Deputy Commissioner of Income Tax, Circle 1(1), JABALPUR V. M/s. Kemtani & Associates, JABALPUR

MA 20/JAB/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4104 (ITAT-JABALPUR)
• Duration Of Justice: 2 year(s) 5 month(s) 4 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-05-2022
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 26-12-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Audit objection; Tax effect; Tax effect
• Section: 268A

Judgement Text

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. 20/JAB/2019 (Arising out of I.T.A. No. 59/JAB/2019) (Asst. Year : 2011-12) Applicant by : Shri S.K. Halder, Sr. DR Respondent by : Shri Rahul Bardia, FCA. Date of hearing : 11/03/2022 Date of pronouncement : 31/05/2022 O R D E R Per Bench 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) 2011-12 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 Dy. CIT, Circle-1(1), Jabalpur. vs. Kemtani & Associates, B-663, Mahanadda, Madan Mahal, Jabalpur. (Applicant) [PAN: AAFFT 3981 Q] (Respondent) MA No. 20/JAB/2019 (ITA No. 59/JAB/2019) (A.Y. 2011-12) Dy. CIT v. Kemtani & Associates 2 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 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 clear mention of its‟ appeal being covered under the exceptional clause of para 10 (c) of the Board Instruction 03/2018, dated 11/7/208, in the statutory order u/s. 253(2) dated 28/6/2019, forming part of the appeal papers, reading out the relevant part thereof, as well as the relevant audit objection/s, placed on record. While the Revenue relies 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 in CIT v. Con cord Pharmaceuticals Ltd. [2009] 317 ITR 395 (Guj). MA No. 20/JAB/2019 (ITA No. 59/JAB/2019) (A.Y. 2011-12) Dy. CIT v. Kemtani & Associates 3 4. We have heard the parties, and perused the material on record, including the decisions relied upon by both the parties. 4.1 The authorization memo dated 28/6/2019 by the Pr. CIT, accompanying Form-36 (Memorandum of Appeal), clearly records the fact of ; para 2 thereof reading as under: “2. Under section 253(2) of the Act, I, therefore, direct the Deputy Commissioner of Income Tax, Circle 1(1), Jabalpur, to file an appeal before the Appellate Tribunal against the order of the above authority, further appeal is being filed as the case falls under exceptional clause of para 10 (c) of Board Instruction No. 3/2018, dated 11/07/2018.” 4.2 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 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 MA No. 20/JAB/2019 (ITA No. 59/JAB/2019) (A.Y. 2011-12) Dy. CIT v. Kemtani & Associates 4 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. 4.3 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 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 Bardia, could not furnish any satisfactory answer. MA No. 20/JAB/2019 (ITA No. 59/JAB/2019) (A.Y. 2011-12) Dy. CIT v. Kemtani & Associates 5 4.4 At this stage we may consider the decision in Concord Pharmaceuticals Ltd. (supra), also considered in Anuarg Srivastaava (supra). The same, rather than that of the assessee, supports the cause of the Revenue in the facts and circumstances of the present case. Per the same, the Hon'ble Court clearly states that if an objection is raised before the Tribunal at the time of hearing, which was not dealt with by it, and the Revenue‟s appeal dismissed on low tax-effect, the Revenue was at liberty to move the Tribunal to restore its appeal for being decided on merits. This is precisely what the Revenue is in the present case doing per it‟s instant application u/s. 254(2). This is in view of the manner in which the hearing in the matter took place. The impugned order dismisses 84 appeals by the Revenue and 12 COs by the assessees at one go. Another 104 appeals/COs, heard simultaneously, were also dismissed along with, albeit per a separate order; the hearing in all cases concluding within a few minutes. The appeals were „heard‟ en masse, without affording any specific opportunity to the Revenue to raise any objection, seriously violating the principles of natural justice. In fact, given the short time frame in which the appeals were fixed, even the notices were not sent to the parties; the list/s itself being finalized only a couple of days prior to the date of their listing. The ITAT Bar and the office of the Departmental Representatives were intimated of the posting, conveying the lists on being finalized on 20/8/2020, & on 22/8/2020, i.e., the revised lists. A fair hearing itself demands adequate notice, and by convention four weeks time is given by the Tribunal. Why, the order dated 14/8/2019 in ITO v. Dinesh Madhavlal Patel & Ors. by the Ahmedabad Bench of the Tribunal, a common order dismissing, like- wise, 628 appeals, reproduced at para 5 (pages 9 to 15) of the impugned order, itself, vide para 1 thereof, notes that individual notices to the parties were dispensed with in light of the discussions with the Principal Chief Commissioner of Income Tax (Gujarat) and the representatives of the ITAT Bar Association. The arguments raised before the Tribunal in the said appeals, as a reading of the same would clarify, were on the legal aspects of the matter, viz. the applicability MA No. 20/JAB/2019 (ITA No. 59/JAB/2019) (A.Y. 2011-12) Dy. CIT v. Kemtani & Associates 6 of the circular to pending appeals, etc., not touching the specific facts of any particular case. It is primarily for the said arguments, equally applicable in the instant case, that an extensive reference, reproducing it in toto, was made by the Tribunal thereto in the impugned order. In the present case, speaking for all the 96 appeals/COs, no counsels, other than those listed, were present during „hearing‟. All this is in fact a matter of the Tribunal‟s record. The claim of proper opportunity having been provided by the Tribunal to the Revenue for raising objection/s, implicit in the charge of it having not raised any objection at the time of hearing, is thus a figment of imagination; the co-author of the impugned order being a constituent of the Bench that heard the matters. There is, accordingly, no reference to any argument, by either side, in the impugned order, much less any mention of provision of opportunity to raise any specific objection; the Bench making it clear that the listed matters had been so on being identified on the basis of the revised monetary limit qua tax-effect per the recently issued Board circular of August 8, 2019, enhancing the same for the maintainability of the Revenues‟ appeals before the Tribunal. The impugned order is thus not maintainable on this short ground alone, i.e., non-provision of any opportunity, or in any case proper opportunity, of being heard. The Tribunal, while doing so, was acutely conscious of the legal infirmity of this course; the pitfalls it entailed; and it‟s duty towards the litigants, i.e., the tax payers and the Revenue. Accordingly, keen to avoid any prejudice being caused by proceeding in the manner it does, it, even as made clear earlier in the open court, preempting the raising of any objection by the Revenue, provided liberty to the parties to move the Tribunal where any appeal or CO, not covered u/s. 268A, has nevertheless been dismissed by it in limine. Para 7 of the Tribunal‟s order, also read out during hearing, reads as under: „7. It may be clarified that though every care has been taken by the Registry of the Tribunal in identifying the listed appeals, it may yet be that some error in working the tax effect may have occurred. It may also be that an appeal/s is otherwise saved by the MA No. 20/JAB/2019 (ITA No. 59/JAB/2019) (A.Y. 2011-12) Dy. CIT v. Kemtani & Associates 7 exceptions listed at para 10 (scope of which stands widened vide amendment dated 20/8/2018) or para 11 of the Circular. Similarly, it may be that a CO/s bears an independent ground/s, raised for adjudication. Accordingly, liberty is hereby granted to the parties to, where so, move the Tribunal in this regard, in which case it shall, where satisfied on merits, recall an appeal/s or, as the case may be, a CO/s, for being heard on merits. Further, the recall of an appeal would be accompanied by the recall of the assessee‟s corresponding CO, if any, dismissed along with. Needless to add, the Tribunal shall, while doing so, which shall be per a speaking order, grant an opportunity of hearing to the other side.‟ (emphasis, ours) Similar liberty, it may be noted, was also provided by the Tribunal in Dinesh Madhavlal Patel (supra) vide para 8 thereof while summarily dismissing 628 appeals, making it clear that either owing to wrong computation of tax effect or owing to such cases being covered by the permissible exceptions, or for any other reason, the Tribunal shall take remedial steps in this regard. Where, then, one may ask, is the scope for raising any objection by the Revenue, which forms the basis of the assessee’s case, or at least the preliminary objection to the instant MAs? Where, again, then, is the scope for taking a plea by the assessee that the Revenue having not raised an objection at the time of hearing of its appeal, is now precluded to seek its restoration? Why, even the Hon‟ble Courts do this, making a saving for any error/omission, i.e., while summarily dismissing an appeal/reference u/s. 268A thus. It may be noted that the Tribunal does not issue any finding, not even with regard to the appeals under reference being covered by the relevant Board circular/s, or otherwise u/s. 268A. All the impugned order says is that the listed appeals are dismissed as withdrawn/not pressed (refer para 6), which makes its order legally infirm in the absence of any material on record to support the same. Needless to add, there is no stated basis or reference to any such material in the impugned order; the sole basis for the in limine dismissal of the appeals being their low tax-effect. The Revenue‟s application is thus admissible by the very terms of the impugned order itself, i.e., the liberty provided per the impugned order. Though, therefore, the applications are u/s. 254(2), its strict parameters, as normally MA No. 20/JAB/2019 (ITA No. 59/JAB/2019) (A.Y. 2011-12) Dy. CIT v. Kemtani & Associates 8 obtain, would not apply thereto. It is in fact this liberty which makes the said order legally sustainable in view of the short shrift given to the due process of hearing, fundamental to the judicial decision making process and, thus, to a judicial order. The instant application, thus, become the first occasion for the Revenue (assessee) to object to it‟s appeal (CO) being wrongly dismissed u/s. 268A, even as contemplated by the impugned order, as well as the order relied upon by it. The Tribunal is thus obliged to consider and decide the Revenue‟s objection/s on merits, as the leave granted per the impugned order itself provides. How, one may ask, does the decision in Concord Pharmaceuticals Ltd. (supra) assists the assessee/s under such circumstances; the same, rather, in view of the position of law as clarified thereby, does that of the Revenue. Each of the Revenue‟s applications are liable to be allowed, restoring the appeals (along with the COs, if any) for being heard on merits, subject to the satisfaction, after hearing the parties, that the appeals are not covered by the extant circular/s. 4.5 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., dated 30/4/2013, the subject matter of cl. 10 (c) (also refer paras 4.1 to 4.4). 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. MA No. 20/JAB/2019 (ITA No. 59/JAB/2019) (A.Y. 2011-12) Dy. CIT v. Kemtani & Associates 9 6. In the result, the Revenues‟ captioned MA is allowed. Order Pronounced in open Court on May 31, 2022 sd/- sd/- (Manomohan Das) (Sanjay Arora) Judicial Member Accountant Member Dated: May 31, 2022 vr/- Copy to: 1. The Applicant: Dy. CI T,Circle-1(1), Jabalpur. 2. The Respondent: M/s. Kemtani & Associates, B-663, Mahanadda, Madan Mahal, Jabalpur 3. The Pr .CI T-1, Jabalpur (MP) 4. The CI T( A)-1, Jabalpur (MP) 5. The Sr .D.R., ITAT, Jabalpur (MP) 6. Guard File. By order (VUKKEM RAMBABU) Sr. Private Secretary, ITAT, Jabalpur