The ITO, Ward-4(3), Ahmedabad V. Himanshu Silk Mills Pvt.Ltd., Ahmedabad

MA 186/AHD/2010

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 8514 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 12 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 01-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2003-2004
• Appeal Filed On: 19-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BALTEJA SRD R
• Keywords: Wrong claim; Tax effect

Judgement Text

1 MA NO. 186/A/2010 (ARISING OUT OF I.T.A NO. 4219/A/2007) ASST. YEAR :-2003-04 I N THE INCOME TAX APPELLATE TRIBUNALC BENCH,AHMEDABAD (BEFORE SRI MUKUL KR. SHRAWAT, J.M. AND SRI A MOH AN ALANKAMONY A.M.) MA NO.18 6 /A/2010 (ARISING OUT OF I.T.A. NO. 4219/A/2007) (ASSESSMENT YEAR: 2003-04) THE ITO, WD-04(3) AHMEDABAD (APPELLANT) VS. HIMANSHU SILK MILLS PRIVATE LTD, AHMEDABAD (RESPONDENT) ON BEHALF OF THE REVENUE SRI O.P.BALTEJA, SR,D.R. ON BEHALF OF THE ASSESSEE SRI PRAKASH D. SHAH DATE OF HEARING : 30-03-20 12 DATE OF PRONOUNCEMENT : 01-06-2012 ( )/ ORDER PER: SRI MUKUL KR. SHRAWAT, J.M. 1. FROM THE SIDE OF THE REVENUE A MISCELLANEOUS APPLICA TION HAS BEEN MOVED ON 19-08-2010 REQUESTING TO RECALL A N ORDER OF THE TRIBUNAL AS REFERRED (SUPRA) IN THE NOMENCLA TURE DATED 14-05-2010. 2 MA NO. 186/A/2010 (ARISING OUT OF I.T.A NO. 4219/A/2007) ASST. YEAR :-2003-04 2. THE TRIBUNAL HAS DISMISSED THE APPEAL OF THE REVENUE (ITA NO.4219/A/2007, ASST. YEAR 2003-04) AS PER THE FOLL OWING OBSERVATIONS REPRODUCED BELOW:- 3. FROM THE SIDE OF THE REVENUE, LEARNED DEPARTMENT AL REPRESENTATIVE HAS STATED THAT THOUGH THE ASSESSEE HAS DECLARED A LOSS AND THE ASSESSMENT HAS ALSO BEEN FINALIZED AT NIL I NCOME, BUT THE QUESTION OF ADDITION OF GROSS PROFIT OF RS. 9,59,55 4/- MIGHT HAVE THE EFFECT OF THE TAX MORE THAN THE PRESCRIBED LIMIT, T HEREFORE, THIS APPEAL CAN INDEPENDENTLY BE ADJUDICATED UPON. ALTERNATIVE LY, HE HAS ALSO CONTESTED THAT THE QUESTION OF NIL ASSESSMENT WHERE ADMITTEDLY NO TAX LIABILITY HAS BEEN IMPOSED BY THE ASSESSEE OFFI CER ARE SUBJECT TO CONTROVERSY THAT WHETHER IN THOSE CASES WHERE THE A DDITION INVOLVED IS SUBSTANTIAL; WHETHER CAN BE SAID TO BE COVERED BY T HE CBDT CIRCULARS. 4. ON HEARING BOTH THE SIDES, WE ARE OF THE VIEW TH AT THE QUESTION OF APPLICABILITY OF CBDT CIRCULAR NOW STOOD SET AT RES T, AS FAR AS THIS FORUM IS CONCERNED. THEREFORE, FOLLOWING THE ABOVE REFERRED DECISIONS AND THE DECISION OF THE DELHI HIGH COURT, WE ARE LE FT WITH NO OPTION BUT TO DISMISS THIS APPEAL OF THE REVENUE IN LIMINE BEING NOT MAINTAINABLE. HOWEVER REVENUE IS ALWAYS AT LIBERTY TO MOVE A MISCELLANEOUS PETITION AT ANY TIME IN FUTURE, IF TH E AFORESAID DECISION 3 MA NO. 186/A/2010 (ARISING OUT OF I.T.A NO. 4219/A/2007) ASST. YEAR :-2003-04 IS REVERSED OR ANY OTHER VIEW IS EXPRESSED BY A HIG HER JUDICIAL AUTHORITY. 3. FROM THE SIDE OF THE REVENUE LEARNED D.R. MR. O.P. BALTEJA APPEARED AND PLACED RELIANCE ON THE MISCELLANEOUS P ETITION THROUGH WHICH IT WAS STATED AS UNDER:- IN THIS CASE, DURING THE COURSE OF ASSESSMENT PROC EEDINGS, THE AO AFTER CONSIDERING THE FACTS REGARDING BOOKING OF UN-CHECKED AND DISPROPORTIONATE EXPENSES, INVOLVED THE PROVISIONS OF SECTION 145(3) OF THE IT ACT AND ON THE BASIS OF THE GROSS PROFIT AT THE RATE OF 5% OF THE JOB WORK AND OTHERS SHOWN BY THE ASSESSEE AT RS. 4, 30,54,563/- WHICH WORKS OUT TO RS. 21,52,728/-. THE ASSESSING OFFICE R ACCORDINGLY, A SUM OF RS. 9,59,554/- BEING THE DIFFERENCE BETWEEN THE GROSS PROFIT SHOWN BY THE ASSESSEE AS COMPUTED ABOVE IS ADDED TO THE T OTAL INCOME OF THE ASSESSEE. AGAINST THE ORDER, THE ASSESSEE HAS PREFERRED APP EAL BEFORE CIT(A). THE LD CIT(A) HAS DELETED THE ADDITION TA KING INTO VIEW THAT THE AO HAS NOT ESTABLISHED ANY CASE OF BOGUS CLAIM OR DOUBLE DEDUCTION OF EXPENSES BY THE APPELLANT. ON AGGRIEVED BY THE ORDER OF THE LD.CIT(A) THE DE PARTMENT FILED AN APPEAL BEFORE THE HONBLE ITAT AGAINST THE ORDER OF THE ID. 4 MA NO. 186/A/2010 (ARISING OUT OF I.T.A NO. 4219/A/2007) ASST. YEAR :-2003-04 CIT(A). DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE HONBLE ITAT, THE ISSUE WAS DEBATED ONLY ON THE BAS IS OF TAX EFFECT, BECAUSE THE TAX EFFECT THEREIN WAS LESS THAN THE PR ESCRIBED LIMIT AND THE HONBLE ITAT DISMISSED THE APPEAL FILED BY THE REVE NUE RELYING ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CIT VS. MANGALAM RICINUS LTD. (2008) 174 TAXMAN 186 (DELHI). THE HO NBLE ITAT HAS ALSO STATED IN THE APPELLATE ORDER THAT IF THE DECI SION OF HONBLE ITAT IS NOT ACCEPTABLE MISCELLANEOUS PETITION TO HONBLE ITAT MAY BE FILED. IN THIS CASE THE QUESTION OF ADDITION OF GROSS PR OFIT OF RS. 9,59,554/- WILL HAVE THE NOTIONAL TAX EFFECT OF RS. 3,52,636/- WHIH IS MORE THAN THE LIMIT OF RS. 2 LAKHS PRESCRIBED AS P ER BOARDS INSTRUCTION NO. 5/2008 DATED 15-05-2008 AND ACCORDI NGLY, THE APPEAL WAS MAINTAINABLE. 4. WE HAVE HEARD BOTH THE SIDES. AS FAR AS THE IS SUE OF NOTIONAL TAX EFFECT IS CONCERNED, THE INSTRUCTION NO. 05 OF 2008 DATED 15 TH MAY, 2008 IS DULY CONSIDERED. HOWEVER OUR ATTENTION HAS BEEN DRAWN THAT THE SAID QUESTION WHE THER A NOTIONAL INCOME CAN BE TAKEN INTO ACCOUNT FOR COM PUTING ANNUAL VALUE WAS REFERRED TO THE SPECIAL BENCH IN T HE CASE OF TRIVOLI INVESTMENT & TRADING COMPANY PVT LTD (ITA N OS.2808 &2009/MUM/1996. HOWEVER THAT REFERENCE WAS WITHDRA WN ON THE GROUND THAT THE ISSUE BEING PENDING FOR ADJUDIC ATION BEFORE THE HIGH COURT THEN THERE WAS NO REQUIREMENT FOR TH E 5 MA NO. 186/A/2010 (ARISING OUT OF I.T.A NO. 4219/A/2007) ASST. YEAR :-2003-04 CONTINUANCE OF A SPECIAL BENCH. AN ANOTHER LEGAL D EVELOPMENT HAS ALSO BEEN BROUGHT TO OUR NOTICE THAT THE HONBL E GUJRAT HIGH COURT IN THE CASE OF CIT VS. ROOPAM RAJEEV MARDI A IN TAX APPEAL 108 OF 2010 VIDE AN ORDER DATED 22-03-2011 H AS CONSIDERED AND ADMITTED THE FOLLOWING QUESTION OF L AW:- WHETHER THE APPELLATE TRIBUNAL IS RIGHT IN LAW AND ON FACTS IN DISMISSING THE TAX APPEAL OF THE REVENUE ON THE GRO UND OF LOW TAX EFFECT; THOUGH THE NOTIONAL TAX EFFECT EXCEEDED THE MONETARY LIMIT PRESCRIBED BY THE BOARD? 5. IN THE SAID BACKGROUND OF THE DEVELOPMENT; THE LEAR NED A R OF RESPONDENT ASSESSEE HAS VEHEMENTLY PLEADED THAT THE ISSUE HAS BECOME DEBATABLE AND THEREFORE NOT WITHIN THE PURVIEW OF THE RECTIFICATION AS PRESCRIBED UNDER SE CTION 254(2) OF IT ACT. THIS ARGUMENT OF THE RESPONDENT ASSESSEE APPEARS TO BE CORRECT, BECAUSE AT THE TIME WHEN THE IMPUGNED APPEAL OF THE REVENUE WAS DISMISSED BY THE TRIBUNAL VIDE ORDER DATED 14-05-2010, RELIANCE WAS PLACED ON CERTAIN DECISIONS AND THE CBDT CIRCULAR AVAILABLE A T THAT TIME. THEREFORE, THE ADJUDICATION WAS PROPER AFTER DUE CONSIDERATION OF THE FACTS AS ALSO THE LAW APPLICAB LE AT THAT POINT OF TIME. ALL THE LATEST DEVELOPMENT THEREAFT ER THUS RAISED A CONTROVERSY AND BEING CONTROVERSIAL IN NAT URE 6 MA NO. 186/A/2010 (ARISING OUT OF I.T.A NO. 4219/A/2007) ASST. YEAR :-2003-04 THEREFORE CANNOT BE MADE THE BASIS FOR RECTIFICATIO N OF THE SAID ORDER AS PRESCRIBED UNDER SECTION 254(2) OF IT ACT. 6. RESULTANTLY, WE HEREBY DISMISS THIS PETITION OF THE REVENUE. SD/- SD/- ( A. MOHAN ALANKAMONY) (MUKUL KR.SHRAWAT) ACCOUNTANT MEMBER JUDICIAL ME MBER A.KUMAR COPY OF THE ORDER FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDED 3. THE CIT(APPEALS)-II, BARODA 4. THE CIT CONCERNED. 5. THE DR, ITAT, AHEMEDABAD 6. GUARD FILE BY ORDER DEPUTY/ASSTT.REGISTRAR AAA ITAT, AHMEDABAD 1.DATE OF DICTATION 30/05/2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER.OTHER MEMBER 30 /05/2012 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER.. 10. DICTATION NOTE BOOK IN ORIGINAL OF THE SAID ORD ER IS PLACED ON RECORD. 7 MA NO. 186/A/2010 (ARISING OUT OF I.T.A NO. 4219/A/2007) ASST. YEAR :-2003-04