M/s. All Bank Finance Ltd., Kolkata V. DCIT, Circle - 6, Kolkata, Kolkata

MA 106/KOL/2011

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 7555 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 06-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 03-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Audit objection; Principle of natural justice; Tax effect
• Section: 14A; 260A; 12A

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA ( ) . . , . . . . !' # !' # !' # !' # , , ) [BEFORE SRI S.V. MEHROTRA, A.M. & SRI N. VIJAYA KU MARAN, J.M.] M.A. NO. 106/KOL./2011 ( $ $ $ $ / IN I.T.A NO. 233/KOL/2011) & I.T.A. NO. 233/KOL./2011 (A.Y. 2006-2007) ASSESSMENT YEAR : 2006-2007 M/S. ALL BANK FINANCE LTD., KOLKATA -VS.- DEPUTY COMMISSIONER OF INCOME TAX, (PAN : AACCA 4014 D) CIRCLE-6, KOLKATA ( APPLICANT ) ( RESPONDENT ) FOR THE APPLICANT : SHRI PIJUSH DEY, A.R. FOR THE RESPONDENT : SHRI R.K. SAHA, D.R. # % & # % & # % & # % & ' '' ' /DATE OF HEARING : 06.01.2012 () & ' () & ' () & ' () & ' /DATE OF PRONOUNCEMENT : 06.01.2012 * / ORDER PER SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER/ . . , :- THE ASSESSEE HAS FILED THIS MISCELLANEOUS APPLICAT ION FOR RECTIFICATION OF CERTAIN MISTAKES ALLEGEDLY HAVING BEEN CREPT IN THE ORDER O F TRIBUNAL DATED 09.08.2011. THE DEPARTMENTAL APPEAL WAS FIXED FOR HEARING FOR THE F IRST TIME ON 05.05.2011. HOWEVER, THE BENCH DID NOT FUNCTION ON THAT DATE. IT IS STATED T HAT THE ASSESSEE HAD NOT RECEIVED ANY NOTICE OF HEARING OF APPEAL FOR 09.08.2011 AND, THEREFORE, NO NE COULD APPEAR ON THE DATE OF HEARING. IT IS FURTHER SUBMITTED THAT THE ONLY GROUND TAKEN BY THE DEPARTMENT RELATED TO DELETION OF DISALLOWANCE UNDER SECTION 14A AMOUNTING TO RS.5,14 ,235/- BUT THE TOTAL TAX EFFECT WORKS OUT TO RS.1,73,092/- AND, THEREFORE, THE DEPARTMENTAL A PPEAL WAS REQUIRED TO BE DISMISSED IN LIMINE. IT IS FURTHER STATED THAT ON MERITS ALSO, T RIBUNAL HAS CONSISTENTLY BEEN HOLDING THAT 1% OF EXEMPTED INCOME SHOULD BE CONSIDERED AS THE AMOUNT DISALLOWABLE UNDER SECTION 14A OF THE ACT. IN VIEW OF THIS FACT, IT IS STATED IN THE MISC ELLANEOUS APPLICATION THAT THE ORDER DATED 09.08.2011 PASSED BY THE TRIBUNAL BE RE-CALLED FOR NECESSARY AMENDMENT. ITA -233-KOL-2011 & M.A. 106-KOL.-2011 (ITA NO.233/KOL./2011) 2 2. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND PERUSED THE RECORDS OF THE CASE. SINCE THE NOTICE OF HEARING WAS NOT SERVED ON ASSESSEE, THEREFORE, WE RE-CALL OUR ORDER DATED 09.08.2011 KEEPING IN VIEW OF THE PRINCIPLE O F NATURAL JUSTICE. IN THE RESULT, M.A. IS ALLOWED. 3. AS AGREED BY BOTH THE PARTIES, WE NOW PROCEED TO DECIDE APPEAL FILED BY THE REVENUE BEING ITA NO.233/KOL./2011 FOR ASSESSMENT YEAR 2006 -07. 4. FROM THE RECORD, WE FIND THAT THE APPEAL WAS FIL ED BY DEPARTMENT ON 11.02.2011 AND THE TAX EFFECT IN THE PRESENT APPEAL IS RS.1,73,092/-, WHICH IS ADMITTEDLY BELOW THE PRESCRIBED MONETARY LIMITS FOR FILING OF APPEAL BEFORE ITAT AN D OTHER SUPERIOR COURTS AS PER INSTRUCTION NO. 3/2011 ISSUED ON 09.02.2011. THE RELEVANT CIRCULAR ISSUED BY CBDT READS AS UNDER : INSTRUCTION NO. 3/2011 [F. NO. 279/MISC. 142/2007- ITJ], DATED 9-2-2011 REFERENCE IS INVITED TO BOARD'S INSTRUCTION NO. 5/2 008 DATED 15-5-2008 WHEREIN MONETARY LIMITS AND OTHER CONDITIONS FOR FILING DEPARTMENTAL APPEALS (IN INCOME-TAX MATTERS) BEFORE APPELLATE TRIBUNAL, HIGH COURTS AND SUPREME COURT W ERE SPECIFIED. 2. IN SUPERSESSION OF THE ABOVE INSTRUCTION, IT HAS BE EN DECIDED BY THE BOARD THAT DEPARTMENTAL APPEALS MAY BE FILED ON MERITS BEFORE APPELLATE TRIBUNAL, HIGH COURTS AND SUPREME COURT KEEPING IN VIEW THE MONETARY LIMITS A ND CONDITIONS SPECIFIED BELOW. 3. HENCEFORTH APPEALS SHALL NOT BE FILED IN CASES WHER E THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER: S. NO. APPEALS IN INCOME-TAX MATTERS MONETARY LIMIT (IN RS.) 1. APPEAL BEFORE APPELLATE TRIBUNAL 3,00,000 2. APPEAL U/S. 260A BEFORE HIGH COURT 10,00,0 00 3. APPEAL 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 ABOVE. FILIN G OF APPEAL IN SUCH CASES IS TO BE DECIDED ON MERITS OF THE CASE. 4. FOR THIS PURPOSE, TAX EFFECT MEANS THE DIFFERENCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HAVE BEEN CHARGEABL E HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF THE ISSUES AG AINST WHICH APPEAL IS INTENDED TO BE FILED (HEREINAFTER REFERRED TO AS 'DISPUTED ISSUES' ). HOWEVER THE TAX WILL NOT INCLUDE ANY INTEREST THEREON, EXCEPT WHERE CHARGEABILITY OF INT EREST 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 ON DISPUTED ADDITIONS. IN CASE OF PENALTY ORDERS, THE TAX EFFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE O RDER TO BE APPEALED AGAINST. 5. THE ASSESSING OFFICER SHALL CALCULATE THE TAX EFFEC T SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUES IN THE CASE OF EV ERY ASSESSEE. IF, IN THE CASE OF AN ASSESSEE, ITA -233-KOL-2011 & M.A. 106-KOL.-2011 (ITA NO.233/KOL./2011) 3 THE DISPUTED ISSUES ARISE IN MORE THAN ONE ASSESSME NT YEAR, APPEAL, CAN BE FILED IN RESPECT OF SUCH ASSESSMENT YEAR OR YEARS IN WHICH THE TAX E FFECT 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 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 AUTHORITY, WHICH INVOLVES MORE T HAN ONE ASSESSMENT YEAR AND COMMON ISSUES IN MORE THAN ONE ASSESSMENT YEAR, APPEAL SHA LL BE FILED IN RESPECT OF ALL SUCH ASSESSMENT YEARS EVEN IF THE 'TAX EFFECT' IS LESS T HAN THE PRESCRIBED MONETARY LIMITS IN ANY OF THE YEAR(S), IF IT IS DECIDED TO FILE APPEAL IN RES PECT OF THE YEAR(S) IN WHICH 'TAX EFFECT' EXCEEDS THE MONETARY LIMIT PRESCRIBED. IN CASE WHER E A COMPOSITE ORDER/JUDGMENT INVOLVES MORE THAN ONE ASSESSEE, EACH ASSESSEE SHALL BE DEAL T WITH SEPARATELY. 6. IN A CASE WHERE APPEAL BEFORE A TRIBUNAL OR A COURT IS NOT FILED ONLY ON ACCOUNT OF THE TAX EFFECT BEING LESS THAN THE MONETARY LIMIT SPECI FIED ABOVE, THE COMMISSIONER OF INCOME- TAX SHALL SPECIFICALLY RECORD THAT 'EVEN THOUGH THE DECISION IS NOT ACCEPTABLE, APPEAL IS NOT BEING FILED ONLY ON THE CONSIDERATION THAT THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIED IN THIS INSTRUCTION'. FURTHER, IN SUCH CA SES, THERE WILL BE NO PRESUMPTION THAT THE INCOME-TAX DEPARTMENT HAS ACQUIESCED IN THE DECISIO N ON THE DISPUTED ISSUES. THE INCOME- TAX DEPARTMENT SHALL NOT BE PRECLUDED FROM FILING A N APPEAL AGAINST THE DISPUTED ISSUES IN THE CASE OF THE SAME ASSESSEE FOR ANY OTHER ASSESSM ENT YEAR, OR IN THE CASE OF ANY OTHER ASSESSEE FOR THE SAME OR ANY OTHER ASSESSMENT YEAR, IF THE TAX EFFECT EXCEEDS THE SPECIFIED MONETARY LIMITS. 7. 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 TH E COURT ONLY ON THE GROUND THAT THE DEPARTMENT HAS IMPLICITLY ACCEPTED THE DECISION OF THE TRIBUNAL OR COURT IN THE CASE OF THE ASSESSEE FOR ANY OTHER ASSESSMENT YEAR OR IN THE CA SE OF ANY OTHER ASSESSEE FOR THE SAME OR ANY OTHER ASSESSMENT YEAR, BY NOT FILING AN APPEAL ON THE SAME DISPUTED ISSUES. THE DEPARTMENTAL REPRESENTATIVES/COUNSELS MUST MAKE EVE RY 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 SP ECIFIED MONETARY LIMIT AND, THEREFORE, NO INFERENCE SHOULD BE DRAWN THAT THE DECISIONS RENDER ED THEREIN WERE ACCEPTABLE TO THE DEPARTMENT. ACCORDINGLY, THEY SHOULD IMPRESS UPON T HE TRIBUNAL OR THE COURT THAT SUCH CASES DO NOT HAVE ANY PRECEDENT VALUE. AS THE EVIDE NCE OF NOT FILING APPEAL DUE TO THIS INSTRUCTION MAY HAVE TO BE PRODUCED IN COURTS, THE JUDICIAL FOLDERS IN THE OFFICE OF CSIT MUST BE MAINTAINED IN A SYSTEMIC MANNER FOR EASY RE TRIEVAL. 8. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING ISSUES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EFFECT ENTAILED IS LES S 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 BOARD'S 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. ITA -233-KOL-2011 & M.A. 106-KOL.-2011 (ITA NO.233/KOL./2011) 4 9. THE PROPOSAL FOR FILING SPECIAL LEAVE PETITION UNDE R ARTICLE 136 OF THE CONSTITUTION BEFORE THE SUPREME COURT SHOULD, IN ALL CASES, BE S ENT TO THE DIRECTORATE OF INCOME-TAX (LEGAL & RESEARCH), NEW DELHI AND THE DECISION TO F ILE SPECIAL LEAVE PETITION SHALL BE IN CONSULTATION WITH THE MINISTRY OF LAW AND JUSTIC E. 10. THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE SHALL NOT APPLY TO WRIT MATTERS AND DIRECT TAX MATTERS OTHER THAN INCOME-TAX, FILING OF APPEAL S IN OTHER DIRECT TAX MATTERS SHALL CONTINUE TO BE GOVERNED BY RELEVANT PROVISIONS OF S TATUTE AND RULES. FURTHER, FILING OF APPEAL IN CASES OF INCOME-TAX, WHERE THE TAX EFFECT IS NOT QUANTIFIABLE OR NOT INVOLVED, SUCH AS THE CASE OF REGISTRATION OF TRUSTS OR INSTITUTIO NS UNDER SECTION 12A OF THE IT ACT, 1961, SHALL NOT BE GOVERNED BY THE LIMITS SPECIFIED IN PA RA 3 ABOVE AND DECISION TO FILE APPEAL IN SUCH CASES MAY BE TAKEN ON MERITS OF A PARTICULAR C ASE. 11. THIS INSTRUCTION WILL APPLY TO APPEALS FILED ON OR AFTER 09.02.2011. HOWEVER, THE CASES WHERE APPEALS HAVE BEEN FILED BEFORE 09.02.2011 WIL L BE GOVERNED BY THE INSTRUCTIONS ON THIS SUBJECT, OPERATIVE AT THE TIME WHEN SUCH APPEA L WAS FILED. 12. THIS ISSUES UNDER SECTION 268(1) OF THE INCOME TAX ACT, 1961. 5. AT THE TIME OF HEARING, LD. D.R. COULD NOT POINT OUT ANY EXCEPTIONS MENTIONED IN ABOVENOTED CIRCULAR IN WHICH THE ASSESSEES CASE FA LLS. THEREFORE, THE DEPARTMENTAL APPEAL CANNOT BE ADMITTED. 6. IN THE RESULT, M.A. BEING NO. 106/KOL./2011 FIL ED BY THE ASSESSEE IS ALLOWED AND THE APPEAL BEING ITA NO. 233/KOL./2011 FILED BY THE REV ENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 06/ 01 /2012. # + , * 06/01/2012. SD/- SD/- [N. VIJAYA KUMARAN / . . . . !' # !' # !' # !' # ] [S.V. MEHROTRA/ ( . . )] JUDICIAL MEMBER/ ACCOUNTANT MEMBER/ DATED : 06/ 01/ 2012 COPY OF THE ORDER FORWARDED TO: 1. M/S. ALL BANK FINANCE LIMITED, 15, MAHARANA PRATAP SARANI, KOLKATA-1 2 DCIT, CIRCLE-6, KOLKATA, P-7, CHOWRINGHEE SQUARE, K OLKATA-69, 3. COMMISSIONER OF INCOME-TAX (APPEALS)- , KOLKATA 4. CIT- , KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA (TRUE COPY) BY ORDER ASSISTANT REGISTRAR, I.T.A.T., KOLKATA LAHA, SR. P.S.