Shreya Jain V. The Union of India and The Principal Commissioner of Income Tax and The Income Tax Officer Ward No. 1 Dimapur

WP(C)/3283/2020

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The case involves Shreya Jain challenging the maintainability of a statutory appeal filed by the Income Tax Officer, Ward-2, Dimapur, before the Income Tax Appellate Tribunal, Guwahati Bench (ITAT,G). The appeal was against an order by the Commissioner of Income Tax (Appeals), Jorhat, which had granted relief to the petitioner by allowing an exemption previously disallowed due to alleged bogus long-term capital gains. The main legal contention was whether the appeal, filed beyond the prescribed period of limitation and accompanied by a condonation of delay application, was maintainable under the retrospective application of Circular No. 23 issued by the Central Board of Direct Taxes. The court found that the appeal was not live due to the uncondoned delay and did not address the retrospective application of the circular as it was not challenged in the writ petition.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 809128 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 17-12-2020
• Assessment Year: misc
• Other Referred Cases: Union of India & Ors. Vs. G.S. Chatha Rice Mills & Ors., Delhi Cloth and General Mills Co. Ltd. Vs. Income Tax Commissioner & Ors., State of Rajasthan Vs. Basant Agrotech (India) Ltd., Godrej Sara Lee Ltd. Vs. Assistant Commissioner (AA) & Ors., Commissioner of Income Tax Vs. Gold Coin Health Food (P) Ltd., GKN Drivesharfts (India) Ltd. Vs. Income Tax Officer & Ors., Rani Paliwal Vs. Commissioner of Income Tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: S G I
• Assessee Lawyers: H BURAGOHAIN
• Keywords: Appeal; Condonation of delay; Delegated legislation; Income Tax; Retrospective effect
• Section: 143(2); 268A; 253

Judgement Text

"Page No.# 1/7 GAHC010112422020 THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH) Case No. : WP(C)/3283/2020 SHREYA JAIN D/O AJIT KUMAR JAIN, RESIDENT OF FIRST FLOOR, CITY TOWER CIRCULAR ROAD, DIMAPUR, NAGALAND, 797112 VERSUS THE UNION OF INDIA AND 2 ORS. REPRESENTED BY THE SECRETARY TO THE GOVT. OF INDIA, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NEW DELHI 110101 2:THE PRINCIPAL COMMISSIONER OF INCOME TAX HAVING ITS OFFICE AT AAYAKAR BHAWAN CHRISTIAN BASTI GS ROAD GUWAHATI 781005 ASSAM 3:THE INCOME TAX OFFICER WARD NO. 1 DIMAPUR HAVING ITS OFFICE AT NEW COLONY PURANA BAZAR DIMAPUR 78711 Advocate for the Petitioner : MR. H. BURAGOHAIN Advocate for the Respondent : ASSTT.S.G.I. Page No.# 2/7 Linked Case : WP(C)/3396/2020 AJIT JAIN (HUF) S/O- LT. SOHAN LAL JAIN R/O- 1ST FLOOR CITY TOWER CIRCULAR ROAD DIMAPUR NAGALAND- 797112 PH.NO. 9436003237 VERSUS THE UNION OF INDIA AND 2 ORS. REP. BY THE SECY. TO THE GOVT. OF INDIA MINISTRY OF FINANCE DEPTT. OF REVENUE NEW DELHI- 110101 2:THE PRINCIPAL COMMISSIONER OF INCOME TAX HAVING ITS OFFICE AT AAYAKAR BHAWAN CHRISTIAN BASTI G.S.ROAD GHY-05 ASSAM 3:THE INCOME TAX OFFICER- WARD 1 DIMAPUR HAVING ITS OFFICE AT NEW COLONY PURANA BAZAR DIMAPUR- 797112 ------------ Advocate for : MR H BURAGOHAIN Advocate for : ASSTT.S.G.I. appearing for THE UNION OF INDIA AND 2 ORS. Linked Case : WP(C)/3400/2020 KIRAN PATNI D/O- SHRI VIJAY KUMAR JAIN R/O- 1ST FLOOR CITY TOWER CIRCULAR ROAD DIMAPUR NAGALAND- 797112 PH. NO. 9436012880 Page No.# 3/7 VERSUS THE UNION OF INDIA AND 2 ORS. REP. BY THE SECY. TO THE GOVT. OF INDIA MINISTRY OF FINANCE DEPTT. OF REVENUE NEW DELHI- 110101 2:THE PRINCIPAL COMMISSIONER OF INCOME TAX HAVING ITS OFFICE AT AAYAKAR BHAWAN CHRISTIAN BASTI G.S.ROAD GHY-05 ASSAM 3:THE INCOME TAX OFFICER WARD 1 DIMAPUR HAVING ITS OFFICE AT NEW COLONY PURANA BAZAR DIMAPUR- 797112 ------------ Advocate for : MR H BURAGOHAIN Advocate for : SC INCOME TAX appearing for THE UNION OF INDIA AND 2 ORS. BEFORE HONOURABLE MR. JUSTICE KALYAN RAI SURANA ORDER 17.12.2020 Heard Mr. P. Jain, learned counsel for the petitioner and Mr. S. Sharma, learned standing counsel for the respondents. 2) By filing this writ petition under Article 226 of the Constitution of India, the petitioner has challenged the legality and maintainability of the statutory appeal, registered and numbered as I.T.A. No. 19 of 2020, filed by the Income Tax Officer, Ward-2, Dimapur, Nagaland (respondent no.3) before the Income Tax Appellate Tribunal, Guwahati Bench, Page No.# 4/7 Guwahati (hereinafter referred to as ‘ITAT,G’ for short). It is projected that the memo of appeal was accompanied with a separate application for condonation of delay. 3) The learned counsel for the petitioner submits that the order which has been impugned before the ITAT,G was passed by the Commissioner of Income Tax (Appeals), Jorhat on 07.09.2017 and that at the relevant point of time the prescribed pecuniary limit for filing appeal was Rs.10.00 lakh. However, pursuant to Circular No. 23 dated 06.09.2019, issued was by the Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, Govt. of India under F. No. 279/Misc./ M-93/2018-ITJ(Pt), issued under section 268A of Income Tax Act, 1961 (hereinafter referred to as “1961 Act” for short), the herein before referred appeal was filed. It is submitted that the petitioner had filed return of income for assessment year 2014-15, which was selected for scrutiny under section 143(2) of the said 1961 Act. Subsequently, the exemption claimed under section 10(38) of the said 1961 Act was disallowed vide assessment order passed on 29.12.2016, purportedly on account of bogus long term capital gains. The aggrieved petitioner preferred an appeal before the Commissioner of Income Tax (Appeals), which was allowed, thereby granting the petitioner relief of exemption which was disallowed vide assessment order. It is submitted that the appellate order referred to herein before had attained finality. 4) The learned counsel for the petitioner has submitted that the circular no. 23 was nothing but a delegated legislation, which cannot have retrospective effect. In support of the said contention, reliance is placed on the case of Union of India & Ors. Vs. G.S. Chatha Rice Mills & Ors., MANU/SC/0714/2020: (2020) 0 Supreme(SC) 557 as well as the case of Delhi Cloth and General Mills Co. Ltd. Vs. Income Tax Commissioner & Ors., AIR 1927 PC 242. The case of State of Rajasthan Vs. Basant Agrotech (India) Ltd., (2013) 15 SCC 1 was referred to explain the meaning of phrase “from time to time” in context of delegated legislation. On the point that despite existence of alternative remedy, writ petition would be maintainable as the issue in this writ petition is with regard to retrospective operation of circular no. 23 and also because the petitioner has assailed the jurisdiction of the appellate authority to entertain and adjudicate the appeal, the learned counsel has referred to the case Page No.# 5/7 of Godrej Sara Lee Ltd. Vs. Assistant Commissioner (AA) & Ors., (2009) 14 SCC 338. 5) Per contra, the learned departmental standing counsel has referred to the affidavit- in- opposition filed by the respondents and it is submitted that as per the powers conferred under section 119(1) of the 1961 Act, the competent authority had issued circular no. 23, based on which the appeal was preferred. It is also submitted that appeal is a statutory right which was not waived by the respondents and, as such, the appeal was maintainable. In support of his contention, the learned departmental standing counsel had cited the following cases, viz., (1) Commissioner of Income Tax Vs. Gold Coin Health Food (P) Ltd., (2008) 304 ITR 0308; (2) GKN Drivesharfts (India) Ltd. Vs. Income Tax Officer & Ors., (2003) 1 SCC 72; and (3) Rani Paliwal Vs. Commissioner of Income Tax, (2004) 268 ITR 0220. 6) It is seen that as against the appellate order dated 07.09.2017 passed by the Commissioner of Income Tax (Appeals), Jorhat the respondent no.3 had preferred a statutory appeal before the ITAT,G. On a perusal of the materials available on record, it is seen that the Memo of Appeal filed before the ITAT,G is annexed to the writ petition as annexure-3, which does not contain any reference to the circular no. 23. The said appeal was filed long after the period of limitation for filing the appeal was over, as such, admittedly the memo of appeal is accompanied with a separate application for condonation of delay. The petitioner has not annexed any order by virtue of which the delay in filing the appeal has been condoned by the ITAT,G. Therefore, the fact remains that technically there is no appeal on board of the ITAT,G, despite the appeal being numbered for administrative reasons. 7) The learned counsel for the petitioner has submitted that the circular no.23 was being given retrospective effect to file an appeal long beyond the prescribed period of limitation and cases have been cited on untenability of any administrative circulars to give retrospective effect to right to appeal or for levy and demand of taxes with retrospective effect. However, the legality or validity of the circular no. 23 is not under challenge in this writ Page No.# 6/7 petition. Therefore, the Court is not required to visit the issue of retrospectively as projected by the petitioner and so vehemently argued by the learned counsel for the petitioner. As indicated above, the said circular no. 23 has not been referred to in the memo of appeal, as such, although it is quite possible that in light of circular no. 23 the appeal might have been filed, but the fact remains that the right to file an appeal is a statutory right conferred by section 253 of the 1961 Act. Therefore, this Court is unable to accept that circular no. 23 has conferred any right to appeal, rather, it merely clarifies that the income tax department may file an appeal, but in no way the circular can be read as if belated appeal would be mandatorily entertained by the ITAT,G or that the said circular no. 23 has reduced the pecuniary limit to file an appeal. Therefore, the ITAT,G would still have jurisdiction to determine whether the appeal for an amount less than its pecuniary limit is maintainable if the appeal was filed as well as registered under section 253 of the 1961 Act. All Courts and Tribunals have inherent power to examine a question relating to its jurisdiction to entertain an appeal. No provision of law has been shown which creates any legal bar for the ITAT,G to take up and decide the issue of maintainability of appeal filed before it. Therefore, the petitioner has an efficacious remedy by applying before the ITAT,G for a preliminary determination of the issue of maintainability of the appeal, if so advised. 8) Moreover, as indicated herein before, the petitioner has not assailed the legality and validity of circular no.23 dated 06.09.2019. Therefore, the Court is of the considered opinion that while determining the prayer made in this writ petition relating to quashing of the appeal pending before the ITAT,G, it is not open to this Court to entertain a collateral challenge to the validity of the said circular no. 23 and make an attempt to determine whether it is sought to be given retrospective effect when there is no reference to the said circular in the memo of appeal. 9) Although the application for condonation of delay is not annexed to this writ petition, but from the nature of submissions made at the Bar, it is presumed that the said circular has been referred to as one of the various grounds based on which the revenue is seeking condonation of the delay in filing the appeal. Page No.# 7/7 10) As indicated herein before, the appeal itself is not live because the delay in filing the appeal has not yet been condoned, hence, at this stage, it would be premature for this Court to venture to examine whether the appeal was maintainable or not. 11) In the totality of the matter as discussed herein before, the Court is not inclined to issue notice motion in this writ petition and the writ petition stands dismissed. 12) However, before parting with the records, it is made clear that as the Court has not adjudicated on the issue of validity of retrospective effect, if any, in respect of circular no. 23 dated 06.09.2019, it would be open to the petitioner to take any defence in respect of the said circular no. 23 as the petitioner may be so advised. It is further provided that this order shall not cause prejudice to either side when the ITAT,G takes up the hearing of the condonation application and/or the connected memo of appeal. 13) The affidavit- in- opposition filed by the respondents was not tagged with the record and as the learned counsel for the petitioner informed the Court that he was coming from out of station, the Court had accepted a photocopy thereof which was produced by the learned departmental standing counsel in course of hearing the Court, which is retained in record. The Court Master shall call for the affidavit-in- opposition filed by the respondents on 17.12.2020 under Document No.1/2020 from the Registry and tag the same with the record. JUDGE Comparing Assistant "