Income-Tax Officer, Central -1, Nashik V. M/S Shree Paras Buildcon, Nashik

MA 243/PUN/2022

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 6276 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 1 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 19-10-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 31-08-2023
• Assessment Year: 2007-2008
• Appeal Filed On: 04-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRAMOD SHINGTE LD.
• Keywords: Tax effect; Tax effect
• Section: 254(2); 119

Judgement Text

॥ आयकर अपीलीय न्यायाधिकरण, पुणे न्यायपीठ,“ बी ” बेंच, पुणे में ॥ ITAT-Pune Page 1 of 5 IN THE INCOME TAX APPELLATE TRIBUNAL, PUNE ‘B’ BENCH, PUNE BEFORE SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI G. D. PADMAHSHALI, ACCOUNTANT MEMBER आयकर अपऩल स ं . / MA No. 243/PUN/2022 (Arising out of ITA No. 1177 /PUN/2012) निर्धारण वषा / Assessment Year : 2007-08 Income Tax Officer, Central-1, Nashik . . . . . . . अपीलार्थी / Applicant बिधम / V/s. M/s Shree Paras Buildcon, Paras Compound, Near M.G. Petrol Pump, Soyagaon, Tal-Malegaon, Dist-Nashik, PAN : AAUFS4746H . . . . . . . प्रत्यर्थी / Respondent द्वधरध / Appearances Assessee by : Mr Pramod Shingte [‘Ld. AR’] Revenue by : Mr Ramnath Murkunde [‘Ld. DR’] स ु नवाई की तारीख / Date of conclusive Hearing : 01/09/2023 घोषणा की तारीख / Date of Pronouncement : 20/10/2023 आदेश/ ORDER PER G. D. PADMAHSHALI, AM; By the present Miscellaneous Application [‘MA’ hereafter] the Revenue sought our indulgence for recalling order of this Tribunal passed u/s 254(1) of the Income Tax Act, 1961 [‘the Act’ hereafter] while dismissing the Revenue’s appeal in ITA No. 1177/PUN/2012 dt. 26/07/2017 on account of low tax effect. 2. Aggrieved by the relief granted by Ld. CIT (A), the Revenue came up in appeal before Tribunal in ITA 1177/PUN/2012, which was dismissed in the light of CBDT Circular No. 21/2015 dt. 10/12/2015 where the tax effect admittedly was below threshold limit prescribed therein. ITO Central-1 Vs M/s Shree Paras Buildcon, MANo.243/PUN/2022 (Arising out of ITA No.1177/PUN/2012) ITAT-Pune Page 2 of 5 3. By the present MA, the Revenue seeks to recall the impugned order contending that, the aforestated CBDT circular’s is to operate prospectively from the date of its issuance and since the appeal in its case was filed prior to issuance aforestated circular (supra), the dismissal of Revenue’s appeal by the Tribunal was not called for. To drive home this contention the Ld. DR Mr Murkunde pressed into service the judgement of Hon’ble Apex Court in case of ‘CIT Vs M/s Gemini Distilleries’ in Civil Appeal No. 16815/2017 dt. 12/10/2017, wherein their Lordship after considering the CBDT Instruction/Circular No. 03/2011 and Circular No. 21/2015 have categorically decided that, CBDT cannot issue any circular having retrospective operation. Per Contra the Ld. AR contended that, impugned case was not subject matter of 03/2011 circular hence judicial precedent relied by the Revenue would have no application to the present case. The Ld. AR further submitted that, unlike para 11 of erstwhile circular, para 10 of CBDT Circular 21/2015 specifically provided for retrospective operation and direction to withdraw pending appeals. 4. Heard rival contentions of both parties; and subject to the provisions of rule 18 of Income Tax Appellate Tribunal Rules, 1963 [for short ‘ITAT, Rules’] perused the application and settled legal position. 5. Apparently, the distinction between two instructions i.e., 03/2011 & 21/2015 is that, para 11 of former circular specifically spelt out the effective date from which it was to come into operation and thus restricted its retrospective operation. Whereas para 10 of later instruction clearly spelled for retrospective operation with a direction to either to withdraw or not to press pending appeals falling below specified tax limit. ITO Central-1 Vs M/s Shree Paras Buildcon, MANo.243/PUN/2022 (Arising out of ITA No.1177/PUN/2012) ITAT-Pune Page 3 of 5 6. We make mention that, the Hon’ble High Courts in ‘CIT Vs Varindera Construction Co.’ [2011] 331 ITR 449 (P& H), ‘CIT Vs Kodananad Tea Estates Co.’ [2005] 275 ITR 244 (Mad), ‘CIT Vs Navbharat Explosives Co. Pvt. Ltd’ [2011] 337 ITR 515 (Chattisgarh), have taken a view that circulars issued prescribing monetary limit for preferring appeal is only prospective and is not applicable to the pending proceedings. Per contra certain other Hon’ble High courts in ‘CIT Vs Ashok Kumar Manibhai Patel & Co.’ [2009] 317 ITR 386 (MP), ‘CIT Vs P. S. Jain and Co.’ [2011] 335 ITR 591 (Del), ‘CIT Vs Delhi Race Club Ltd’ (ITA No. 128/2008, dated 3 March 2011), ‘CIT Vs Ranka & Ranka’ [2013] 352 ITR 121 (Kar) and the Hon’ble Jurisdictional high Court of Bombay in the case of ‘CIT Vs Pithwa Engg. Works’ [2005] 276 ITR 519 (Bom), CIT v. Madhukar K. Inamdar (HUF) [2009] 318 ITR 149 (Bom) have held that, such circular will apply to the pending appeals as well. We also note that, the Hon’ble Supreme Court in ‘CIT Vs M/s Gemini Distilleries dt 13/10/2017’ (supra) considering its earlier decision rendered in ‘CIT v. Suman Dhamija (Civil Appeal Nos.4919-4920/2015)’ and circular no 21/2015, have confirmed its earlier view to the effect that, the CBDT cannot issue any circular having retrospective operation. However, a month after the aforestated decision, in the case of ‘DIT Vs SRMB Dairy Farming (P) Ltd dt 23/11/2017’ the division bench of Hon’ble Supreme Court placing reliance on its three Judge Bench decision rendered in the case of ‘CIT Central-III Vs Surya Herbal Ltd. [SLP(C) No.CC 13694/2011] have laid the controversy to rest by not interfering with the retrospective applicability but with two caveats (i) Circular should not be applied by the High Courts ipso facto when the matter had a cascading effect; (ii) where common principles may be involved in subsequent group of matters or a large number of matters. ITO Central-1 Vs M/s Shree Paras Buildcon, MANo.243/PUN/2022 (Arising out of ITA No.1177/PUN/2012) ITAT-Pune Page 4 of 5 7. Since neither party to present dispute could place on record as to whether retrospective application of circular 21/2015 in the present case is subject to aforestated two caveats/limitation or not, therefore following judicial discipline we placing our reliance on the ratio laid by their Lordships in ‘CIT Vs M/s Gemini Distilleries’ (supra) and allow the present MA of the Revenue and restore the impugned order for adjudication. 8. Before departing, we are also heedful to the fact that, unlike para 11 of CBDT Circular 03/2011, para 10 of the CBDT Circular No. 21/2015 directed the Revenue to withdraw or not to press the appeal falling below specified tax limit, therefore in our considered view, in the present case this obligated the Ld. DR either to withdraw the appeal by a written application or not to press for adjudication, as this circular being binding on all the officer employed in the administration of the Act. 9. In this context we note that, in ‘Navnit Lal C. Jhaveri Vs. K.K. Sen’ (1965) 56 ITR 198 (SC), the Supreme Court had an occasion to examine the statutory basis, background, scope and the effect of such circulars issued by the CBDT under the provisions of the Act, wherein their Lordships have observed that the circular issued by the CBDT is binding on all officers and persons employed in the administration of the Act. 10. In the case of ‘K.P.Varghese Vs ITO’ (1981) 131 ITR 597 (SC), the Supreme Court had gone one step further and observed that circulars issued by the CBDT are legally binding on the revenue and this binding character attaches to the circulars even if they are found not in accordance with the correct interpretation ITO Central-1 Vs M/s Shree Paras Buildcon, MANo.243/PUN/2022 (Arising out of ITA No.1177/PUN/2012) ITAT-Pune Page 5 of 5 of a statutory provision and they depart or deviate from such construction. The above dictum of law laid down by the Supreme Court show that although the circulars are not binding on the courts or an assessee, they are certainly binding on the revenue and it is not open to the revenue to advance an argument or filing an appeal contrary to the circulars. In fact, the department cannot even take contrary stands to the circulars as well. 11. The above discussion leads us to the only conclusion that so long as a circular issued u/s 119 of the Income Tax Act is applied and enforced, it would be binding on the departmental authorities to ensure a uniform and proper administration of the Act even if they are found not in accordance with the correct interpretation of a statutory provision and they depart or deviate therefrom. Therefore, Ld. DR in compliance with para 10 of CBDT circular 21/2015 was obligated for not to press the recalled appeal of this order and placing same on record, we deem it fit to dismiss the recalled appeal as not pressed for adjudication. 4. In nutshell, the present MA of the Revenue filed u/s 254(2) of the Act is recalled and the ITA No. 1177/PUN/2012 stands dismissed as not pressed. U/r 34 of ITAT Rules, order pronounced in open court on this Friday 20 th day of October, 2023. -S/d- -S/d- S. S. GODARA G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER प ु णे / PUNE ; ददना ां क / Dated : 20 th day of October, 2023. आदेश की प्रनिनलनप अग्रेनषि / Copy of the Order forwarded to : 1. अपीलाथी / The Appellant. 2. प्रत्यथी / The Respondent. 3. The CIT(A)-Nashik (MH-India) 4. The CIT, Central, Nagpur (MH-India) 5. DR, ITAT, Pune Bench ‘B’, Pune 6. गार्डफ़ाइल / Guard File. Ashwini आदेशान ु सार / By Order, वररष्ठ दनजी सदिव / Sr. Private Secretary आयकर अपीलीय न्यायादधकरण, प ु णे / ITAT, Pune.