015 SD/- ( MAHAVIR SINGH, JUDICIAL MEMBER ) SD/- (M. BALAGANESH, ACCOUNTANT MEMBER) DATE 29 /12/2015 IT (SS) NOS. 64 & 65/KOL/2015-B-AM T.E.L.T RS. 10 LACS M/S. EDWARD SUPPLY PVT. LTD- 5 1. THE APPELLANT: I T O WARD 5(3), AAYKAR BHAWAN, CHOWRINGHEE SQ., KOL-69. 2 THE RESPONDENT-M/S. EDWARD SUPPLY PVT. LTD 9/12 LAL BAZAR ST, 2 ND FL., BLOCK-I, KOL - 1 . 3 /THE CIT, 4.THE CIT(A ) 5. DR, KOLKATA BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR **PRADIP/SPS COPY OF THE ORDER FORWARDED TO: