ACIT, Chandigarh V. M/s Vrindavan Electricals, Panchkula

ITSSA 77/CHANDI/2004

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5852 (ITAT-CHANDIGARH)
• Duration Of Justice: 14 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 25-04-2019
• Assessment Year: misc
• Appeal Filed On: 18-11-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHISH GUPTA
• Keywords: Audit objection; Tax effect
• Section: 115JB; 12AA; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, A, CHANDIGARH . . , , BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRI SANJ AY GARG, JUDICIAL MEMBER ./ IT (SS) A NO. 75/CHD/2004 BLOCK PERIOD: 01.04.1987 TO 20.11.1997 THE ACIT, CIR 1(1), CHANDIGARH VS. SHRI KAPIL DEV JERATH, H.N. 8, SECTOR 7, CHANDIGARH ! ' ./PAN NO: !#/ APPELLANT %&!# /RESPONDENT & ./ IT (SS) A NO. 77/CHD/2004 BLOCK PERIOD: 01.04.1987 TO 20.11.1997 THE ACIT, CIR 1(1), CHANDIGARH VS. M/S VRINDAVAN ELECTRICALS, P.NO. 93, PHASE-II, PANCHKULA ! ' ./PAN NO: !#/ APPELLANT %&!# /RESPONDENT '() * + /ASSESSEE BY : SH. ASHOK GOYAL, CA * + / REVENUE BY : SH. ASHISH GUPTA, CIT DR , - * ).' /DATE OF HEARING : 25.04.2019 /012 * ).' / DATE OF PRONOUNCEMENT : 25 .04.2019 / ORDER PER N.K. SAINI, VICE PRESIDENT: THESE TWO APPEALS BY THE DEPARTMENT ARE DIRECTED AG AINST THE SEPARATE ORDERS EACH DATED 2.9.2004 IN RESPECT OF EACH OF TH E ASSESSEE FOR THE BLOCK PERIOD 1.4.1987 TO 20.11.1997 PASSED BY THE LD. COM MISSIONER OF INCOME TAX (APPEALS), PATIALA. 2. DURING THE COURSE OF HEARING, LEARNED COUNSEL FO R THE ASSESSEE, AT THE VERY OUTSET, STATED THAT THE APPEALS FILED BY THE DEPART MENT ARE NOT MAINTAINABLE IN VIEW OF CIRCULAR NO.3/2018 DATED 11.7.2018 ISSUED B Y THE CBDT WHEREIN THE IT(SS)A.NOS. 75 & 77-CHD/2004 SHRI KAPIL DEV, CHANDIGARH & M/S VRINDAVAN ELECTRIC ALS, PANCHKULA 2 MONETARY LIMIT FOR TAX EFFECT FOR FILING THE APPEAL BEFORE THE ITAT HAS BEEN INCREASED TO RS.20 LAKHS. 3. THE LD. CIT DR, SUBMITTED THAT CIRCULAR NO.3/201 8 IS NOT A BLANKET BAR ON FILING OF APPEALS BEFORE ITAT AND PARA 10 DETAIL S THE EXCEPTIONS TO FILE THE APPEAL WHERE TAX EFFECT IS LESS THAN RS.20 LAKHS AN D ALSO CLARIFIES THAT IN CASES WHERE TAX EFFECT IS LESS THAN RS.20 LAKHS OR WHERE TAX EFFECT CANNOT BE QUANTIFIED AS IN THE CASE OF REGISTRATION U/S 12AA, THE MONETARY LIMIT WOULD NOT BE APPLICABLE. IT WAS FURTHER SUBMITTED THAT T HE AFORESAID CIRCULAR NO.3/18 HAS BEEN AMENDED VIDE LETTER F.NO.279/MISC. 142/2007-ITJ(PT) DATED 20 TH JULY, 2018 AS UNDER:- (A) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVIS IONS OF AN ACT OR RULE IS UNDER CHALLENGE, OR (B) WHERE BOARDS ORDER, NOTIFICATION, INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES, OR (C) WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS B EEN ACCEPTED BY THE DEPARTMENT, OR (D) WHERE ADDITION RELATES TO UNDISCLOSED FOREIGN I NCOME/UNDISCLOSED FOREIGN ASSETS INCLUDING FINANCIAL ASSETS/UNDISCLOS ED FOREIGN BANK ACCOUNT. (E) WHERE ADDITION IS BASED ON INFORMATION RECEIVE D FROM EXTERNAL SOURCES IN THE NATURE OF LAW ENFORCEMENT A GENCIES SUCH AS CBI/ED/DRI/SFIO/DIRECTORATE GENERAL OF GST INTELLIG ENCE (DGGI). (F) CASES WHERE PROSECUTION HAS BEEN FILED BY THE DEPARTMENT AND IS PENDING IN THE COURT. 4. AFTER CONSIDERING THE SUBMISSIONS OF THE LD. D.R . AND THE MATERIAL ON RECORD. IN OUR OPINION, THE AMENDED CIRCULAR IS NO T APPLICABLE TO THE FACTS OF THE PRESENT CASE RATHER IT IS COVERED BY THE ORIGINAL C IRCULAR NO.3/18 DATED 11.07.2018, VIDE WHICH THE CBDT HAS REVISED THE MON ETARY LIMIT TO RS.20,00,000/- FOR NOT FILING THE APPEAL BEFORE TH E TRIBUNAL, THE SAID CIRCULAR READS AS UNDER: SUBJECT: REVISION OF MONETARY LIMITS FOR FILING OF APPEALS BY THE DEPARTMENT BEFORE INCOME TAX APPELLATE TRIBUNAL, HI GH COURTS AND SLPS/APPEALS BEFORE SUPREME COURT-MEASURES FOR REDU CING LITIGATION- REG. REFERENCE IS INVITED TO BOARDS CIRCULAR NO. 21 OF 2015 DATED 10.12.2015 WHEREIN MONETARY LIMITS AND OTHER CONDIT IONS FOR FILING DEPARTMENTAL APPEALS (IN INCOME-TAX MATTERS) BEFORE INCOME TAX IT(SS)A.NOS. 75 & 77-CHD/2004 SHRI KAPIL DEV, CHANDIGARH & M/S VRINDAVAN ELECTRIC ALS, PANCHKULA 3 APPELLATE TRIBUNAL, HIGH COURTS AND SLPS/ APPEALS B EFORE SUPREME COURT WERE SPECIFIED. 2. IN SUPERSESSION OF THE ABOVE CIRCULAR, IT HAS BE EN DECIDED BY THE BOARD THAT DEPARTMENTAL APPEALS MAY BE FILED ON MER ITS BEFORE INCOME TAX APPELLATE TRIBUNAL AND HIGH COURTS AND SLPS/ AP PEALS BEFORE SUPREME COURT KEEPING IN VIEW THE MONETARY LIMITS A ND CONDITIONS SPECIFIED BELOW. 3. HENCEFORTH, APPEALS/ SLPS SHALL NOT BE FILED IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HE REUNDER: S NO APPEALS/SLPS IN INCOME-TAX MATTERS MONETARY LIMIT (IN RS) 1 BEFORE APPELLATE TRIBUNAL 20,00,000/- 2 BEFORE HIGH COURT 50,00,000/- 3 BEFORE SUPREME COURT 1,00,00,000/- IT IS CLARIFIED THAT AN APPEAL SHOULD NOT BE FILED MERELY BECAUSE THE TAX EFFECT IN A CASE EXCEEDS THE MONETARY LIMITS PRESCR IBED ABOVE. 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 BEEN CHARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY TH E AMOUNT OF INCOME IN RESPECT OF THE ISSUES AGAINST WHICH APPEA L IS INTENDED TO BE FILED (HEREINAFTER REFERRED TO AS DISPUTED ISSUES) . FURTHER, TAX EFFECT SHALL BE TAX INCLUDING APPLICABLE SURCHARGE AND CES S. HOWEVER, THE TAX WILL NOT INCLUDE ANY INTEREST THEREON, EXCEPT WHERE CHARGEABILITY OF INTEREST ITSELF IS IN DISPUTE. IN CASE THE CHARGEAB ILITY OF INTEREST IS THE ISSUE UNDER DISPUTE, THE AMOUNT OF INTEREST SHALL B E THE TAX EFFECT. IN CASES WHERE RETURNED LOSS IS REDUCED OR ASSESSED AS INCOME, THE TAX EFFECT WOULD INCLUDE NOTIONAL TAX ON DISPUTED ADDIT IONS. IN CASE OF PENALTY ORDERS, THE TAX EFFECT WILL MEAN QUANTUM 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 IS SUES IN 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 FIL ED IN RESPECT OF SUCH ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFE CT IN RESPECT OF THE DISPUTED ISSUES EXCEEDS THE MONETARY LIMIT SPECIFIE D IN PARA 3. NO APPEAL SHALL BE FILED IN RESPECT OF AN ASSESSMENT Y EAR OR YEARS IN WHICH THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPEC IFIED IN PARA 3. IN OTHER WORDS, HENCEFORTH, APPEALS CAN BE FILED ONLY WITH REFERENCE TO THE TAX EFFECT IN THE RELEVANT ASSESSMENT YEAR. HOWEVER , IN CASE OF A COMPOSITE ORDER OF ANY HIGH COURT OR APPELLATE AUTH ORITY, WHICH INVOLVES MORE THAN ONE ASSESSMENT YEAR AND COMMON I SSUES IN MORE THAN ONE ASSESSMENT YEAR, APPEALS SHALL BE FILED IN RESPECT OF ALL SUCH ASSESSMENT YEARS EVEN IF THE TAX EFFECT IS LESS THA N THE PRESCRIBED MONETARY LIMITS IN ANY OF THE YEAR(S), IF IT IS DEC IDED TO FILE APPEAL IN RESPECT OF THE YEAR(S) IN WHICH TAX EFFECT EXCEEDS THE MONETARY LIMIT PRESCRIBED. IN CASE WHERE A COMPOSITE ORDER/JUDGEME NT INVOLVES MORE THAN ONE ASSESSEE, EACH ASSESSEE SHALL BE DEALT WIT H SEPARATELY. IT(SS)A.NOS. 75 & 77-CHD/2004 SHRI KAPIL DEV, CHANDIGARH & M/S VRINDAVAN ELECTRIC ALS, PANCHKULA 4 6. FURTHER, WHERE INCOME IS COMPUTED UNDER THE PROV ISIONS OF SECTION 115JB OR SECTION 115JC, FOR THE PURPOSES OF DETERMI NATION OF TAX EFFECT, TAX ON THE TOTAL INCOME ASSESSED SHALL BE COMPUTED AS PER THE FOLLOWING FORMULA- (A B) + (C D) WHERE, A = THE TOTAL INCOME ASSESSED AS PER THE PROVISIONS OTHER THAN THE PROVISIONS CONTAINED IN SECTION 115JB OR SECTION 11 5JC (HEREIN CALLED GENERAL PROVISIONS); B = THE TOTAL INCOME THAT WOULD HAVE BEEN CHARGEABL E HAD THE TOTAL INCOME ASSESSED AS PER THE GENERAL PROVISIONS BEEN REDUCED BY THE AMOUNT OF THE DISPUTED ISSUES UNDER GENERAL PROVISI ONS; C = THE TOTAL INCOME ASSESSED AS PER THE PROVISIONS CONTAINED IN SECTION 115JB OR SECTION 115JC; D = THE TOTAL INCOME THAT WOULD HAVE BEEN CHARGEABL E HAD THE TOTAL INCOME ASSESSED AS PER THE PROVISIONS CONTAINED IN SECTION 115JB OR SECTION 1I5JCWAS REDUCED BY THE AMOUNT OF DISPUTED ISSUES UNDER THE SAID PROVISIONS: HOWEVER, WHERE THE AMOUNT OF DISPUTED ISSUES IS CON SIDERED BOTH UNDER THE PROVISIONS CONTAINED IN SECTION 115JB OR SECTIO N 115JC AND UNDER GENERAL PROVISIONS, SUCH AMOUNT SHALL NOT BE REDUCE D FROM TOTAL INCOME ASSESSED WHILE DETERMINING THE AMOUNT UNDER ITEM D. 7. IN A CASE WHERE APPEAL BEFORE A TRIBUNAL OR A C OURT IS NOT FILED ONLY ON ACCOUNT OF THE TAX EFFECT BEING LESS THAN T HE MONETARY LIMIT SPECIFIED ABOVE, THE PR. COMMISSIONER OF INCOME-TAX / COMMISSIONER OF INCOME TAX SHALL SPECIFICALLY RECORD THAT EVEN THO UGH THE DECISION IS NOT ACCEPTABLE, APPEAL IS NOT BEING FILED ONLY ON T HE CONSIDERATION THAT THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPEC IFIED IN THIS CIRCULAR. FURTHER, IN SUCH CASES, THERE WILL BE NO PRESUMPTIO N THAT THE INCOME- TAX DEPARTMENT HAS ACQUIESCED IN THE DECISION ON TH E DISPUTED ISSUES. THE INCOME-TAX DEPARTMENT SHALL NOT BE PRECLUDED FR OM FILING AN APPEAL AGAINST THE DISPUTED ISSUES IN THE CASE OF T HE SAME ASSESSEE FOR ANY OTHER ASSESSMENT YEAR, OR IN THE CASE OF ANY OT HER ASSESSEE FOR THE SAME OR ANY OTHER ASSESSMENT YEAR, IF THE TAX EFFEC T EXCEEDS THE SPECIFIED MONETARY LIMITS. 8. IN THE PAST, A NUMBER OF INSTANCES HAVE COME TO THE NOTICE OF THE BOARD, WHEREBY AN ASSESSEE HAS CLAIMED RELIEF FROM THE TRIBUNAL OR THE COURT ONLY ON THE GROUND THAT THE DEPARTMENT HAS IM PLICITLY ACCEPTED THE DECISION OF THE TRIBUNAL OR COURT IN THE CASE O F THE ASSESSEE FOR ANY OTHER ASSESSMENT YEAR OR IN THE CASE OF ANY OTHER A SSESSEE FOR THE SAME OR ANY OTHER ASSESSMENT YEAR, BY NOT FILING AN APPE AL ON THE SAME DISPUTED ISSUES. THE DEPARTMENTAL REPRESENTATIVES/C OUNSELS MUST MAKE EVERY EFFORT TO BRING TO THE NOTICE OF THE TRIBUNAL OR THE COURT THAT THE APPEAL IN SUCH CASES WAS NOT FILED OR NOT ADMITTED ONLY FOR THE REASON OF THE TAX EFFECT BEING LESS THAN THE SPECIFIED MON ETARY LIMIT AND, THEREFORE, NO INFERENCE SHOULD BE DRAWN THAT THE DE CISIONS RENDERED THEREIN WERE ACCEPTABLE TO THE DEPARTMENT. ACCORDIN GLY, THEY SHOULD IMPRESS UPON THE TRIBUNAL OR THE COURT THAT SUCH CA SES DO NOT HAVE ANY PRECEDENT VALUE AND ALSO BRING TO THE NOTICE OF THE TRIBUNAL/ COURT THE IT(SS)A.NOS. 75 & 77-CHD/2004 SHRI KAPIL DEV, CHANDIGARH & M/S VRINDAVAN ELECTRIC ALS, PANCHKULA 5 PROVISIONS OF SUB SECTION (4) OF SECTION 268A OF TH E INCOME-TAX ACT, 1961 WHICH READ AS UNDER : (4) THE APPELLATE TRIBUNAL OR COURT, HEARING SUCH APPEAL OR REFERENCE, SHALL HAVE REGARD TO THE ORDERS, INSTRUC TIONS OR DIRECTIONS ISSUED UNDER SUB-SECTION (1) AND THE CIRCUMSTANCES UNDER WHICH SUCH APPEAL OR APPLICATION FOR REFERENCE WAS FILED OR NO T FILED IN RESPECT OF ANY CASE. 9. AS THE EVIDENCE OF NOT FILING APPEAL DUE TO THI S CIRCULAR MAY HAVE TO BE PRODUCED IN COURTS, THE JUDICIAL FOLDERS IN THE OFFICE OF PR. CSIT/CSIT MUST BE MAINTAINED IN A SYSTEMIC MANNER F OR EASY RETRIEVAL. 10. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING ISS UES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EF FECT 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 PROVIS IONS OF AN ACT OR RULE IS UNDER CHALLENGE, OR (B) WHERE BOARDS ORDER, NOTIFICATION, INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA FIRES, OR (C) WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS B EEN ACCEPTED BY THE DEPARTMENT, OR (D) WHERE THE ADDITION RELATES TO UNDISCLOSED FOREI GN ASSETS/ BANK ACCOUNTS. 11. THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE S HALL NOT APPLY TO WRIT MATTERS AND DIRECT TAX MATTERS OTHER THAN INCO ME TAX. FILING OF APPEALS IN OTHER DIRECT TAX MATTERS SHALL CONTINUE TO BE GOVERNED BY RELEVANT PROVISIONS OF STATUTE AND RULES. FURTHER, IN CASES WHERE THE TAX EFFECT IS NOT QUANTIFIABLE OR NOT INVOLVED, SUCH AS THE CASE OF REGISTRATION OF TRUSTS OR INSTITUTIONS UNDER SECTIO N 12A/ 12AA OF THE IT ACT, 1961 ETC., FILING OF APPEAL SHALL NOT BE GOVER NED BY THE LIMITS SPECIFIED IN PARA 3 ABOVE AND DECISION TO FILE APPE ALS IN SUCH CASES MAY BE TAKEN ON MERITS OF A PARTICULAR CASE. 12. IT IS CLARIFIED THAT THE MONETARY LIMIT OF RS. 20 LAKHS FOR FILING APPEALS BEFORE THE ITAT WOULD APPLY EQUALLY TO CROS S OBJECTIONS UNDER SECTION 253(4) OF THE ACT. CROSS OBJECTIONS BELOW T HIS MONETARY LIMIT, ALREADY FILED, SHOULD BE PURSUED FOR DISMISSAL AS W ITHDRAWN/ NOT PRESSED. FILING OF CROSS OBJECTIONS BELOW THE MONET ARY LIMIT MAY NOT BE CONSIDERED HENCEFORTH. SIMILARLY, REFERENCES TO HIG H COURTS AND SLPS/ APPEALS BEFORE SUPREME COURT BELOW THE MONETARY LIM IT OF RS. 50 LAKHS AND RS. 1 CRORE RESPECTIVELY SHOULD BE PURSUED FOR DISMISSAL AS WITHDRAWN/ NOT PRESSED. REFERENCES BEFORE HIGH COUR T AND SLPS/ APPEALS BELOW THESE LIMITS MAY NOT BE CONSIDERED HE NCEFORTH. 13. THIS CIRCULAR WILL APPLY TO SLPS/ APPEALS/ CRO SS OBJECTIONS/ REFERENCES TO BE FILED HENCEFORTH IN SC/HCS/TRIBUNA L AND IT SHALL ALSO APPLY RETROSPECTIVELY TO PENDING SLPS/ APPEALS/ CRO SS OBJECTIONS/REFERENCES. PENDING APPEALS BELOW THE SP ECIFIED TAX LIMITS IN PARE 3 ABOVE MAY BE WITHDRAWN/ NOT PRESSED. IT(SS)A.NOS. 75 & 77-CHD/2004 SHRI KAPIL DEV, CHANDIGARH & M/S VRINDAVAN ELECTRIC ALS, PANCHKULA 6 14. THE ABOVE MAY BE BROUGHT TO THE NOTICE OF ALL C ONCERNED. 15. THIS ISSUES UNDER SECTION 268A OF THE INCOME-TA X ACT 1961. 5. FROM CLAUSE 12 & 13 OF THE ABOVE SAID CIRCULAR I T IS CLEAR THAT THESE INSTRUCTIONS ARE APPLICABLE TO THE PENDING APPEALS ALSO AND AS PER CLAUSE 13, THERE IS CLEAR CUT INSTRUCTION TO THE DEPARTMENT TO WITHDRAW OR NOT TO PRESS THE APPEALS FILED BEFORE THE ITAT WHEREIN TAX EFFECT IS LESS THAN RS.20,00,000/-. THESE INSTRUCTIONS ARE OPERATIVE RETROSPECTIVELY TO THE PENDING APPEALS. 6. KEEPING IN VIEW THE CBDT CIRCULAR NO. 3 OF 2018 DATED 11.07.2018, WE ARE OF THE VIEW THAT THE REVENUE SHOULD NOT HAVE FI LED THE INSTANT APPEALS BEFORE THE TRIBUNAL. 7. IN THE RESULT, THE APPEALS OF THE DEPARTMENT ARE DISMISSED. (ORDER PRONOUNCED IN THE COURT ON 25.04.2019) SD/- SD/- . . ! (SANJAY GARG ) (N.K. SA INI) ' #/ JUDICIAL MEMBER %&' / VICE PRESIDENT DATED : 25.04.2019 .. 3 * %)45 651) / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. %&!# / THE RESPONDENT 3. , 7) / CIT 4. , 7) ( )/ THE CIT(A) 5. 58 %)9' , . 9'2 , :;<= / DR, ITAT, CHANDIGARH 6. < >- / GUARD FILE 3 , / BY ORDER, ? / ASSISTANT REGISTRAR