Income Tax Officer, Ward-2, Valsad, Valsad V. M/s Hardik Corporation, Valsad

MA 58/SRT/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 7563 (ITAT-SURAT)
• Duration Of Justice: 1 year(s) 5 month(s) 6 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 08-01-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 02-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SEEKING RECALL OF
• Keywords: Audit objection; Tax effect
• Section: 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER MA NO. 58/SRT/2019 [ARISING OUT OF ITA NO. 78/SRT/2017 FOR AY.2010-11] ( VIRTUAL HEARING) ITO WARD -2, VALSAD. VS M/S HARDIK CORPORATION, 18, GIRDHAR CHAMBERS, KACHARI ROAD, VALSAD, PAN : AACFH 7680 R APPELLANT RESPONDEDNT REVENUE BY MISS ANUPMA SINGHLA SR. DR ASSESSEE BY SH. BHAVIN MARFATIA - CA/AR DATE OF HEARING 08.01.2021 DATE OF PRONOUNCEMENT 08.01.2021 ORDER UNDER SECTION 254(2) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER : 1. THIS MISCELLANEOUS APPLICATION (MA) IS FILED BY THE REVENUE FOR SEEKING RECALL OF THE ORDER DATED 15.11.2018. IN THE APPLICATION, THE APPLICANT/REVENUE HAS CONTENDED THAT THIS APPEAL WAS DISMISSED BY TRIBUNAL VIDE ORDER DATED 15.11.2018 ON ACCOUNT OF TAX EFFECT OF LESS THAN RS.20.00 LAKHS, BEING LOWER THAN THE MONETARY TAX LIMIT PRESCRIBED IN CBDTS CIRCULAR NO.03 OF 2018. THE REVENUE WAS GIVEN LIBERTY TO MOVE APPROPRIATE APPLICATION, IF THE TAX EFFECT IS DISCOVERED TO BE MORE THAN THE PRESCRIBED LIMIT OR THE CASE IS COVERED BY ANY EXCEPTION OF CBDT CIRCULAR DATED M/S HARDIK CORPORATION MA NO.58/SRT/2019 FOR A.Y. 2010-11 2 20.08.2018. THE REVENUE FURTHER STATED THAT THOUGH THE TAX EFFECT IN THE PRESENT APPEAL IS LESS THAN THE MONETARY LIMIT, HOWEVER, PRESENT APPEAL IS COVERED BY EXCEPTION (C) OF PARA-8 OF LETTER NO. F.NO. 279/MISC/ 142/2007-ITJ (PT) DATED 20.08.218 AS THE ASSESSMENT WAS REOPENED ON THE BASIS OF AUDIT OBJECTION. 2. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE MADE HER SUBMISSION ON SIMILAR LINES AS STATED IN MA. THE LD. DR FOR REVENUE SUBMITS THAT PRESENT APPEAL WAS CLEARLY COVERED BY PARA 8 (C) OF CBDTS CIRCULAR NO. 5 OF 2014 AND WAS NOT LIABLE TO BE DISMISSED DUE TO LOW TAX EFFECT. THE AUDIT OBJECTION WAS ACCEPTED BY THE REVENUE. THE LD. SR. DR FOR REVENUE PRAYED FOR RECALLING THE ORDER DATED 15.11.2018. 3. ON THE OTHER HAND, THE LD. AUTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE SUBMITS THAT THERE IS NO MISTAKE IN THE ORDER PASSED BY THE TRIBUNAL WHICH REQUIRE RECTIFICATION AND THAT THE APPLICATION FILED BY THE REVENUE IS LIABLE TO BE REJECTED. THE LD. AR FOR THE ASSESSEE FURTHER SUBMITS THAT AT THE TIME OF HEARING NO SUCH PLEA WAS RAISED, AS RAISED IN THIS APPLICATION THAT THE CASE IS COVERED BY EXCEPTION CLAUSE OF CBDT CIRCULAR NO. 21/2015, ( WHICH WAS UPDATED VIDE F.NO. 279/MISC/ 142/2007-ITJ (PT) DATED 20.08.218). THE LD AR FOR THE ASSESSEE FURTHER SUBMITS THAT SUBSEQUENT TO THE CIRCULAR NO.21/2015, CBDT HAS ISSUED FURTHER ISSUED CIRCULAR 5/2017 DATED 23.01.2017, WITH REGARD TO THE M/S HARDIK CORPORATION MA NO.58/SRT/2019 FOR A.Y. 2010-11 3 CASES WHERE THE ADDITIONS MADE ON ACCOUNT OF AUDIT OBJECTION IS DELETED, BEING ERRONEOUSLY INTERPRETED AND APPEAL ARE BEING FILED MECHANICALLY BY THE DEPARTMENT WITHOUT PROPER EXAMINATION CASES ON MERIT. IT WAS CLARIFIED IN THE SAID CIRCULAR THAT APPEAL AGAINST THE ADVERSE JUDGMENT SHOULD ONLY BE FILED ON MERIT. THUS, THE CONTENTION RAISED THE APPLICATION IS MECHANICAL AND THERE IS NO MERIT IN THE APPLICATION FILED BY THE REVENUE. IN SUPPORT OF HER SUBMISSIONS THE LD AR FOR THE ASSESSEE RELIED ON THE CBDT CIRCULAR NO. 5/2017 DATED 23.01.2017, DECISION OF AHMEDABAD TRIBUNAL IN MA NO.220/AHD/2019 IN ACIT VS. HANUBHAI R.SANGANI DATED 06.01.2020, MA NO.332/AHD/2019 IN ITO VS. ASHOKKUMAR H.BHAVSHAH DATED 06.01.2020 AND MA NO.389, 394, 399/AHD/2019 IN ITO VS. BHAVI TOURS AND TRAVELS DATED 11.03.2020 AND HON'BLE BOMBAY HIGH COURT IN PCIT VS NAWANY CONSTRUCTION CO P LTD (2018) 98 TAXMANN.COM 294 (BOMBAY). 4. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD ACCORDINGLY. THE TRIBUNAL DISMISSED THE APPEAL OF THE REVENUE, VIDE ORDER DATED 15.11.2018 DUE TO LOW TAX EFFECT IN VIEW OF CBDT CIRCULAR NO. 3 OF 2018 DATED 11.07.2018. NOW, THE REVENUE HAS RAISED THE PLEA THAT THE CASE WAS COVERED BY CLAUSE 8C OF CBDT CIRCULAR NO.21 DATED 10.10.2015. WE MAY NOTE THAT CBDT IN ITS CIRCULAR NO. 5 OF 2017 DATED 23.01.2017, HAVE CLARIFIED ABOUT CLAUSE-C IN PARA 8 OF M/S HARDIK CORPORATION MA NO.58/SRT/2019 FOR A.Y. 2010-11 4 CIRCULAR NO. 5 OF 2014 AND CLARIFIED THAT PARA 8 (C) OF THE SAID CIRCULAR IS BEING ERRONEOUSLY INTERPRETED AND APPEALS ARE BEING FILED MECHANICALLY BY THE DEPARTMENT WITHOUT PROPER EXAMINATION OF THE CASE ON MERIT AND CLARIFIED THAT ERROR AND CONTENT OF PARA 8 (C) OF CIRCULAR NO. 21 OF 2015 IS THAT EVEN ON ISSUES MENTIONED IN THE SAID PARA, APPEALS AGAINST THE ADVERSE JUDGMENT SHOULD ONLY BE FILED ON MERITS. IN PARA 4 OF THE SAID CIRCULAR, IT WAS DIRECTED THAT IF APPEAL HAVE BEEN FILED IN VIOLATION OF THIS INSTRUCTION, MAY BE WITHDRAWN. 5. WE HAVE FURTHER NOTED THAT COORDINATE BENCH OF AHMEDABAD TRIBUNAL IN DCIT VS MALAY JAYENDRABHAI PATEL MA NO. 363/AHD/2019 IN ITA NO.324/AHD/2019, DATED 20.01.2020, WHILE CONSIDERING SIMILAR CONTENTION OF THE REVENUE ON SIMILAR MA FOR RECALLING OF THE ORDER OF TRIBUNAL ON THE GROUND OF EXCEPTION CLAUSE IN PARA 8( C) OF CBDT CIRCULAR DATED 10.12.2015, CBDT CIRCULAR NO 5 OF 2017 DATED 23.01.2017 AND RELYING ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN PCIT VS NAWANY CONSTRUCTION CO P LTD (2018) 98 TAXMANN.COM 294 (BOMBAY), PASSED FOLLOWING ORDER; 5. THE HONBLE BOMBAY HIGH COURT HAS CONSIDERED THIS CIRCULAR AND OBSERVED THAT MERE RAISING AN AUDIT OBJECTION IS NOT SUFFICIENT FOR RECALL OF THE ORDER. THE RELEVANT PART OF THE DISCUSSION OF THE HONBLE BOMBAY HIGH COURT HAS HELD AS UNDER: M/S HARDIK CORPORATION MA NO.58/SRT/2019 FOR A.Y. 2010-11 5 8. IT IS CONCEDED THAT WHILE SEEKING TO RESTORE INCOME TAX APPEAL NO.254 OF 2013 ON THE FILE OF THIS COURT, NEITHER THE REVENUES CIRCULAR DATED 11-7-2018 IS REFERRED NOR ANY CONDITION THEREIN. IF THE CONDITION NOW RELIED UPON IS WITH REGARD TO THE REVENUE AUDIT OBJECTION, THEN, MERE RAISING OF THIS OBJECTION IN TERMS OF THIS CIRCULAR IS NOT ENOUGH. THE REVENUE WILL HAVE TO POINT OUT THAT THIS AUDIT OBJECTION HAS BEEN ACCEPTED BY THE DEPARTMENT. WE HAVE NO SUCH RECORD BEFORE US. 9. IN THE CIRCUMSTANCES, WE FIND THAT THIS IS AN ATTEMPT TO GET OVER THE BINDING CIRCULARS AND IN ANY CASE WE SHALL NOT ALLOW THE REVENUE TO GET OVER THEM IN THIS MANNER. THE CIRCULARS CONTINUE TO BIND THE REVENUE AND IF THEY CONTAIN ANY CONDITIONS, WHETHER SUCH CONDITIONS ARE ATTRACTED OR NOT WOULD HAVE TO BE PROVED AND ESTABLISHED BY THE REVENUE. ONCE THERE IS NO SUCH RECORD BEFORE US, WE DO NOT COUNTENANCE THE ORAL REQUEST OF MR. PINTO. CONSEQUENTLY, WE DO NOT SEE ANY REASON TO ENTERTAIN THIS APPEAL. IT IS DISMISSED. 6. THE LD.DR WAS UNABLE TO CONTROVERT THE ABOVE POSITION. 7. ON DUE CONSIDERATION OF ALL THESE FACTS, CIRCULARS OF THE BOARD, AS ALSO IN THE LIGHT OF HONBLE BOMBAY HIGH COURT DECISION ALL CITED (SUPRA), WE ARE OF THE VIEW THAT DEPARTMENT HAS NOT BROUGHT ANY SUBSTANTIAL MATERIAL ON THE RECORD POINTING OUT THAT APPEAL WAS FILED AFTER MA NO.363/AHD/2019 4 EVALUATION OF MERIT ON THE ISSUES INVOLVED. IT SOUGHT TO RECALL ORDER OF THE TRIBUNAL MERELY ON THE BASIS OF AUDIT OBJECTION, WHICH IS NOT SUFFICIENT FOR RECALLING THE TRIBUNAL ORDER. THEREFORE, WE DO NOT FIND ANY ERROR IN THE ORDER OF THE TRIBUNAL AND THE MISCELLANEOUS APPLICATION IS REJECTED. 6. THE LD. CIT(A) DR FOR THE REVENUE AT THE TIME OF HEARING COULD NOT BRING ANY MATERIAL TO OUR NOTICE TO DEMONSTRATE THAT THE APPEAL M/S HARDIK CORPORATION MA NO.58/SRT/2019 FOR A.Y. 2010-11 6 WAS FILED AFTER EVALUATION OF CASE ON MERIT ON THE ISSUES INVOLVED IN THE APPEAL. CONSIDERING THE AFORESAID FACTUAL AND LEGAL DISCUSSION, AND RESPECTFULLY FOLLOWING THE SAME, WE DO NOT FIND ANY MERIT IN THE MA FILED BY THE REVENUE. NO CONTRARY DECISION IS BROUGHT TO OUR NOTICE. HENCE, THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE MA OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 08/01/2021 BY PLACING RESULT ON NOTICE BOARD. SD/- SD/- (DR. ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER SURAT, DATED: 08/01/2021 SELF/ AUTHOR COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE CO/// TRUE BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SR. PS/ PS ITAT, SURAT