Income Tax Officer, Ward 1 (3), Jabalpur V. Shri Sudhir Kumar Rawat, Jabalpur

MA 16/JAB/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 5167 (ITAT-JABALPUR)
• Duration Of Justice: 2 year(s) 1 month(s) 23 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 17-02-2022
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 25-12-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Audit objection; Tax effect; Right to appeal
• Section: 274; 268A; 119

Judgement Text

1 | P a g e IN THE INCOME TAX APPELLATE TRIBUNAL JABALPUR BENCH, JABALPUR (through web-based video conferencing platform) BEFORE SHRI SANJAY ARORA, HON’BLE ACCOUNTANT MEMBER & SHRI MANOMOHAN DAS, HON'BLE JUDICIAL MEMBER M.A.No. 16/JAB/2019 (arising out of I.T.A. No. 63/JAB/2019) (Asst. Year: 2010-11) Appellant by : Shri S.K. Halder, Sr. DR Respondent by : Shri Sapan Usrethe, Advocate Date of hearing : 18/02/2022 Date of pronouncement : 22/04/2022 O R D E R Per Sanjay Arora, AM: This is a Miscellaneous Application (MA) by the Revenue directed against the Order under section 254(1) of the Income Tax Act, 1961 (‘the Act’ hereinafter) by the Tribunal, dated 23/8/2019, dismissing its’ captioned appeal for Assessment Year (AY) 2010-11 in limine, i.e., as not maintainable u/s. 268A of the Act. 2. The Revenue’s case is that its’ appeal under reference has been wrongly dismissed, as the same, even as clarified per the Authorization Memo accompanying the Memorandum of Appeal (in Form 36), is covered by the exception specified at para 10(c) of the Board Instruction 03/2018, dated 11/07/2018. Section 268A, inserted on the statute book by Finance Act 2008 w.e.f. 01/4/1999, empowers the Central Board of Direct Taxes (CBDT/Board) to issue ITO, Ward-1(3), Jabalpur. vs. Sudhir Kumar Rawat, 757, Satna Building, Gole Bazar, Jabalpur. [PAN : ADYPR 6449K] (Appellant) (Respondent) MA No. 16/JAB/2019 (AY 2010-11) ITO v. Sudhir Rawat 2 circulars, instructions, orders, directions, etc. from time to time fixing monetary limits for the purpose of regulating the filing of appeals and applications for references by the Revenue before the higher forums, being the Appellate Tribunal, Hon'ble High Court, and the Hon'ble Supreme Court (sec. 268A(1)), and which are to, while considering those appeals, references, etc., have regard to those Circulars/Instructions, etc. (s. 268A(4)). Instruction 03/2018 is one such Instruction issued u/s. 268A(1), and applicable to appeals pending disposal (as on 11/07/2018) as well. Paras 10 & 11 thereof provide exceptions to the said general prescription, so that an appeal/reference, otherwise covered, would be excepted in case it falls under any of the situations specified/contemplated therein. Para 10(c) thereof reads as under: ‘Where Revenue Audit objection in the case has been accepted by the Department, or’ This was followed by Instruction 17/2019, dated 08/08/2019, enhancing the monetary limits specified in the former, being from Rs. 20 lacs to Rs.50 lacs for appeals before the Tribunal. Both the Instructions, to be read together, were accordingly applicable at the relevant time. 3. Before us, while the Revenue relied on the decision by the Tribunal in Anurag Srivastava & Ors. (MA Nos. 03-07/Jab/2020, dated 07/9/2020), the assessee does on the decision by the Hon'ble jurisdictional High Court in ITO v. Krishna Warehouse (ITA No. 75-2019, dated 16/01/2020), rendered following the decision in Pr. CIT v. Nawany Construction Co. (P.) Ltd. [2018] 98 Taxmann.com (Bom) by the Hon'ble Bombay High Court, besides others. 4. We have heard the parties, and perused the material on record, including the decisions relied upon by both the parties. 4.1 The matter stands examined by the Tribunal at length in Asst. CIT v. Anurag Srivastava & Ors. (supra), relied upon by the Revenue, examining the issue from various angles. The said order is in fact in respect of the impugned MA No. 16/JAB/2019 (AY 2010-11) ITO v. Sudhir Rawat 3 order, passed as a common order for a large number of appeals and cross objections (COs), and therefore covers the instant MA, i.e., in principle, as well. It stands, inter alia, explained that the mention of an appeal having been filed as covered by the exception (stating the clause under which it is), though the monetary limit is not exceeded, is a circumstance, of which the Tribunal is therefore obliged to have regard of in terms of s. 268A(4). Why, the relevant Board Instruction u/s. 268A(1) being applicable to pending appeals, while the threshold monetary limit for filing an appeal, etc. by the Revenue is progressively increased with time, there may have been in a given case no occasion (at the time of filing the appeal) for the Revenue to have clarified this fact earlier, i.e., along with the appeal memo, so that it would be so for the first time only at the time of the hearing of its’ appeal by the Tribunal. In fact, the mention of this fact was itself not an ingredient of the memorandum of appeal, and could be urged at the time of the hearing the appeal. Further, the very fact that an addition/ disallowance stands made in assessment is itself, at least prima facie, indicative of the acceptance of the revenue audit objection by the Revenue. Further, the filing of the appeal qua the relevant issue only emphasizes that it continues to endorse the same. Why, the presumption in law, inasmuch as all judicial and official acts are presumed to be regularly performed (s.114)(e) of the Evidence Act), would also endorse this inference. It was in any case open for the Tribunal to call for the record in case it wished to satisfy itself about the applicability or otherwise of s. 268A(1) read with the extant Board Instruction, etc. thereunder, in a given case, which course rather only would enable it to issue a definite finding in the matter. 4.2 The decision in Anurag Shrivastava (supra) is qua the impugned order (IO) and, thus, directly applicable in the facts and circumstances of the case. It stands explained therein that the said order is an order en masse, passed without affording any, much less proper, opportunity to the Revenue, whose appeals stand dismissed thereby. To be heard, a basic ingredient of a judicial order, as indeed, as specifically stated therein, of an order u/s. 254(1), stood thus grossly violated. And MA No. 16/JAB/2019 (AY 2010-11) ITO v. Sudhir Rawat 4 it was for this reason that the impugned order specifically provided liberty to the Revenue to move the Tribunal in case it’s appeal was not covered by the Board Instruction 03/2018 read with 17/2019. A similar liberty was in fact also provided vide the Order by its’ Ahmedabad Bench in ITO v. Dinesh Madhavlal Patel & Ors. dated 14/8/2019 dismissing 628 appeals by the Revenue and connected COs by the assessees, which was followed and noted by it in the IO. Why, there is, and for that reason, even no finding therein by the Tribunal that the Revenue’s appeal/s is covered u/s. 268A read with the extant Board Circular. How, one wonders, then, would the decisions by the Honb’le Courts relied upon by the assesse, apply? On this being observed by the Bench during hearing, the ld. counsel for the assessee, Shri Usrethe, would draw our attention to the Board Instruction 05/2017, dated 23/01/2017 (PB pgs. 19-20) as well as the Order by the Tribunal in Asst. CIT v. Rajesh Kumar Shantilal Sanghvi & Ors. (in MA No. 396/2019, dated 09/9/2020 / PB pgs. 21 – 27), reading relevant parts thereof. The said Instruction, in terms, clarifies that the Income Tax Authorities engaged in administrative of the Act are not to file appeals merely because their tax effect exceeds the monetary limits as specified in the Board Instructions issued u/s. 268A. That is, regard in all cases is to be had of the merits of the case before filing an appeal by the Revenue, which is not to be reduced to a mechanically filing. We are urged to, therefore, dismiss the Revenue’s appeal under reference, even as was by the Tribunal in Rajesh Kumar Shantilal Sanghvi & Ors (supra). 4.3 We find the assessee’s contention as wholly without merit. The same has no basis, either on facts or in law and, accordingly, only needs to be stated to be rejected. To begin with, does it imply that the assessee concedes to the Revenue’s appeal being not covered u/s. 268A per se inasmuch as it is only in that case that a reference may have to be made to Instruction 05/2017 (supra), exhorting the Revenue’s authorities not to file appeals mechanically, i.e., merely because the monetary limit u/s. 268A is breached. This itself should be the end of the matter as the Revenue’s appeal was dismissed as not maintainable u/s. 268A (without even MA No. 16/JAB/2019 (AY 2010-11) ITO v. Sudhir Rawat 5 issuing a finding to that effect). That, then, i.e., the applicability or otherwise of s. 268A in the facts and circumstances of the case, and the law in the matter, could only be the subject matter of the rectification proceedings, making it impermissible to travel to other areas. Rather, a finding as to the appeal being without merit, and thus filed mechanically, is a finding on the merits of the case, which necessarily implies it being admissible and not liable to be dismissed as not maintainable for low tax effect u/s. 268A. The argument is thus self-defeating. We shall dwell on this aspect later. Suffice here to say that the argument raises a question as to whether the Board Instruction 05/2017 gives any extra jurisdiction (to an appellate forum) which extends beyond it’s appellate jurisdiction, i.e., in deciding the Revenue’s appeal as without merit, implicit in which is it’s consideration and adjudication on merits? That is, even assuming it to be filed mechanically, does it give rise to an appealable right to the assessee, i.e., separate and distinct from that it has to defend the impugned order on merits? Continuing further, the question as to if an appeal has been filed mechanically or not, which is itself a question of fact or, at best, a mixed question of fact and law, requires a consideration of it’s merits, entailing, in turn, an examination of the relevant facts and circumstances of the case, the law in the matter, as well as indeed the adjudication by the prior adjudicating authority/s, whose order/s is under challenge, and all of this with due application of mind. The argument of an appeal as being ousted for consideration on merits, as it has been filed mechanically, and is without merit, is thus a contradiction in terms. No answer, much less satisfactory, was given by Shri Usrethe during hearing, on being questioned thus. Why, the said finding would also necessarily require hearing the parties thereon, i.e., on merits, a pre-requisite of an order u/s. 254(1). Further still, Instruction 05/2017 is not a Instruction issued by the Board u/s. 268A(1), but only u/s. 119. How, one wonders, an appeal be dismissed u/s. 268A(1), or its dismissal justified thereunder, on the basis of a Circular issued u/s. 119? The right to appeal is a statutory right, which cannot be abrogated or diluted except where the law MA No. 16/JAB/2019 (AY 2010-11) ITO v. Sudhir Rawat 6 itself provides therefor. In Pahwa Chemicals (P.) Ltd. v. CCE [2005] 274 ITR 87 (SC), the Hon'ble Apex Court clarified that the Instructions by the Board u/s. 37B (of the Central Excise Act, 1944), which is akin to s. 119 of the Act, are circumscribed by the consideration stated in section 37B itself, i.e., in furtherance of the provisions of the Act. Sure, it is open for a litigant not to file an appeal or, upon filing, not press it, but once filed, it becomes obligatory for the appellate authority to consider it on merits (Rani Paliwal v. CIT [2004] 268 ITR 220 (P&H)). Proceedings under the Act, it needs to be appreciated, are not adversarial in nature, and the sole objective of any appellate authority, as indeed of the assessing authority, is an assessment in conformity with law, a public law. Continuing further, the withdrawal of an appeal, i.e., the non-exercise of the statutory right, can only be regulated by law and, where so, as u/s. 268A, is therefore to be strictly construed, i.e., strictly in accordance with the terms of the withdrawal, so that the same would have to be scrupulously observed. It therefore does not even otherwise lie in the mouth of the assessee-respondent to contend so, i.e., that the appeal is without merits, except where it is being heard on merits, implying its admission. Put succinctly, a decision to the effect that an appeal is without merits is only a decision on its’ merits, to be decided after hearing the parties, or in the least affording them an opportunity of being heard, i.e., qua the merits, if it is to qualify as a valid judicial order. The hearing contemplated in the captioned appeal was on the applicability or otherwise of section 268A, and not on the merits of the case. An appeal dismissed as being not eligible to be heard in view of the threshold monetary limit for filing appeals by the Revenue, without affording an opportunity thereto and without issuing any definite finding as to it being indeed covered by the relevant Board Instruction, albeit reserving a right to show otherwise, is, on the Revenue exercising the said right, i.e., to show it’s appeal as being excepted under the very same Instruction/s relied upon in dismissing the appeal, is being contested by the assessee – not on the ground of it having been rightly dismissed u/s. 268A, but as being without merit, even without MA No. 16/JAB/2019 (AY 2010-11) ITO v. Sudhir Rawat 7 showing so, much less hearing the Revenue thereon, and on that basis, contending it as rightly dismissed in limine! This, even as the Tribunal, as explained in considerable detail in Anurag Srivastava (supra), considers it a serious wrong on its’ part in not extending the Revenue an opportunity of being heard (on the applicability of or otherwise of section 268A), though saved by the provision of liberty to, in fact, both the parties, inasmuch as the COs by the assessees were also dismissed along with, we are being pressed to consider the question if the appeal has been filed mechanically, i.e. without merit, and that too without hearing the parties thereon. A speaking order, it is well settled, is a pre-requisite of a judicial order (refer: Pr. CIT v. Bajaj Herbals (P.) Ltd., in CA No. 2659/2021, dated 07/4/2022). In short, to compound the error already committed, instead of its rectification. If this is not a travesty of justice, what is, and the argument advanced, plainly, no more than a confused statement, without understanding its import and ambit. 4.4 Coming to the merits of the instant application by the Revenue, the record, referred to by it now, i.e., upon being afforded an opportunity to do so by the Tribunal, clearly shows that the appeal under reference was preferred by it conscious of the monetary limitation, due to it being excepted under the relevant Instruction itself, mentioning the relevant clause (Cl. 10 (c)) thereof. This aspect is not contested by the assessee, even as the Revenue, as a matter of abundant caution, has also placed on record the relevant audit objection, i.e., the subject matter of cl. 10 (c) (also refer paras 4.1 to 4.3). 4.5 The decisions by the Hon’ble Courts, of which only that mentioned were brought to our notice during hearing, would, in view of foregoing, be of little assistance to the assessee. We may here also briefly discuss the reliance on the order in Rajesh Kumar Santhilal Sanghvi (supra). The same follows another order by the Tribunal in ITO vs Ashokkumar Harkishnabhal Bhavsar (in ITA No. 32/AHD/2019), wherein it was found by the Tribunal, as a fact, that the addition MA No. 16/JAB/2019 (AY 2010-11) ITO v. Sudhir Rawat 8 made on account of the revenue audit objection was in fact deleted, and the same was being erroneously interpreted and appeals being filed by the Revenue mechanically. It was under these circumstances that the Tribunal referred to the Board Circular Nos. 21/2015 and 8/2016 exhorting the Revenue Authorities not to file appeals mechanically, but only upon due consideration of their merits. The same, as would be apparent from the foregoing, has no application in the facts and circumstances of the instant case. Rather, inasmuch as the same is an order u/s. 254(1), deciding an appeal by the Revenue per a speaking order, it is supportive of what stands stated hereinabove. Needless to add, no such finding stands issued in Rajesh Kumar Santhilal Sanghvi (supra) relied upon, which could only be on hearing on merits. 5. In view of the foregoing, we have no hesitation in, accepting its’ instant petition, recalling the relevant appeal by the Revenue for being heard on and a decision on merits by the Tribunal after hearing the parties. We decide accordingly. 6. In the result, the Revenues’ captioned MA is allowed. Order pronounced in open court on April 22, 2022 Sd/- Sd/- (Manomohan Das) (Sanjay Arora) Judicial Member Accountant Member Dated: 22/04/2022 Aks/- Copy to: 1. The Appellant: ITO, Ward-1(3), Jabalpur 2. The Respondent: Sudhir Kumar Rawat, 757, Satna Building, Gole Bazar, Jabalpur 3. The Principal CI T-1, Jabalpur 4. The CI T( Appeals)-1, Jabalpur 5. The Sr . D.R., I TAT, Jablapur By Order 6. Guard File (VUKKEM RAMBABU) Sr. Private Secretary ITAT, Jabalpur